West Africa gas project enters a critical phase

However, industries expected to benefit from the project will not be able to get supply until mid-2008.

The completion of the $700-million gas pipeline project will open new possibilities for economic development of the West Africa countries that are going to be beneficiaries. The West African Gas Pipeline Company is building a "30 onshore and 20 offshore" natural gas pipeline from Alagbado Tee part of the Escravos gas pipeline in Nigeria, to Volta River Authority (VRA) power plant in Takoradi, Ghana, which sets the tone for furthering the pipeline dream on the drawing board for a while now.

The project, when it takes off fully, will reduce significantly the rate of gas flaring in Nigeria. Going by projections, associated and non associated natural gas from oil fields in the Western Niger Delta would be transported to Alagbado via the Escravos Lagos gas pipeline system (ELPS) from where West African Pipeline Company (WAPCO) will transport gas to delivery points in Cotonou in Benin Republic, Lome in Togo and Tema and Takoradi in Ghana.

Out of the initial supply of 200-million standard cubic feet of gas a day (SCF/d), Cotonou is expected to take delivery of 5-million SCF/d. This may be raised to 27-million SCFD, Tema, 7-million SCF/d; which may increase to about 234-million SCF/d; Lome 7-million SCF/d with a possibility of increasing to 27-million SCF/d, while Takorad will take delivery of 130-million SCFD.

The bulk of natural gas to be supplied to Ghana, Togo and Benin would be used to generate electricity, while the remaining would be used for industrial purposes.

Indeed, 85 percent of the gas is targeted at electricity generation and the remaining 15 percent for industrial development.

According to industry watchers, enhanced electricity infrastructures will inadvertently enhance investments in the West Africa sub region.

The project, they say, will accelerate regional economic integration and contribute to job creations especially during the construction of the over 800 kilometres pipeline.

Foreign exchange income to Nigeria is expected to boost through regular sales of gas for the 20-year period the contract will last.

The countries involved in the project are also to rake-in an average of $600-million as tax revenue within the same period..

The project, aside from being environmentally friendly, also takes into consideration the Federal Government's policy on local content and this will be the thrust of the project policy on recruitment.

In the execution of the project, priority is given to workers from communities along its compressor stations or pump station and right of way (ROW), in Lagos and Ogun States while construction goes on.

The company will ensure that fair and adequate compensation are paid to the communities within its operational areas for lands acquired for the ROW and compressor stations.

The natural gas to be supplied through WAPCO to its customers would be processed gas devoid of impurities, solids, heavy hydrocarbon liquids and water. It would be dry gas, which is suitable for power plants and industrial applications.

The trans-border pipeline began in earnest August 2002, when the consortium of Shell, Chevron, Sobegas, Sotogas and the Nigerian National Petroleum Corporation took a preliminary commercial evaluation decision to move forward with the project and later launch its environmental impact assessment (EIA) study in all the countries affected by the project.

The evaluation of the onshore and offshore engineering survey data was completed in February 2003. This was followed by the submission of the EIA study report to states concerned. The final investment decision (FID) is expected to be taken by this month by the stakeholders.

These will kick-start the project construction which is expected to be completed within a period of between 18 to 20 months.

WAPCO was formed to build, own and operate the West African Gas Pipeline (WAGP). The company is owned by both states and the consortium sponsoring the project. Chevron, the chief promoter, is investing $209.4-million or 41.87 percent of the total cost of the project; the Nigerian National Petroleum Corporation (NNPC) $126.3-million or 25.25 percent, Shell $82.2-million or 16.5 percent; while Sobegas, Sotogas of Benin are expected to contribute $10-million each for two percent of the project.

Industrial customers along the route especially those in cement production, fertilizer, food, metallurgy, aluminum, iron steel and beverages, would be first beneficiaries of the project as their plants are eager to have the production plant hooked up to gas, which is expected to cost just between $16 and 18 a standard cubic feet.

The pipeline system will have laterals of 8-inches to Cotonou in Benin Republic, 10 inches to Lome in Togo and 18 inches to Tema in Ghana.

In Nigeria, the onshore pipeline will start in Ogun State and terminate at the Atlantic beach in south of Ajido near Topo, Badagry creek.

The Badagry lagoon creek and Atlantic beach crossing will be horizontal and directional drilling via trenching and burial operation. The offshore pipeline will start at the beach and continue through Benin Republic across the Nigeria Benin border.

The pipeline will include a mid-line relief system located off the Otta-Idi Iroko highway near Canaan Land in Ogun State.

Already, the company has put up notice of its intention in the affected countries as well as seeking government agencies approval to start work on the project.

Specifically, the public notice carried the description of the entire project and also spelt out the routes and type of pipeline that would be laid in the course of executing the project.

Sources, close to the firms said the groups is ready to embark on the next stage with the public notice, which will centre on calling for international competition tender for the construction work.

Before this time, however, the stakeholders would have taken the final investment decision to commit funds for the collection and realisation of the project.

Similarly, the project manager and the West Africa Gas Pipeline Company would have signed the statutory gas purchase and sales agreement with all the customers so far identified.

In gas business, such agreement is usually for the initial period of 20 years.