3A-West African Gas Pipeline (IDA S/UP)

closed

The Gas Pipeline Project for West Africa aims at improving the competitiveness of the energy sectors in Ghana, Benin, and Togo by promoting the use of cheaper and environmentally cleaner gas from Nigeria in lieu of solid and liquid fuels for power generation and other industrial, commercial uses, and diversifying energy supply sources; and fostering regional economic and political integration that would support economic growth, and in particular the development of the West Africa electricity market. The project has the following three components: Component 1) Pipeline Cost and Financing. The Sponsors estimate the new pipeline to cost about US$590 million; additional compression-related costs are estimated to be about US$l10 million over 20 years (which would be needed if the capacity requirement grows from the initial 200,000 MMBtu/day to the 474,000 MMBtu/day target by the Sponsors under the agreed demand forecast). Component 2) Sources of Natural Gas. Nigeria's proven natural gas reserves (associated and non-associated) are conservatively estimated at about 125 trillion cubic feet. About 1,300 billion cubic feet of these reserves are produced annually, of which nearly 75 is AG and most of which is flared (2,500 MMscf/day). Component 3) Uses of Natural Gas. The pipeline is being financed based on amounts contracted upfront with the core customers, namely VRA and CEB. These customers are referred to as Foundation Customers and the volumes of gas they are contracting to purchase are referred to as the foundation volumes.