Energy Expert Urges Cancellation of Africa-Atlantic Gas Pipeline Commitment
Dan Kunle, a prominent energy expert, has formally urged President Bola Tinubu to reconsider Nigeria’s involvement in the proposed $27 billion Africa-Atlantic Gas Pipeline. Kunle asserts that the project currently lacks adequate commercial justification and could turn into an expensive national asset with minimal economic return.
Focus on Domestic Gas Utilization
In a letter addressed to the President on July 23, marking his third correspondence in just under three weeks, Kunle emphasized the importance of prioritizing domestic gas consumption over ambitious regional export initiatives. He argues that until critical issues surrounding supply, financing, and market demand are adequately resolved, commitment to such large-scale projects is misguided.
ECOWAS Approval and Ongoing Concerns
This plea comes in the wake of unanimous support from Economic Community of West African States (ECOWAS) member states for the Africa-Atlantic Gas Pipeline, following the signing of an Intergovernmental Agreement (IGA) on July 19 in Lungi, Sierra Leone. Kunle expressed skepticism about the project’s viability, dubbing it another potential “memorandum of misunderstanding” and spotlighting the disconnection between political aspirations and economic realities.
Financial Considerations and Feasibility Issues
“The project is currently estimated to cost around $27 billion,” Kunle noted. While recent political agreements signify progress, he stressed the necessity of establishing a project company, securing an investor, and making a final investment decision before the project can transition into a commercially viable endeavor.
Gas Supply Challenges and Energy Insecurity
Kunle raised alarms regarding the source of the gas for the pipeline. Despite Nigeria’s impressive reserves of over 200 trillion cubic feet, he highlighted that untapped resources do not equate to processed commercial gas. The country continues to grapple with energy insecurity, struggling to supply power while prioritizing long-distance export infrastructure.
Complex Geopolitical Landscape
The expert did not shy away from citing the substantial financial, legal, and geopolitical challenges the project faces. Unlike the Trans-Saharan Gas Pipeline, which involves only three countries, the Africa-Atlantic Gas Pipeline seeks to traverse more than ten West African nations, each with unique regulatory, fiscal, and political circumstances. “A nearly 7,000-kilometer pipeline is only as robust as the weakest treaty or jurisdiction,” he cautioned, questioning how participating countries would finance such significant capital expenditures and who would bear the consequences of non-compliance.
Advocating for Industrialization
Kunle advocates for a strategic pivot, suggesting that Nigeria could drive greater economic value by converting gas into electricity and industrial products such as fertilizers, petrochemicals, and steel. He pointed out, “Nigeria has been exporting crude oil for decades while importing refined petroleum products. We must avoid the mistake of exporting gas as a raw material only to import products that could have been produced domestically.” He proposed that liquefied natural gas (LNG) presents a more adaptable and commercially viable solution, as cargo can be redirected based on market demand.
Recommendations for Policy Adjustment
In his communication, Kunle recommended that President Tinubu instruct the Presidential Petroleum Reform and Value Optimization Task Force, led by Mr. Fola Adeola, to perform an independent commercial, financial, and strategic analysis of the pipeline project. He cautioned that pipeline projects should only advance if they are privately funded, supported by enforceable commercial agreements, and provide clear benefits to Nigeria in comparison to other potential investments. “A comprehensive national gas plan should be published,” he urged, outlining how Nigeria will meet its power and industrial obligations in the decades to come. He concluded by stating that only gas that is genuinely surplus, developed, and commercially available should be considered for long-term export agreements.
