On the right track: in the Sahara
Khelil names Trans-Sahara date
A deal which will see work start on the Trans-Sahara pipeline - a link which will carry Nigerian gas across the Sahara desert to Algeria - will be signed next week in Abuja, Algerian Energy & Mines Minister Chakib Khelil said.
The European Union has said the Trans-Sahara project could help diversify its energy sources but the project has been stuck on the drawing board for years.
"I'm going to Abuja next week to sign the agreement. This is a final agreement for how we are going to proceed," Reuters quoted Khelil telling reporters at a gas summit in Qatar, without giving further details.
"We are not going to have problems with financing, it's not a technically difficult project. We hope in a couple of years (to start work)," he said, adding the 4128 kilometre pipeline across West Africa could be completed by 2015.
France's Total and Anglo-Dutch supermajor Shell are among the international players to have expressed interest in the project aimed at diversifying Europe's gas supplies away from Russia, which currently supplies a quarter of the European Union's total demand.
But last week Russian gas monopoly Gazprom and Nigeria's state-run oil company Nigeria National Petroleum Corporation agreed to invest at least $2.5 billion to explore and develop Africa's biggest oil and gas sector, including building the first part of the Trans-Sahara pipeline.
Some analysts see Russia's keen interest in the West African country as an attempt to keep its grip on Europe's natural gas supplies.
The whole Trans-Saharan project is estimated to cost around $10 billion for the pipeline and $3 billion for gathering centres, which industry observers say could be off-putting for investors at a time of uncertain demand.
"In the medium term it is hard to see a project of that size and scale getting off the ground," Ian Cronshaw, head of energy diversification at the International Energy Agency, told Reuters.
"In the current circumstances, with companies' constrained balance sheets, difficult financing ... Everywhere the big difficulty is getting large scale pipelines off the ground. Demand is very uncertain... Beyond 2015 it could happen."
Nigeria has estimated natural gas reserves of 2.22 trillion cubic metres, but has had to rely on relatively expensive liquefied natural gas production and export by tanker.
It is the world's fifth-biggest LNG player, with annual exports of 20.5 billion cubic metres in 2008, but the new pipeline could more than double the country's export sales, sending up to 30 Bcm a year to Europe.
Despite Nigeria's vast gas reserves it has been unable to develop its gas industry anywhere near full potential because of a lack of funds and regulation, while foreign investors in the country suffer attacks on their energy facilities.