Trans Nigeria Gas Pipeline

From Global Energy Monitor
This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.
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Trans Nigeria Gas Pipeline is a gas pipeline under construction in Nigeria.[1]

Location

The pipeline will run from the Qua Iboe Terminal, Nigeria to the gas terminal in Kano, Nigeria.[1]

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Project details

  • Owner: Nigerian National Petroleum Corporation (NNPC)[2]
  • Proposed capacity: 3.5 billion cubic meters per year[2]
  • Length: 1300 kilometers[3][4]
  • Status: Construction[5]
  • Cost: US$2.89 billion[5]
  • Financing: US$2.6 billion loan from the Bank of China, and a US$434 million equity investment from the Nigerian Gas Company, a subsidiary of NNPC[5]
  • Start year:

Background

The Trans Nigeria Gas Pipeline Project (TNGP) will run from the Qua Iboe Terminal through the Obigbo-Umuahia-Enugu-Ajaokuta network and the Ajaokuta-Abuja-Kaduna-Kano (AKK) network.

Phase 1: Ajaokuta–Kaduna–Kano Pipeline Project

The AKK Gas Pipeline Project constitutes Phase 1 of the TNGP Project.[1] Phase 1 originates in Ajaokuta, traversing Abuja, Kaduna and terminating at a terminal gas station in Kano. The proposed pipeline will be supplied with gas sourced from various gas gathering projects. The AKK pipeline is estimated to be 614 kilometers in length total, with sections including: a 187-kilometer pipeline from Ajaokuta to Abuja; a 193-kilometer pipeline from Abuja to Kaduna; a 65-kilometer pipeline from Kaduna to Zaria; and a 238-kilometer pipeline from Zaria to Kano.

The gas line will provide gas to cement firms, compressed natural gas users, power generation plants, and other industrial concerns, as well as residential customers, within the northern half of the country. Nigeria plans to build three new gas-fired power plants, to be located in Abuja, Kaduna and Kano, which would use gas provided by the pipeline to generate 3,600 MW of power.[6] The (AKK) Pipeline Project is estimated to cost about US$2.8 billion dollars. The Nigerian National Petroleum Corporation and the Federal Government are expected to meet financial gaps and guarantee the return on net investment.[1]

In January 2020, the Nigerian government announced a sovereign debt guarantee for US$2.5 billion in financing for the pipeline's construction, and NNPC stated that it planned to have the funding secured from Chinese lenders by Q2 2020. The pipeline would be built using a build-and-transfer public-private partnership model. At the time, NNPC stated that construction would begin in March.[6][7]

In July 2020, the construction of the pipeline project was officially launched.[2] At the same time, details emerged about the financing of the overall pipeline project. China Export & Credit Insurance Corporation (Sinosure) is providing insurance cover for 85 percent of the total cost, estimated at US$2.89 billion. Nigeria is borrowing US$2.6 billion over 12 years from the Bank of China at Libor (London interbank offered rate) plus 3.75 per cent. The remaining US$434 million will come as equity from the Nigerian Gas Company, a subsidiary of NNPC.[5]

It was reported in July 2021 that the financing for the pipeline had become complicated due to Bank of China's unwillingness to start disbursing the funding which it had pledged in 2020. A spokesman for NNPC said it was still negotiating with Bank of China and Sinosure to cover US$1.8 billion of the project cost. There was also speculation that the company was turning to other potential funders, including export credit agencies.[8]

Articles and resources

References

  1. 1.0 1.1 1.2 1.3 Ajaokuta – Kaduna – Kano Pipeline Project Oil and Gas Nigeria, accessed Sep. 6, 2021.
  2. 2.0 2.1 2.2 Nigeria starts building the Ajaokuta-Kaduna-Kano gas pipeline, EnerData, Jul. 1, 2020, accessed Sep. 6, 2021.
  3. AKK natural gas pipeline project, Hydrocarbons Technology, accessed Sep. 6, 2021.
  4. NNPC boosts 1300-km pipeline project for gas delivery to Europe, Nigeria Infrastructure Concession Regulatory Commission, May 5, 2021, accessed Sep. 6, 2021.
  5. 5.0 5.1 5.2 5.3 Jevans Nyabiage, Work begins on Nigeria’s China-funded US$2.8 billion gas pipeline, South China Morning Post, Jul. 2, 2020, accessed Sep. 6, 2021.
  6. 6.0 6.1 Ruth Olurounbi, Nigeria secures $2.5bn gas pipeline finance, Petroleum Economist, 24 Jan. 2020.
  7. Terhemba Daka & Saxone Akhaine, ‘Work on Ajaokuta-Kaduna-Kano gas pipeline to begin soon with 15% equity funding’, Nigeria Guardian, 9 Mar. 2020
  8. Libby George, Nigeria seeks $1 bln for key gas pipeline as it awaits Chinese lending, Reuters, Jul. 16, 2020.

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