China National Petroleum Corp. (CNPC) signed a transportation convention with Niger on September 15.
This follows a construction and operation agreement that was signed with Benin on August 5. Savannah Petroleum reported the Niger deal today. Surface infrastructure works will be officially launched on September 17, under Nigerien President Mahamadou Issoufou.
The plan is for a pipeline to run from the Agadem Rift Basin to Port Seme, on the coast of Benin. This would require a link of around 2,000 km, which it said would be CNPC’s largest ever cross-border oil pipeline investment. Of this, 687 km would be in Benin. The pipe is expected to be completed by the end of 2021 and should allow throughput of around 90,000 barrels per day.
The transportation convention was signed by Nigerien Minister of Petroleum Foumakoye Gado and the head of CNPC Exploration and Development Co. (CNODC) Wang Zhong Cai.
Gado was quoted in local reports as saying the agreement would cover the partnership between Niger and CNPC on the construction and operation of the pipeline. Negotiations had been going on for months.
An amendment was signed in June 2018 on CNPC’s production-sharing agreement (PSA) in the Agadem Basin. In addition to plans to increase production, this also provided the Chinese company with more certainty on its infrastructure investments.
Savannah is entitled to access under its licences and the Niger petroleum code. “The Niger-Benin Export Pipeline is expected to transform Niger into a major regional oil producer and deliver a material increase in the country’s economic growth rate,” said Savannah’s CEO Andrew Knott. “From a Savannah perspective, it provides our company with a significant additional potential route to market, alongside the existing Zinder refinery, for our existing and future discoveries in Niger.”
CNPC began working in Niger in 2003. Construction on an upstream development, a 463 km pipeline and the 20,000 barrel per day Zinder refinery began in 2009. The refinery came online in 2011.
The relationship between Niger and CNPC has not always been smooth. A pricing dispute in 2015 led to the Zinder refinery shutting down for 45 days. The facility is 60% owned by CNPC and 40% by Niger. The price CNPC was demanding for its locally produced supplies for the refinery was criticised by Niger for being too high.
The Niger government has been largely accommodating of the Chinese company, though. In June, it redrew the borders of the Termit and Tin-Toumma nature reserves in order to avoid clashing with CNPC’s Agadem, Tenere and Bilma blocks.