Belt & Road

Belt and Road 2018: Nigeria gas pipeline

FinanceAsia examines what China’s Belt and Road initiative has actually brought to the world last year. This is the eighth of our 10-part series.

China’s trillion-dollar Belt and Road Initiative is hailed as the “project of the century” as the world’s second-largest economy looks to take the lead role in globalisation historically held by the West.

Much has been discussed about the political, economic and cultural impact that the initiative could have globally since it was introduced in 2013. However, there has been little attention paid to the infrastructure projects in the making.

FinanceAsia will publish a series about the 10 biggest Belt and Road infrastructure deals that have been signed in the 2018 calendar year, and examines which companies are spearheading and likely benefitting from these projects.

The series follows a similar feature in 2017 where we examined BRI projects that started that year. Click here to revisit the feature.

These projects will be published in descending order based on their estimated project value. We will only include infrastructure deals of more than $1 billion.

        8. Kaduna-Kano Gas Pipeline Project, Nigeria

Companies involved: China National Petroleum Corporation (70%), Brentex Petroleum (30%)

Status: Contracts signed in July 2018

Estimated project value: $1.6 billion

China’s participation in building and financing a major gas pipeline across Nigeria will be a major step towards the country’s full utilization of its huge natural gas reserves.

With proven gas resources of 202 trillion cubic feet, Nigeria is currently Africa’s largest holder of gas reserves. On a global scale, the country’s gas reserves are larger than bigger countries such as China, Canada and Australia.

In fact, Nigerian officials claim that the country has potentially the world’s third-largest gas reserves because its unproven gas reserves are estimated to be around 600 trillion cubic feet – three times the size of its current gas base.

However, the country’s gas utilisation rate remains low mainly because it lacks an efficient transmission network across the country. As a combined result of high extraction and low production, Nigeria is one of the world’s top nations of gas flaring, referring to the process of burning unwanted or excess gases that creates significant greenhouse gas emissions.

The Ajaokuta-Kaduna-Kano pipeline is arguably Nigeria’s biggest infrastructure project in the gas sector thus far. The 614-kilometre long natural gas pipeline will connect the northern and southern regions and form the backbone of a nationwide gas network known as Trans-Nigeria Gas Pipeline.

The 70/30 joint venture between China Petroleum Engineering Corporation (CPEC) and Nigeria’s Brentex Petroleum won the contract to build the section between Kaduna and Kano for $1.6 billion. CPEC is a Shanghai-listed subsidiary of state-owned China National Petroleum Corporation, the country’s largest energy company.

The project will involve the construction of a 310-kilometre pipeline, two clearing houses and two measuring facilities, as well as 10 valve stations.

A consortium of Chinese financial institutions have offered to provide the bulk of the project’s financing. They include Industrial and Commercial Bank of China, Bank of China and China Export and Credit Insurance Corporation.

CPEC said construction will begin once the financing terms have been agreed.

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