Politics of the trans-Saharan gas project

Dec 22, 2009 01:00 AM

by Idowu Oyebanjo

The trans-Sahara Gas Pipeline Project aims to carry gas from Nigeria through Niger and Algeria to Europe. While it is commendable to earn foreign exchange from the hitherto wasted and flared gas produced for many years from the Nigerian oil fields, we cannot underestimate what can happen when pipelines cross borders between states and nations in view of the economic cum socio-political diversities of the different parties.
In view of the fact that much of the investment for the construction of a typical pipeline is made before the commissioning of the installation, one expects that long term fuel delivery contracts and a myriad of agreements to ensure smooth take off of design and operation would have been put in place.

The owners and operators of the pipeline systems are thus expected to have contracts and some sorts of common legal frameworks to govern the obviously large but intended routine business transactions so that in the event of a disagreement, some tractable recourse to law or arbitration will therefore be available.
What does history tell us about problems that may arise from pipeline crossing borders?

For a pipeline to cross parts of another country, it may suffice to give thoughts to the transit fee chargeable by the host country in addition to the fact that the host country in some cases will propose to "lift" some of the fuel crossing its territory at some preferential rate. To this end, when pipelines cross borders as in this case, it may well have a potential to become part of the fabric of regional or even international conflicts of significant proportions.
No doubt, much depends on the relationship between the parties involved. However, when political passions are inflamed or geopolitical calculations take precedence, existing agreements may soon become no more than a constantly shifting reality. Hence, the political climate between parties becomes an important factor. For example, in the Middle East, none of the great trans-national pipelinesconstructed in the last century is functioning today.

The Trans-Arabian pipeline code named "Tapline" was constructed to run from the Arabian oil fields, through Jordan and Syria en-route the Mediterranean coast. It was meant to be a shorter and cheaper route compared to the tankers used then along the Arabian Peninsula. By 1975, the endless increase in transit fees by Syria soon marred the economic viability and therefore the continuous operation of the pipeline system.
A similar pipeline network constructed by Iraq Petroleum Company (IPC) from the Iraqi oil fields to the Mediterranean coast enjoyed similar fate from Syria. Needless to say, the operations of the Iraq Petroleum Company pipelines and the Trans-Arabian pipelines were repeatedly disrupted by the Syrians, who stood to benefit from the squabbles by many hundreds of millions of dollars through combined packages of "off take" rights, preferential tariffs and transit fees.

In reaction, Saddam Hussein, the then Iraqi leader, built alternative, longer and more expensive networks of pipelines through Turkey and Saudi Arabia to the international market. This gave Syria an unfortunate reputation of a mere transit state that could easily be avoided with the attendant political tension that came with it.
But in 1990, Saudi Arabia confiscated Iraqi pipeline network through its territory following the invasion of Kuwait by Iraq while the Kirkuk-Ceyhan pipeline on the Turkish Mediterranean coast currently operates at an extremely reduced capacity following the damage by US bombing during the invasion of Iraq in 2003.

Careful consideration must also be given to the possibility of the dissolution of the member states of a nation along ethnic or political lines or cessation of a part thereof. In the case of the former Soviet Union, early after world war two, Soviet engineers constructed the largest integrated pipeline system in existence.
This network supplied crude oil to all the Soviet Republics as well as providing about 100 mm tons of crude supplies to Europe. In building this system however, little regard was paid to the internal rancour between the individual Soviet Republics. After the dissolution of the Soviet Union, each of the new republics laid claim to the pipelines passing through its territory.

As a result, international boundaries were erected in the paths of these oil and gas pipelines many years after the systems had been completed. This has led to the unsavoury outcome that Russia's gas and oil export to the west now cross into the territories of Ukraine and Belarus.
This new configuration has led to endless squabbles over transit fees, fuel prices, interference in energy transmission and politically motivated blackmails. The recent Russia-Ukraine confrontation is a fall out of this, leading to an interruption of Europe-bound supplies for about three weeks in the middle of winter.

In the operation of a trans-national gas pipeline of this nature, careful thoughts need to be given to the aspirations of locals from whose land gas is being exploited. Experience has shown that where multinational oil and gas companies from the west operate carelessly and pollute their environment, poor locals, who mostly benefit a little of what they think is owed to them from the central government in their country, resort to blowing of pipelines and vandalising structures to express their aggression.
Hence, not all pipeline problems arise from inter-state rivalries. For example, in the north-eastern state of Assam in India, separatist forces regularly blow up regional oil pipelines.

Also, in neighbouring Pakistan, Balochistans show their displeasure at government policies by regularly blowing up gas pipelines. The guerrilla-style attacks on oil and gas installations in the Niger-delta region in Nigeria is a further testimony to what can result if locals from the region where oil and gas resources are being tapped suffer neglect or have little to show for the oil and gas wealth leaving their damaged environment and source of livelihood.
Mostly, such locals worldwide have argued that the central government was giving too little to the region in return for exploiting their gas and mineral resources. By disrupting pipeline operations, insurgents have been able to deprive the central government of large amount of income that could be used to development other sectors of the economy.

It is imperative to state that international politics must also be considered, especially in cases where post-colonial tendencies still hold some of influences over their former colonies. Also, powerful nations may influence decisions of parties to the trans-national pipeline network.
A case of the political tension between Iran and the USA is very instructive. Iran, a country with the second largest proven gas reserves after Russia wishes to sell gas to the South Asian subcontinent. While the construction of the Iran-Pakistan-India gas pipeline is economically attractive, overcoming the diplomatic resistance of the USA has proved daunting. India has therefore exploited the rancour to derive enormous benefits in delaying the project, as the USA is offering nuclear fuels as an alternative source of energy to lure India away from it.

Needless to say, in retaliation to what is perceived to be the over domineering of the west, terrorist groups may capitalise on the fact that most borders in the developing nations are not properly monitored to unleash attacks that will prevent gas fuel reaching the intended regions in the west.
Given these facts, the Nigerian government should put into consideration the crucial role the several hurdles involved in transporting fuel across regional and national boundaries. Some pipelines can be entangled in geo-political intrigues and machinations. These unwholesome possibilities and measures to mitigate their impact must be given due consideration during the early life of the project.

Idowu Oyebanjo writes from the United Kingdom at oyebanjoidowu@yahoo.com

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