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Thursday, February 26, 2009

Total eyes role in trans-Saharan gas pipeline

02-26-2009 - Financial Times by Matthew Green in Abuja - Total, the French oil group, yesterday said it was ready to participate in a planned trans-Saharan gas pipeline, seen by European governments as a potential route to reduce their dependence on Russian energy supplies. Gazprom, the Russian gas monopoly, has already expressed interest in the €15bn ($19bn, £13.4bn) scheme as part of a wider strategy to gain access to Nigeria's vast gas reserves, seen as crucial to future energy security in Europe and the US. Total's announcement suggests western energy companies are also starting to look seriously at the pipeline in spite of the huge technical and commercial challenges of pumping gas from Nigeria's restive Niger Delta to export terminals on Algeria's Mediterranean coast. Guy Maurice, managing director of Total Exploration and Production in Nigeria, told an oil and gas conference in Abuja, Nigeria's capital, that the pipeline would be a long-term strategic investment for the country. "Total is ready to be involved in this project." Mr Maurice gave no further details of intended participation. Total said discussions were preliminary. Disruptions to Russian supplies to Europe have heightened European Union anxiety. The EU depends on Russia for a quarter of its annual gas consumption of 300bn cubic metres. The planned trans-Sahara pipeline could provide 20-30bn cubic metres. The project is likely to face great hurdles, including the security threat posed by militants on the planned route through Nigeria, Niger and Algeria, and complications about revenue-sharing between the hosts. Experts say investment in Nigeria's liquefied natural gas capacity could prove more cost effective to deliver energy to Europe than a lengthy pipeline. Gazprom seemed to steal a march on rivals interested in the project by signing in September a memorandum of understanding with the Nigerian National Petroleum Corporation, the state oil company, to co-operate on gas exploration, production and transportation. The company has said it will invest at least $2.5bn to build a network of pipelines and processing plants to harness gas for local use. "We're continuing [to say] that though we are very interested in the Trans-Saharan pipeline, Trans-Saharan starts after the Nigerian gas grid is completed," Vladimir Ilyanin, managing director of Gazprom's subsidiary in Nigeria, told the conference.

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