March 2020, Vol. 247, No. 3

Features

Pipelines Bringing ‘Stranded’ Nations into EU Energy Market

By Nicholas Newman, Contributing Editor

In a nutshell, supplies of North Sea gas to Europe are in terminal decline. This fact, combined with EU enlargement, underpins the current wave of long- and short-distance pipeline projects, designed to bring gas to Northern, Southern and Eastern Europe. 

The soon-to-be completed pipelines crossing the North Sea, the Baltic Sea and the Black Sea, as well as the Adriatic Sea, will diversify Europe’s gas supplies and bring “stranded” countries into the EU single energy market. 

In the north, to be completed in months, is NordStream 2, which crosses the Baltic Sea and makes landfall in Greifswald in northeastern Germany. About 759 miles (1,221 km) long, this pipeline could double direct Russian gas supplies to northern Germany, Denmark, Benelux and northern France. 

The pipeline, owned by Gazprom in partnership with European Uniped, Wintershall, Gazania and Engie, enables Russian gas to replace declining North Sea output and, from the Russian point of view, bypass their traditional access route via Ukraine. 

Also in the Baltic, Polish and Danish gas grid operators Gaz-System and Energinet have been given the green light to build the 528-mile (850-km) bidirectional Baltic gas pipeline at a cost of $1.88 billion, to be financed jointly by Poland and Denmark, together with a $243 million contribution from the European Commission. 

The pipeline, with an annual design capacity of 353 Bcf (10 Bcm), will give Denmark, Poland and Sweden direct access to North Sea gas fields and boost Poland’s goal to become eastern Europe’s gas hub. Construction is scheduled for the start of 2020 and completion is expected in 2022.

At the eastern end of the Baltic, the $277 million bidirectional subsea Baltic Connector, linking Finland’s gas network with the Baltic states, has just come online. In addition, once the Gas Interconnection Poland–Lithuania (GIPL), a bidirectional gas pipeline that links the Baltic states with Poland, becomes operational in December 2021, it will be possible for all the Baltic states, including Finland, to import gas from Poland.

In southeastern Europe, Bulgaria has begun building the $268 million bidirectional Greece-Bulgaria Gas Interconnector (ICGB), which will end the Balkan country’s total dependence on Russian gas and help diversify supplies in southeastern Europe. After years of delays, the 113-mile (182-km) link, with an initial annual capacity of 105 Bcf (2.97 Bcm), is now expected to ready by the end of 2020. It will carry mainly Azeri gas to Bulgaria via the soon-to-be completed Trans Adriatic Pipeline. Bulgaria Energy Holding (BEH) holds a 50% stake in ICGB, while Greece’s state energy firm (DEPA) and Italy’s Edison each hold 25%.

In the vicinity, the 710-Bcf (20-Bcm) per annum Trans Adriatic Pipeline project will be completed at the end of next year, bringing natural gas to Italy and onward to Adriatic countries, including Greece and Albania. Investors comprise international oil company BP (20%), State Oil Company of Azerbaijan Republic (20%), and gas infrastructure companies Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%).

From the start of 2020, the TurkStream Gazprom and Turkey’s Botas’s joint 680-mile (1,094-km) pipeline will bring 1.1 Tcf (31.5 Bcm) of natural gas from Russkaya compressor station near Anapa in Russia’s Krasnodar region, across the Black Sea to Kimiko on the Turkish Thrace coast, where it connects to other pipelines and onward to southeastern Europe. 

Europe

Under Construction: 1,511

Planned: 850 

Total: 2,361

 

Africa

Egypt and Cyprus have signed an agreement for the construction of a 192.6-mile (310-km) underwater pipeline, to boost the possible construction of a $1 billion pipeline from Cyprus’ Aphrodite gas field – estimated to contain around 4.5 Tcf (127 Bcm) of gas — onto Egyptian shores and then onward to the liquefied natural gas facility in Idku. 

In East Africa, the Kenya Crude Oil Pipeline’s Lokichar–Lamu Crude Oil Pipeline, is a proposed 51-mile (82-km), $2.1 billion pipeline that will originate in the oil-rich South Lokichar Basin, near the town of Lokichar, in northwest Kenya to end at Port Lamu, on the Indian Ocean. 

In December 2019, British firm Wood Group Plc presented two designs to Kenya’s Ministry of Energy for the Lokichar-Lamu crude oil pipeline project and it is currently at the pre-final investment decision (FID) stage, with the engineering, procurement and construction (EPC) tendering process ongoing. The FID is expected by June 2020. Construction of the onshore pipeline is expected to begin 15 months after the FID to allow for pipe manufacture, insulation and transport to site.

In the West African country of Nigeria, the 381-mile (613-km) Ajaokuta-Kaduna-Kano (AKK) natural gas pipeline is being developed by the Nigerian National Petroleum Corporation (NNPC). It will be laid between Ajaokuta and Kano in Nigeria and forms phase one of the Trans-Nigeria Gas Pipeline (TNGP) project. The pipeline project is being implemented via a build and transfer (BT) public-private partnership (PPP) model, which involves the contractor providing 100% of the funding. 

The pipeline will cost an estimated $2.8 billion and is currently scheduled for commissioning in 2020. It is expected to transport 3,500 MMscf/d (99 MMm3/d) of dehydrated wet gas from several gas-gathering projects located in southern Nigeria, and it will be 40 inches (1,016 mm).

It is regarded as the first stage of the long-dreamt-of 2,565-mile (4,128-km) Trans-Saharan gas pipeline linking Nigeria to Algeria. In Algeria it would connect with Trans-Mediterranean pipelines to transport gas to markets in Europe via Italy or Spain.

South America

Peru and Bolivia are in preparatory discussions to determine the prospects of building a new oil and gas pipeline that would allow Bolivia to import oil and export gas to Peru and perhaps export liquefied natural gas to the rest of the world. The first stage would be a 155-mile (249-km) pipeline between La Paz, Bolivia’s administrative capital, and Puno in Southern Peru.

Further east in Brazil, the state of Bahia has begun constructing the first section of the Southwest Gas pipeline, which will be one of the largest pipelines in the interior of Brazil and is noteworthy because most of the natural gas distribution network of 5,840 miles (9,399 km) is located on the coast. 

With a total planned investment of $100 million, the 190-mile (306-km) Southwest Gas pipeline will connect municipalities from Ipiaú to Brumado, bringing gas to 40,000 new customers in 2021.

This overview of pipeline development around the world (excluding North America) clearly shows that on each continent, in each major market and in each producing country, prospects for oil and gas are positive.

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