Niger on verge of first oil exports with 110,000 b/d Benin pipeline completed: sources

The landmark 110,000 b/d Niger-Benin pipeline, which will quintuple Niger's crude production and make it a significant exporter, has been completed and could see its first cargo lifted as early as April, sources told S&P Global Commodity Insights.

The relaxation of sanctions on junta-led Niger by the Economic Community of West African States (ECOWAS) in February, seven months after a military coup, allowed China National Petroleum Corporation to complete construction of the 2,000 km pipeline and crude was flowing through the conduit last week, sources said.

Benin is part of the ECOWAS regional bloc which placed sanctions on Niger, preventing important equipment from crossing the border between the two countries. As a result, a number of pump stations were waiting for equipment stuck in Benin, sources said.

However, on Feb. 24, the bloc, which is dominated by oil powerhouse Nigeria, said it was easing the sanctions with "immediately effect" for humanitarian reasons, ending a no-fly zone, border closures and financial restrictions on state assets such as Niger's state-owned Sonidep.

Landlocked Niger produces 20,000 b/d of crude from its Agadem Rift Basin, which is primarily used domestically due to the lack of an export route, but that is set to rise to 110,000 b/d thanks to the Chinese-built pipeline, which connects Koulele in Niger's oil fields to the Beninese port of Seme.

Sources said the pipeline will start up at around 90,000 b/d, before ramping up to 110,000 b/d. Storage tanks in Benin are being filled before the first crude lifting in late April or early May.

CNPC has not commented on the pipeline's completion.

"Niger is set to become the world's newest oil exporter," said Jim Burkhard, S&P Global's vice president of oil markets, energy and mobility.

"Niger was successfully able to overcome political obstacles that could have prevented exports or hobbled the start of them. The economic importance to Niger -- and of the pipeline to Benin -- gained the upper hand."

Savannah Energy, the only Western company operating in Niger, hopes to bring a 1,500 b/d oil project onstream in coming months, before ramping up to 5,000 b/d.

Military coup

Niger was on the verge of an CNPC-driven oil sector overhaul when President Mohamed Bazoum was overthrown by his presidential guard last July, prompting a raft of ECOWAS sanctions and condemnation from Western governments.

Military ruler Abdourahamane Tchiani was subsequently declared president.

The central African nation was a longstanding Western ally under the ousted Bazoum and seen as a bulwark against the spread of extremism across the Sahel and towards the coastal West African states, including emerging oil producers like Cote d'Ivoire and Ghana.

Tchiani has cut ties with former colonial power France and stepped closer to Russia. Alongside Burkina Faso and Mali, both also led by military juntas following coups, Niger has said it will quit ECOWAS altogether.

China, the world's largest crude importer, has stepped up energy and mining investments in Africa in recent years in a bid to secure future oil and gas supply, tap into considerable reserves of critical minerals and expand its diplomatic reach on the world's fastest-growing continent.