Nigerian, Moroccan SWFs sign deal to promote Trans-Africa gas pipeline project

06 Dec 2016
Financial Nigeria


The Trans-African Pipeline is designed to support the creation of industrial hubs that attract foreign investment - Morocco's SWF: Ithmar Capital

Uche Orji, CEO, Nigeria Sovereign Investment Authority

The Nigerian Sovereign Wealth Fund and its Moroccan counterpart, Ithmar Capital, have signed a deal to develop the Trans-African Pipeline project, which will transport Nigerian gas to Europe via Morocco.

The two sovereign wealth funds signed the deal during the visit of King Mohammed IV of Morocco to President Muhammadu Buhari in Abuja from December 1st to 3rd, according to a statement released on Monday.

"The pipeline will run an estimated 4,000 km along the west coast of Africa and the countries through which it runs and the exact route will be determined as the project moves forward, based on further research," a spokesman for Ithmar told S&P Global Platts. "Morocco and Nigeria are eager to work with all countries in West Africa to ensure their economies and people benefit from the project,” he said.

It is not clear the route the pipeline will take, although Ithmar Capital told Platts that they foresee it passing through the coast of West Africa. The countries that lie along this route are: Benin, Ghana, Cote D’Ivoire, Guinea, Senegal, Sierra Leone, The Gambia, Guinea Bissau, Capa Verde, Mauritania, and Western Saharan.

“By accelerating the electrification of the region, the Trans-African Pipeline will improve access to energy across West Africa,” Ithmar Capital said in a statement. “This will help address one of the region's most significant barriers to development, the lack of affordable energy. In addition, the project will strengthen energy exports to Europe, linking Nigerian gas to the European energy market through Morocco.”

This will not be the first time that countries in North Africa will seek to channel Nigeria’s huge gas reserves to markets in Europe. In 2002, Algeria’s state-owned oil company, Sonatrach, and its Nigerian counterpart, the Nigerian National Petroleum Corporation, signed a deal to develop the Trans-Saharan Gas Pipeline. An intergovernmental accord was later signed between both countries in 2009. But the project has so far floundered given the huge distances involved and huge investments required to develop the project. (The Trans-Sahara link was designed to run for 1,037 km from Nigeria to the border with Niger, before running 841 km from Niger to Algeria and then another 2,303 km across Algeria to Spain).

But Ithmar said routing of the Trans-African pipeline have yet to be finalized, and talks with other West African countries is expected to begin soon. “In West Africa, the Trans-African Pipeline is designed to support the creation of industrial hubs that attract foreign investment,” Ithmar Capital said. “The project will therefore facilitate the expansion of sectors ranging from industry to food processing to fertilisers and improve the competitiveness of exports, particularly amongst African countries.”

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