The planned Nigeria-to-Morocco natural gas pipeline (NMGP) faces a myriad of challenges and is “unlikely to materialize in the short or medium-term,” Kallanish Energy learns from analysts at Fitch Solutions Macro Research.
The 5,660-kilometer (3,516-mile) combined onshore and offshore pipeline would cross 13 countries along the West African coast, delivering Nigerian gas to Morocco. Following an agreement in December 2016, the two countries launched early this month Phase 1 of a front end engineering and design (FEED) study.
British firm Penspen is carrying out the study, aimed at evaluating gas demand and supply mechanisms, as well as negotiation prospects with the countries through which the pipeline would pass. Current timeframes indicate pipeline construction is slated to be phased over 25 years, based on increasing needs of the countries crossed and Europe, Fitch said.
The NMGP would boost Nigeria’s gas export potential to European markets and help the country to reduce flaring, as well as allow the acceleration of electrification projects (gas-to-power) across West Africa.
But the analysts warned the estimated $20 billion project is bound to face “considerable commercial, technical, legal and financial challenges.”
In a new report, the issues pointed out include demand growth might be too modest and gas supply too uncertain for the pipeline to be viable, as a new liquefied natural gas (LNG) terminal is under development in Morocco, and Nigeria’s gas production doesn’t seem to be sufficient to feed such a large pipeline.
Other points include risks related to security, as the line would pass through several unstable countries; struggles in project financing and potential cost overruns; and political considerations given a Nigeria’s new president could see a shift in political capital for the project.
