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West African Gas
Pipeline (WAGP) Project
Energy Information
Administration, US Government
Introduction
In 1982, The Economic Community of West
African States (ECOWAS) as one of its key
regional economic policies, proposed the
development of a natural gas pipeline
throughout West Africa. ECOWAS's regional
energy distribution plan (1991) and a
feasibility study on the supplying of
Nigerian gas to Ghanaian markets (1992)
further ehanced the practicality and need of
developing a regional pipeline. A
feasibility report, prepared for the World
Bank in the early 1990's, deemed that a
pipeline to transport Nigerian natural gas
to Benin, Togo and Ghana was commercially
viable. The report's conclusion was based on
the U.S.-firm Chevron's associated gas
reserves in Nigeria's Escravos region. In
September 1995, the governments of the four
nations signed a Heads of Agreement (HOA)
pertaining to the pipeline project. The HOA
broadly outlined the principles of the
pipeline development.
An energy shortage experienced by Ghana,
Togo, and Benin in 1997-1998 renewed
interest in the pipeline project. In August
1998, a consortium of Chevron, Shell,
Nigerian National Petroleum Corporation (NNPC),
Ghana National Petroleum Corp. (GNPC),
Societe Beninoise de Gaz (SoBeGaz), and
Societe Togolaise de Gaz (SoToGaz) signed an
agreement commissioning a feasibility study
on the West Africa Gas Pipeline (WAGP). The
study, which was completed in March 1999,
concluded the commercial and technical
viability of the WAGP, and projected that it
could be operational as early as 2002. On
August 11, 1999, in Cotonou, Benin, a
Memorandum of Understanding was signed by
the four countries and the consortium
establishing the legal framework for the
WAGP. The Joint Venture Agreement naming
Chevron as the WAGP project manager was
signed on August 16, 1999 in Abuja, Nigeria.
In February 2000, the four nations signed an
Inter-Governmental Agreement (IGA) which
established the framework for realizing the
pipeline venture. The IGA includes the
governments commitments to the pipeline
owners and gas distributors on the
conditions for the development, construction
and operation of the WAGP, as well as fiscal
and customs policies for the venture. The
project has received administrative support
from the ECOWAS Secretariat and technical
assistance ($1.55 million) from the United
States Agency for International Development
(USAID).
In June 2002, A gas supply agreement for
Ghana's Takoradi power plant was signed. The
gas is expected to significantly reduce
boiler-fuel costs at Takoradi by
substituting gas for oil. In February 2003,
The four nations signed an agreement on the
implementation of the WAGP. The treaty,
which is for a 20-year period, provides for
a comprehensive legal, fiscal and regulatory
framework, as well as a single authority for
the implementation of the project. The WAGP
partners are ChevronTexaco with 36.7%, NNPC
with 25%, Shell with 18%, Ghana's Volta
River Authority (VRA) with 16.3% and SoBeGaz
and SoToGaz each with a 2% interest.
Project Details
The WAGP will traverse 620 miles (1,033
kilometers) both on and offshore from
Nigeria's Niger Delta region to its final
planned terminus in Ghana. The first portion
of the pipeline, which will deliver gas to
the greater Lagos area (Alagbado), is
already in existence. The Escravos-Lagos
pipeline (ELP) was commissioned in 1989,
supplying natural gas to Nigeria's Egbin
power plant and other industrial consumers
in Lagos and Ogun States. ELP has a capacity
to handle nearly 900 million cubic feet per
day (Mmcf/d) of natural gas, but currently
the majority of this capacity is not
utilized. A 34-mile (57- kilometer) onshore
portion of the WAGP will run from Alagbado
to Seme beach in Lagos State. The WAGP will
continue offshore, with proposed landfall
spurs at Cotonou (Benin), Lome (Togo), Tema
(Ghana), Takoradi (Ghana) and Effasu
(Ghana). The initial capacity of the WAGP
will be 200 Mmcf/d, with the capability to
expand to 600 Mmcf/d as demand grows.
The $500-million WAGP will initially
transport 120 Mmcf/d of gas to Ghana, Benin
and Togo begining in June 2005. Gas
deliveries are expected to increase to 150
Mmcf/d in 2007, to 210 MMcf/d in 7 years and
be at 400 Mmcf/d when the pipeline is
functioning at its capacity (approximately
15 years after construction). It is
estimated that $600 million will be spent on
the development of new and renovated power
facilities in the four states to utilize the
gas. It is also possible that the WAGP will
be extended to markets in Cote d'Ivoire.
Speculation has the WAGP eventually
terminating in Senegal, but the current
regional stability problems of several
countries (Cote d'Ivoire, Liberia, Sierra
Leone) that lie on the way to Senegal, will
hinder any further extension of the WAGP.
Project Benefits
A study, commissioned by Chevron, estimates
that 10,000 to 20,000 primary sector jobs
will be created in the region by WAGP. New
power supplies, fueled by gas from the
project, will stimulate the growth of new
industry. The industrial growth has the
potential to spawn an additional
30,000-60,000 secondary jobs. In addition to
the $1 billion in investment (WAGP and power
facilities) already projected, the study
sees approximately $800 million in new
industrial investment occurring in the
region.
The World Bank estimates that Benin, Togo
and Ghana can save nearly $500 million in
energy costs over a 20-year period as WAGP-supplied
gas is substituted for more expensive fuels
in power generation. Ghana estimates that it
will save between 15,000-20,000 barrels per
day of crude oil by taking gas from the WAGP
to run its power plants. Chevron has signed
a 20-year agreement to supply natural gas,
via the WAGP, to a 220-MW power plant
proposed in Tema, Ghana. Under terms of the
contract, the plant will receive 40 Mmcf/d
of natural gas.
Environmental Impact
The major positive environmental impact of
WAGP will be the development and use of gas
currently flared in Nigeria. Research by
ecologists suggests that routine flaring of
gas at Niger Delta facilities has stunted
plant growth and reduced crop yields in the
region. Cleaner-burning gas supplied by the
WAGP will replace petroleum products used in
the generation of electricity.
Several local environmental groups in Ghana,
Nigeria, and Togo oppose the WAGP project.
Friends of the Earth-Ghana argue that
environmental impact assessments of the
project were not given sufficient priority
in feasibility studies. Nigerian
environmentalists estimate that a total of
50,000 families in Nigeria, Ghana, Benin,
and Togo could be displaced as a result of
the WAGP projec
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