Sahara pipeline deal signing next week: Algeria minister

The European Union has said the Trans-Sahara project could help diversify its energy sources but the project has been stuck on the drawing board for years.

“I'm going to Abuja next week to sign the agreement. This is a final agreement for how we are going to proceed,” Khelil told reporters at a gas summit in Qatar, without giving further details.

“We are not going to have problems with financing, it's not a technically difficult project. We hope in a couple of years (to start work),” he said, adding the 4,128 km (2,580 mile) pipeline across West Africa could be completed by 2015.

France's Total and Anglo-Dutch energy giant Royal Dutch Shell are among the international firms to have expressed interest in the project aimed at diversifying Europe's gas supplies away from Russia, which currently supplies a quarter of the EU's total demand.

But last week Russian gas monopoly Gazprom and Nigeria's state-run oil company NNPC agreed to invest at least US$2.5 billion to explore and develop Africa's biggest oil and gas sector, including building the first part of the Trans-Sahara pipeline.

Some analysts see Russia's keen interest in the West African country as an attempt to keep its grip on Europe's natural gas supplies.

The whole Trans-Saharan project is estimated to cost around $10 billion for the pipeline and $3 billion for gathering centres, which industry observers say could be off-putting for investors at a time of uncertain demand.

“In the medium term it is hard to see a project of that size and scale getting off the ground,” Ian Cronshaw, head of energy diversification at the International Energy Agency, told Reuters in Paris on Monday. “In the current circumstances, with companies' constrained balance sheets, difficult financing ... Everywhere the big difficulty is getting large scale pipelines off the ground. Demand is very uncertain... Beyond 2015 it could happen.”

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