Economic Viability of the African Atlantic Gas Pipeline
In a recent analysis, Jeffrey Porter, an American expert specializing in North African oil and gas, expressed skepticism regarding Morocco's proposed African Atlantic Gas Pipeline project, which aims to connect Nigeria to the Atlantic coast and ultimately to Morocco. Porter emphasized that the economic model presented by this proposal is unlikely to ensure profitability or the recovery of the substantial investments required for its execution, stating that the project "will never be completed." His remarks, shared on his social media platform, underline the challenges posed by the pipeline’s passage through eleven countries, which complicates its feasibility. Notably, the economic concerns stem from the fact that these eleven nations would receive only 5% of their dues in kind from the gas as transit rights, fundamentally undermining the project.
Porter further highlighted that the existence of multiple agreements for the payment of transit rights could adversely affect the investment payback period and the expected returns. He pointed out that countries produce gas primarily for sale, emphasizing that pipeline projects require customers willing to pay for the use of the infrastructure to recoup the investment costs. He concluded that the African Atlantic Gas Pipeline does not meet the essential economic conditions necessary for success.
Contrasting Pipeline Projects in Africa
In his commentary, Porter also referred to President Abdelmadjid Tebboune's recent remarks about the African Atlantic Gas Pipeline, reiterating that the economic rationale behind it "does not seem logical at all" given the volume of gas allocated for transit compared to the anticipated returns from the project. In stark contrast, he pointed to the Trans-Saharan Gas Pipeline (TSGP) project, which runs between Nigeria, Niger, and Algeria, spanning approximately 4,000 kilometers. This project has recently transitioned into the implementation phase, with construction commencing in the Algerian section near Ouargla since June, and topographic surveys expected to begin in Niger this October.
The TSGP, with a projected capacity of 20 to 30 billion cubic meters of gas annually, extends beyond merely transporting natural gas; it is viewed as a pivotal project for energy and economic integration in Africa. It aims to provide a new outlet for Nigerian gas resources while enhancing Niger's role as a transit country and solidifying Algeria's status as an energy hub connecting the continent's resources to international markets, particularly in Europe.
International and regional organizations and agencies unanimously recognize the significance of the Trans-Saharan Gas Pipeline, deeming it a structural project that could elevate Africa's position as a key player in maintaining global market balance, serving as a major energy corridor that would bolster energy security, regional economic integration, and continental cooperation.
As reported by aps.dz.
