INTERNATIONAL GAS UNION

WOC 10

GAS MARKET DEVELOPMENT IN

TRANSITION COUNTRIES
Nigeria’s Pipelines Vs LNG
Competition or Cooperation

Mourad Belguedj
The World Bank
TOKYO
June 6, 2003
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 General Principles

• Do pipelines compete with LNG or are they

complementary to LNG
• LNG extends pipeline’s reach, delivering gas
where they still cannot
• Developing countries are committed to export gas
by pipelines and LNG
• Nigeria is a unique SSA LNG and gas exporter to
remote markets and soon to neighboring countries
• This is the case we intend to study here
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 Policy Framework

• Nigeria’s target of eliminating gas flaring by 2008

has attracted a broad range of private investment
proposals in LNG and Natural Gas pipelines
• National, regional, and international markets have
shown interest in Nigeria’s gas export options
• For instance, gas and LNG have been competing
for the Ghana power and industrial market

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 Nigeria Gas Option

• Nigeria’s gas is yet to develop in a way commensurate

with its resource base
• Concerns over damage to health and environment as Niger
delta oil production could increase flaring
• Nigeria’s Gas pipeline infrastructure is non-existent,
domestic and regional gas markets are undeveloped
• Power trade is growing exponentially in Gulf of Guinea:
CI and Nigeria to Chad, Niger, Ghana, Benin
• Lack of financial resources and enabling environment
have hindered gas exports
• New Vision & Gas Strategy will forward development
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 Gas Is Nigeria’s Fastest Growing
Primary Energy Source

• Gas is Nigeria’s fastest growing energy source over the

next 30 years. Reserves stand at 150 Tcf and could last 108
years at current production rates
• Gas demand is expected to more than double its
consumption level to 42 BCM by the year 2020 with
export capacity reaching 60-70BCM/y in 2010 for LNG
• Two green field pipeline projects ( WAGP, NAGP) will
lead development with NLNG and new LNG projects
• Most of Nigeria’s growth is expected to occur in exports
directed to advanced and emerging regional markets

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 Onshore and Offshore LNG

• Although there are no precedents, floating LNG near

offshore gas fields could materialize during the present
decade, based on FPSO’s recent success in oil and gas fiels
( N’kossa, Girassol, in West Africa)
• Nigeria is expanding the existing 5 trains of NLNG from
Bony to 16.7 Mt/y in 2007
• Greenfield proposals which include 9Mt/y Chevron-
Texaco West Niger delta at Escravos, Statoil, ExxonMobil
5/6 Mty
• both floating LNG will add to 25Mt/y expected to develop
over the next 10–15 years
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 Combination of Pipelines and LNG

• Technology advances in gas transport improve gas

economics as new deep-sea pipeline technology is
also bringing to markets stranded gas.
• Progress in power market reforms are expanding
in greenfield power projects.
• Diversification of supply for buyers and of
markets for exporters, mean increased security for
buyers and sellers alike.
• The traditional divide of LNG Vs Gas Pipelines is
shifting towards complementarity.
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 Gas to Power
An Attractive Option

• Technology & efficiency of gas turbine favor gas as Capex,

Apext, & modularity make suitable to even the smallest
markets
• Peak shaving & base load LNG are viable everywhere
• CO2 emissions for gas are 80% lower than from coal,
making gas more health friendly, especially if this gas
originates from associated gas otherwise flared
• Gas helps LDCs develop industrial parks near gas fields,
extracting LPG, LNG projects, GTL, GTW Petrochemical
and Fertilizer Industries

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 Complementarity

• Decreasing cost, higher efficiency of new LNG plants and

Gas Carriers make LNG economical & affordable by the
smallest markets
• Trading Gas or LNG is another commodity exchanged
"over-the-counter" by energy service providers
• Forward trading in BTUs/electrons, is making swap deals
part and parcel of market flexibility
• The gas chain is now more flexible & complementary
• Gas-to-power convergence, technological advances in
higher efficiency turbines and CC technology is the option
for the future.
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 GAS, LNG, and Power

• The Power sector can play a leading role in securing

financing and getting projects off-the-ground, paving the
way for further economic development and access to
global products, including to Information Technology.
• An appropriate, clear Institutional and Regulatory
framework is the first step to attract FDI and ensure lasting
development
• Gas using technologies will ensure access to modern fuels
for the poor and would monetize stranded, undeveloped
gas or associated flared gas benefiting the environment
• Collaboration between Governments, Industry, and
Financial Institutions would ensure its success
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 Options for Nigeria

• Nigeria, a developing but now a well established

LNG producing and exporting country, will also
become a major regional and international pipeline
gas exporter,
• Cooperation rather than competition, will be the
trademark of international gas business in the
years to come and that both LNG and piped gas,
will be part of the energy mix of importing
countries and of exporter's options alike.
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International Pipeline Opportunities:
WAGP.NAGP

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Location of the Proposed
Major Export Projects

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 Nigeria to Algeria Pipeline in
Relation to other European Supply

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Locations of the Proposed Major
Pipeline Projects

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