West African Gas Pipeline

The West African gas pipeline (WAGP) is a 681 kilometre onshore and offshore pipeline designed to transport natural gas from gas fields in the western Niger Delta of Nigeria to consumers in Benin Republic, Ghana and Togo.

Out of total estimated project costs of 590 million dollars, the World Bank has provided a 125 million dollar guarantee, while the European Investment Bank provided a 75 million euro loan to the Government of Ghana in 2006. The project is being implemented by WAPCO (the West Africa Gas Pipeline Company), a consortium headed by ChevronTexaco that also includes Shell and the state companies of the respective countries. The pipeline started operation in late 2007 after significant delays caused by conflicts and instability in the Niger Delta.

WAGP’s sponsors claim that the project will “contribute to the harmonization of regional, institutional, legal and regulatory frameworks in the participating West African countries” in the context of the World Bank’s West Africa Regional Integration Assistance Strategy. It is also claimed that the project will reduce the cost of energy and improve the reliability of energy systems in Benin, Ghana and Togo. Finally, the project is being touted to play a part in Nigeria’s plans to end all harmful gas flaring by 2008.

Environmental and social impacts

WAGP has only added to the suffering of communities living in the Niger Delta region. It has brought about environmental destruction, extreme social disruption, violence and political instability. The oil giants ChevronTexaco and Shell have openly admitted that they have contributed to the violence, corruption and disruptions in the region. The World Bank Inspection Panel has confirmed that WAPCO took possession of lands in Lagos and Ogun and displaced already impoverished residents, paying just 10 percent of the established value of their land. The people living along the pipeline route in Nigeria and Ghana report that they have not been properly consulted.

Both the project sponsors and the World Bank have claimed that the pipeline will contribute to the ending of dangerous gas flaring in Nigeria. Yet the Inspection Panel has found that gas flaring continues, afflicting Niger Delta communities with never-ending noise, heat, light and pollution that can only have acute impacts on public health. Moreover, actual reductions in gas flaring will be substantially less than was suggested when WAGP was still in the planning phase.

The cocktail of toxic substances which has been emitted for over 40 years via flaring – and with major support from Chevron and Shell – contains mercury, benzene, lead, nitrogen oxide, sulphur dioxide and particulates. The effects of flaring have exposed neighbouring communities to an increased risk of premature deaths, child respiratory illnesses, asthma and cancer, as well as acid rain that kills fish, defoliates vegetation and corrodes infrastructure and buildings in surrounding areas. While the Constitutional Court of Nigeria has declared that gas flaring is an illegal practice and a violation of human rights, this decision has not been implemented.

Who benefits?

The agreements between the African states and the oil companies also raises questions about the overall economic viability of WAGP for Ghana and Nigeria.

An assessment undertaken by Ghana’s Energy Commission concluded that the WAGP project would not be economically viable for the people of Ghana. It stresses that the terms offered to Ghana by the ChevronTexaco-led consortium allow only a small saving on the current cost of oil for power generation. The Energy Commission also warned that “there is an urgent need for transparency” in relation to the Gas Purchase Agreement, which details the country’s payment obligations. These contracts lock Ghana into buying WAGP gas at a set price for twenty years, impacting on Ghana’s budget and ruling out possible future alternative energy directions.

It also requires Ghana to pay the pipeline owners an annual fee in the order of 88 million dollar for transport services, thereby obliging the country to pay even in the event of supply failure. In addition, Ghana will pay for the amortisation of the pipeline without ever gaining ownership title to the investment.

The project also has no economic benefit for Nigeria despite WAPCO claims that “the provision of a market and financial returns for natural gas that may otherwise have been flared, will have a positive impact on the economy”. However, in a country where the economic benefits of oil production – estimated at over 20 billion dollars a year – have consistently not reached the most needy in society, it seems unlikely that any additional income from gas sales will ever benefit them. The community conflicts that continue to rage across the delta area are directly linked to unequal benefit sharing.

While the World Bank claimed that the project adheres to its own safeguard policies, it did note that the WAGP is laying the foundation for continuing conflict in the Niger Delta.

Dialogue with NGOs

Despite concerns raised by environmental groups towards some of the EIB’s executive directors that the bank's funding for WAGP should have been postponed until the EIB ensured that outstanding problems were resolved, its board of directors gave the go-ahead to a project loan in December 2006.

In meetings and correspondence, EIB staff have claimed that the EIB would approve the loan only under certain conditions, subject to the World Bank Inspection Panel's satisfaction, and would make sure that the project uses 100 percent associated gas. However, shortly after these statements, the EIB financed the project with no conditions attached and with currently no information available on its website, other than a few lines about the amount of the lending provided and the beneficiary.

The EIB has neither ensured that the project will increase access to energy for people living in Ghana, Benin and Togo, nor asked for a new environmental impact assessment (EIA) study that would scrutinise the Escravos-Lagos pipeline. This pipeline was built in 1980 – without an EIA – to transport unflared non-associated gas to WAGP.