China builds 1,980 km oil pipeline between Niger and the Republic of Benin


Nigeria may have lost a multibillion-dollar pipeline contract following a Chinese investor’s decision to move the project to the neighboring Republic of Niger after it first attempted to locate it in the most populous country in Africa.

The China National Petroleum Corporation (CNPC), now known as China Petroleum Pipeline Engineering Co. Ltd. (CPP), has started construction work on a 1,980 km diameter 20-inch pipeline that will transport crude from the Agadem Rift Basin. (ARB) in the Republic of Niger at the Atlantic oil terminal of the Republic of Benin in the port of Sèmè-Kraké.

Construction of the pipeline which the partners said had been delayed for months by the coronavirus pandemic is expected to increase Niger’s oil production from the current 20,000 barrels per day to 120,000 barrels per day after the completion of the pipeline in 2024.

Known as the Niger-Benin Export Pipeline (NBEP), the $ 7 billion pipeline, which was launched by the governments of Niger and Benin last month, will run from Agadem in Niger to the Republic of Benin.

There are strong indications that Nigeria has lost the huge economic gains that would have been earned by the country and its many citizens from the multibillion dollar crude oil pipeline with the government of the Republic of Niger and the Chinese government.

LEADERSHIP Sunday’s findings revealed that the crude oil export pipeline project, which is now slated to extend from the Republic of Niger to Port Seme on the Atlantic coast in Benin, was originally planned with the Nigerian government .

Sources close to the transaction revealed that the China National Petroleum Corporation (CNPC) now known as China Petroleum Pipeline Engineering Co., Ltd. (CPP) has been trying since 2006 to build an oil pipeline connecting Niger’s oil fields to the coast.

Sources say the outcry from some Nigerians over the pipeline project may have led the Nigerian government to deny the deal with China.

The pipeline would allow the transport of all proven reserves of crude to Niger for export in order to earn foreign exchange for the Nigerien government and developers.

LEADERSHIP Sunday recalled that the CNPC had offered in 2006 102 million dollars at auctions organized by the Bureau of Public Enterprises (BPE) to privatize the Kaduna refinery, but Nigeria declined.

The source revealed that CNCP planned to buy the Kaduna refinery, rehabilitate it and then build an oil pipeline for the Republic of Niger to supply crude oil to be refined at the refinery.

After the failure of securing the plan with Nigeria, CNCP reportedly moved on to planning the Niger-Chad pipeline, which would have linked Chad to the Chad-Cameroon pipeline, but this plan was abandoned, apparently in due to a ‘bad experience with the Chadian authorities.

The official explanation given for the cancellation of the project was concerns over the Boko Haram attacks in the Lake Chad region.

After this plan began to crumble, CNPC pursued an alternative plan to bring a pipeline to the coast through Benin.

In January 2019, the Minister of Petroleum Resources of the Republic of Niger and the Minister of Water and Mines of Benin signed a bilateral agreement for the construction of the pipeline, and later in August, the CNPC signed a contract with the government of Benin for the construction and operation of the Niger-Benin pipeline. pipeline.

The 1,982 km, $ 7 billion pipeline would start from the Agadem oil field in Niger, connect to the refinery built by CNPC in Zinder, Niger, and terminate at the port of Seme Terminal in Benin, allowing CNPC to export oil from Niger.

In September 2019, CNPC signed a transport agreement with the two governments and began construction, with Nigerien President Mahamadou Issoufou laying the foundation stone and giving the project full approval.

In February 2020, CNPC suspended all construction work due to the COVID-19 pandemic. With the coronavirus affliction raging in China, CNPC was unable to transfer employees from China and was concerned about the disease spreading among construction workers.

In October 2020, it was reported that CNPC had started the detailed design of the gas pipeline and that a consortium of companies related to CNPC had completed the engineering of the onshore section of the project, including 675 kilometers that will cross Benin and 1 275 kilometers through Niger.

Experts believe that Nigeria would have benefited enormously from the transaction had it been completed in the country, in terms of easier access to the high-end motor spirit for use in the country, as well as huge employment opportunities for the teeming youth of the country. All these profits will now go to the Republic of Benin

In his reaction, Adigun Ademola, oil policy analyst at the Facility for Transparency and Oil Sector Reform (FOSTER), said it was a huge loss for the country which has a huge oil deficit. infrastructure in the oil and gas industry.

