Niger's Oil Pipeline Project with China in Jeopardy After Coup

A China-backed initiative aimed at transforming Niger into an oil-exporting nation faces significant hurdles due to an internal security crisis and a diplomatic rift with Benin, following a coup that ousted Niger's democratic government last year. The 1,930-km pipeline, extending from Niger's Agadem oil field to the port of Cotonou in Benin, is central to a $400 million agreement with China's state-run national petroleum company, intended to quintuple Niger's oil production.

However, the project has hit a standstill due to diplomatic tensions with Benin, resulting in the pipeline's recent shutdown. Compounding these challenges is an attack by the Patriotic Liberation Front, a local rebel group that has threatened further disruptions unless the deal with China is annulled. This group, under the leadership of former rebel leader Salah Mahmoud, became active following Niger's military coup, exacerbating the country's security issues.

Niger, one of the globe's most impoverished nations, relies heavily on external support for its budget—a lifeline now cut off due to the coup. With a current refining capacity of just 20,000 barrels per day for domestic use, the pipeline's potential to export up to 90,000 barrels daily represents a critical opportunity for economic recovery and resilience against sanctions imposed in the coup's aftermath.

Ryan Cummings, director of Signal Risk, highlights the dire need for direct engagement between both administrations to untangle this complex situation. The stalled pipeline not only threatens Niger's economic prospects but also poses a risk to regional stability. The World Bank had forecasted Niger to be Africa's fastest-growing economy this year, buoyed by oil exports. Yet, this projection now hangs in balance amidst ongoing diplomatic and security crises.

The tension between Niger and Benin traces back to July when Niger's president Mohamed Bazoum was overthrown. This event led to border closures with West African neighbors and the emergence of local liberation groups threatening further attacks on the oil project. Although Benin has since reopened its border with Niger, Nigerien officials have kept theirs closed, accusing Benin of harboring French troops considered a threat by Niger after it severed military ties with France.

This standoff has resulted in economic losses for both nations, with Benin missing out on millions in transit fees. The situation exacerbates regional tensions post-coup and challenges the Economic Community of West African States (ECOWAS), which typically plays a mediating role in such disputes.

Amidst these diplomatic shifts, with Niger leaning towards Russia and Benin aligned with France and ECOWAS, China has attempted to mediate and safeguard its investment in the pipeline project. However, these efforts were undermined as diplomatic tensions escalated further, highlighted by Benin's recent conviction and imprisonment of three Nigerien oil workers on charges of using falsified computer data—a move that led Niger to halt pipeline operations last week.

With Niger's military government now facing fiscal challenges in maintaining public services and meeting financial obligations such as debt repayment and infrastructure funding, Cummings notes the junta must tread carefully in managing the country's financial health amidst these crises.