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Therefore, EU’s market demand will surely be secured and guaranteed as long as other compelling factors are seriously addressed. These factors in a nutshell, include the following: the geopolitical and security developments in the two regions (i.e. West and North Africa respectively) and the type of transit and other commercial contractual agreements, legal obligations, institutional and regulatory arrangements put in place by the parties involved.
These overriding factors are so important from the point of what The Economist Magazine recently (i.e. January 10th -16th edition, pages 12 and 33-34) dubbed ‘Gas wars,’ which have been happening annually since 2006 between Russia and Ukraine, for example, regarding shipment of gas through international pipeline grid from the Russian federation to Europe via Ukraine, which serves both as a consumer (i.e. off-taker) as well as a transit country for the European gas supplies. This Russia – Ukraine example of events of the past few years and of recent weeks show what can possibly go wrong with international oil and gas pipeline systems.
Therefore, the TSGP promoters, owners, managers and gas-producing countries (i.e. Nigeria and Algeria), the transit country (i.e. Republic of Niger) and consuming EU nations must brace up for the daunting tasks of how to deal with some of the already known knotty issues. Such issues as a) gas pricing, b) transit fees or tariffs/charges, c) handling of commercial dispute regarding transit fees or tariff/charges (i.e. the usual ‘Obsolescing bargaining’ problematic) and or environmental despoliation and compensation issues d) handling of physical security and integrity of the pipeline network and the gas product therein. The last but by no means the least, e) how to deal with the regional and wider international geopolitics of energy in general and oil and gas pipeline politics in particular.
Nigeria, as the originating country from where the gas will be piped into the TSGP network is relatively familiar with some of these knotty issues. For example, it has just (i.e. 2008) successfully completed the West African Gas Pipeline (WAGP) to Benin, Togo and Ghana.
Although some of the problem areas enumerated above have not started showing up yet with the WAGP, the other issues of physical security and integrity concerns of oil and gas pipelines are areas that Nigeria has been battling without success for a while. For example, vandalism; illegal damaging of pipelines, tampering, and stealing (i.e. oil bunkering) of oil from Nigeria’s internal oil pipeline networks in the troubled Niger Delta oil and gas rich-region is continuing and without any sense of slowing down.
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In financial and economic terms, it has been estimated that Nigeria lost over $50bn from 1999 to 2008 from such nefarious activities. This is the region from where the TSGP will start its long 4, 300km tedious and probably, dangerous journey to Algeria and onward to European consumers. Therefore, these concerns need to be addressed squarely and urgently.
Similarly, for instance, in the Russian – Ukraine gas pipeline annual dispute or squabble, apart from the yet to be resolved issues of gas pricing and political arms-twisting of Ukraine by the Russian leadership, Russia has also accused Ukraine of stealing or ‘pinching’ its gas destined for the EU as well. The promoters of the TSGP therefore have a lot to learn from the existing Russia-Ukraine international gas pipeline legal, commercial contractual agreements and institutional arrangements, and geopolitical relations and the perennial gas dispute between the two former Soviet Union nation states.
Interestingly however, Russia and its own gas giant, Gazprom have expressed great interests in the TSGP initiative. This has begun to generate jitters in EU and as such, the EU has woken up from its initial lackadaisical interest in the TSGP and has equally made some mouth-watering offers to the TSGP promoters. For instance, as the EU is looking for ways of reducing its over-exposure and vulnerability to Russia for its gas needs, which amounts to over a quarter of its consumption, the TSGP provides an alternative gateway. Hence, EU will not allow itself to be outplayed by the Russians in the TSGP geopolitics and strategic alliance or game.
In the same vein, Nigeria must put its own house in order (i.e. the Niger Delta conundrum) if and only if the pipedream can be turned into a dream pipeline of the century. Therefore, Nigeria’s commitment to the TSGP must transcend a mere budgetary appropriation for the initiative, but looking ahead of having a lasting solution to the Niger delta belligerency. Nigeria stands to benefit a lot from the TSGP if and only if it plays its role properly and appropriately. Yes, Nigeria and its partners in this initiative can transform the TSGP project from a mere 20 year-old pipedream to a reality dream pipeline of the century by 2015.
