Seismic Data Gathering for Dangote’s Nigeria Pipeline Begins
Seismic data gathering work has begun on the ambitious multi billion dollar gas pipeline network being promoted by Africa’s richest man, Aliko Dangote and which is set to quadruple the supply of gas in Nigeria reported by Business Day Online.
The International Finance Corporation (IFC) a member of the World Bank group, has shown keen interest in the project and preliminary meetings were held by the parties at the weekend, Dangote told BusinessDay in an interview in Lagos.
The project has received initial backing from Carlyle Group LP and Blackstone Group LP, the world’s two biggest private equity firms and the billionaire says he will be investing between $2.2bn and $2.5bn of his own funds in the gas project.
Dangote, who has a net worth of $15 billion according to the Bloomberg Billionaires Index, said the pipeline will be capable of carrying about three billion standard cubic feet, scf of gas daily, in a country where economic growth has long been held down by the inability to send gas to its thermal power stations.
“We are making steady progress on the pipeline project and foresee no major hitches,” the billionaire told our reporter in the commercial capital.
While Nigeria has gas reserves of about 180 trillion cubic feet, more than any other African country, most of what’s produced is flared or exported because of a lack of infrastructure to transport it to local companies and households.
Boosting domestic supply will help increase electricity generation in a country where power cuts are common and about 70 percent of electricity plants are fueled by gas, Dangote had said in an April 28 interview with Bloomberg.
“Having an additional three billion scf will sort out all the gas issues we have today in Nigeria,” he said in the lounge of his house in the Victoria Island district of Lagos, overlooking a half moon-shaped swimming pool. “It’s badly needed.”
Dangote, who has interests ranging from cement to sugar and oil refineries, plans to start laying the pipelines before the end of the year, he said. The first one should be ready by mid-2017.
Blackstone and Carlyle said in August they would partner with Dangote Industries Ltd., the holding company for the billionaire’s operations, to invest in sub-Saharan Africa. Blackstone said its Johannesburg-based partner, Black Rhino, would jointly invest as much as $5 billion with the company on energy and other infrastructure in the region.
The pipelines could be used by oil producers in Nigeria that currently have little incentive to sell gas from their fields in the country, including Royal Dutch Shell Plc. and Exxon Mobil Corp., Dangote said.
“If today they process that gas, there’s no infrastructure to remove it, there’s no pipeline,” he said. “We’re trying to build that infrastructure.”
Nigeria’s economy, which gets 90 percent of export earnings and two-thirds of government revenue from oil, has been hit by the 40 percent fall in Brent crude prices since last year.