Ademola said, however, that Nigeria may have rejected the deal due to unfavorable contract terms; nonetheless, the project would have provided an excellent opportunity to optimize industry operations and opportunities.

Another respondent who would not want to be named said the government could cautiously disengage from huge financial debt to China.

The source curiously linked Nigeria’s rejection of the deal to the ongoing delay by Chinese lenders in releasing essential funds for the completion of the Ajaokuta-Kaduna-Kano pipeline.

It has been learned that the federal government is seeking a loan of $ 1 billion so that work can continue on the gas pipeline which will cost up to $ 2.8 billion after Chinese lenders, who had pledged to offer the most of the funds, did not disburse money so quickly. as expected.

It is the latest sign of declining Chinese financial support for infrastructure projects across Africa, after years of large Chinese loans for rail, energy and other projects.

A spokesperson for the Nigerian National Petroleum Corporation (NNPC), which is building the 614 km (384 mile) Ajaokuta-Kaduna-Kano (AKK) pipeline, said it was still negotiating with Chinese lenders – Bank of China and Sinosure – to cover $ 1.8 billion of the cost of the project.

“There is no reason to be alarmed,” the spokesperson said, without saying whether the NNPC was looking to other lenders.

But all three sources told Reuters the company is now approaching others, including import-export institutions, to continue work on the pipeline that will run through the center of the country to its northern economic hub, Kano. .

Chinese lenders were originally lined up to finance most of the estimated $ 2.5-2.8 billion cost of the project, which is at the heart of President Muhammadu Buhari’s plan to expand gas resources and boost development in the northern Nigeria.

The NNPC, which was funding 15%, said last year it had used its own funds to start construction. The sources said Chinese lenders would not agree to disburse the cash expected by NNPC by the end of the summer, prompting it to turn to other sources.

“They see Nigeria as one loan, and right now they feel overly exposed,” a source said.

The Bank of China has said it will not comment on specific agreements. Sinosure did not respond to a request for comment.

Nigeria’s Ministries of Transport, Finance and Petroleum also did not respond to requests for comment.

Chinese bank loans to African infrastructure projects have plummeted across the continent, from $ 11 billion in 2017 to $ 3.3 billion in 2020, according to a report by Baker McKenzie in April.

With the continent facing an infrastructure deficit estimated at $ 100 billion per year, the loss of Chinese funding leaves a great void to fill.

Nigeria started building the AKK gas pipeline in June 2020, saying it will help generate 3.6 gigawatts of electricity and support gas industries along the route. The project was to be financed through a debt financing model, backed by a sovereign guarantee and repaid through the pipeline transport tariff.

NNPC awarded engineering and construction work along three sections of the pipeline to Oando, OilServe, China First Highway Engineering Company, Brentex Petroleum Services and China Petroleum Pipeline Bureau.

Transport Minister Rotimi Amaechi said earlier this month that Nigeria was negotiating a mix of loans from Chinese and European lenders to fund rail projects, after media said it had initially planned to mainly rely on Chinese banks.

Former President of the National Association of Master Seamen (NAMM), Ade Olopoenia, said Nigeria was supposed to be a port of destination for landlocked countries like Chad and the Republic of Niger, but the inefficiency of our share cost us this status.

Olopoenia, in conversation with LEADERSHIP on Sunday, said there could be an agreement between Nigeria and the Republic of Niger, but that there will be a clause that will help end the pact if certain conditions are not met. not met.

He said: “It is because of what is happening in Nigerian ports that has caused the Republic of Benin to receive Nigerian cargoes due to its efficiency and lower tariff plans. They will prefer to spend less and profit more in the Republic of Benin than to come to the Nigerian port to export crude and pay more. “

He also said that as Nigerian pipelines are not immune to vandalism, the Republic of Niger may be skeptical about using our port for export.

“Nigerian pipelines are not immune to vandalism. Products are vandalized and this causes the pipes to malfunction. It may be another fear. Due to the insecurity, they may be afraid to invest heavily in Nigeria. So they needed a safe place to export their crude and if they can’t find it in Nigeria, they will look for another option, ”he said.


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