NaijaPositive.com

admin · Site Admin Joined: 25 May 2007 Posts: 5404

EU Dumps Russia for Nigerian Gas

Segun Adeleye

Worried by last month's invasion of Georgia by Russia, the European Union (EU) is pinning its hope of regular gas supply in the future on the planned $10billion trans-Saharan gas pipeline project. The project, through which Nigerian gas will be piped into Europe via the Sahara desert, is seen as the safest alternative to Russian gas.

Five European Union members are wholly dependent on Russia for their natural gas. Four others receive more than 50 percent of their natural gas from Russia. A third of all EU oil imports comes from Russia.

Russia is turning out to be a bully in the region and energy experts believe that it will not hesitate to use energy as a weapon. On December 1, 2006, Russia cut off natural gas supplies to and through Ukraine because of a contract dispute. With about 80 percent of the natural gas Europe imports from Russia passing across Ukraine, the effects were felt not just in Ukraine, but as far as Italy. In May last year, Russia cut off delivery of oil products and coal to Estonia because the country decided to move a monument to the Red Army to a less prominent location.

EU Energy Commissioner, Andris Piebalgs, who expressed deep interest in plans to develop the 4,300-kilometre trans-Saharan Gas Pipeline from Nigeria through Niger and Algeria en route the Mediterranean, admitted that it could help the group diversify its energy sources. Piebalgs, who is in Nigeria, ahead of talks on energy projects and peace in the restive Niger Delta said: "Nigeria is already very important for our security of supply, 20 percent of their oil and 80 percent of their gas goes to Europe".

Nigerian gas is currently shipped to Europe as liquefied LNG. A pipeline is therefore seen as improving security in Africa's transit regions, thereby reducing the flood of migrants to Europe. "The development of a trans-Saharan project with 20 billion cubic metres a year that might arrive to Europe by 2015 and increase the security of supply of Nigeria itself and the countries it crosses, makes it a very interesting project for Nigeria and Europe," said Piebalgs.

Nigeria has the world's seventh-largest proven gas reserves, but has been unable to develop its gas industry to anywhere near its full potential because of a lack of funds and regulation. The EU is not alone in courting Nigeria for its oil and gas reserves. Last week, Russian gas giant, Gazprom signed an oil and gas exploration agreement with Nigeria with the hope of developing LNG exports to north America.

Nigeria hopes to double crude oil production to four million barrels per day by 2010, although militant attacks on pipelines and funding problems have thrown those plans into doubt. But Piebalgs said the goal, if achieved, could help further soothe oil prices, now at around $104 a barrel after hitting an all-time high of $147.3 in July. "Plans to increase production to four million barrels per day in the coming years could have a very positive impact to keep global oil markets better supplied," he said.

The trans-Saharan gas pipeline project was conceived in 2002 by Nigeria and Algeria following a series of bilateral agreements. Niger Republic has joined as co-sponsors. Nigeria said it had set aside about 13 to 15 trillion cubic feet of gas for the project billed to come on stream in 2015 and last for 25 years in the first instance, at the rate of off-take of about two billion scf per day.

_________________
May we be strengthened with the ability, willingness and capabilities to be good ambassadors of Nigeria contributing to its uplifting, rather than its detriment. - Cxsm