Benin to Resume Niger Oil Exports to Save Chinese Investment

(Bloomberg) -- Benin has agreed to allow Niger’s crude to be exported through its port after China stepped in to mediate a dispute between the two West African neighbors.

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Landlocked Niger relies on an export terminal in Benin to ship its oil through a 1,200-mile (1,930-kilometer) pipeline from the Agadem field operated by China National Petroleum Corp. However, a diplomatic row led Benin to block Nigerien crude exports earlier this month — jeopardizing China’s investments.

“Benin’s government has authorized for crude from the Niger-Benin pipeline to be loaded” for export, Beijing’s ambassador to Benin Peng Jingtao told journalists late Thursday. “The government of Benin has also agreed to continue to strengthen cooperation in this project.”

Benin President Patrice Talon confirmed the development. Bloomberg reported earlier Thursday that Benin was readying to resume exports.

Read more: Beijing-Based AIIB Eyes $1 Billion Africa Projects

The CNPC-built pipeline is part of an investment of as much as $7 billion in Niger’s oil industry. The country was expected to start exporting 90,000 barrels per day this month, which will increase to 110,000 barrels once the link is fully operational.

CNPC holds a 57% interest in the crude production from the Agadem block in Niger. A unit of Taiwan’s CPC holds about 18%, with the remaining 25% stake held by the government of Niger, which was taken over by a military junta last July.

Read more: China’s $400 Million Oil Deal to Help Niger Repay Debt

The International Monetary Fund has forecast that Niger’s economy would expand 10.4% in 2024 — the most in Africa — driven by the ramp-up of crude production and exports. Niger, one of the world’s poorest countries, plans to use part of its crude revenue to repay a $400 million loan from CNPC.

Diplomatic Feud

The dispute between the two nations escalated when Niger closed its border to Benin after trade sanctions imposed by the West African regional bloc, the Economic Community of West African States, following the July coup. The ruling junta has kept the border closed for goods coming and going from Benin despite the sanctions being lifted earlier this year.

Officials in Niger also refused to meet Benin’s Mining Minister Samou Adambi when he traveled last week carrying a conciliatory message to Niger’s military leader, Abdourahamane Tiani, according to Benin President Patrice Talon.

Despite the strained ties, shipments will be allowed to resume, Talon told the national broadcaster late Thursday. Niger needs to exempt crude from its land border blockade for customs formalities to be completed, he said.

Earlier this month, Benin allowed one shipment to be loaded as a “gesture of good faith” following a week-long impasse, Benin’s Foreign Affairs Minister Shegun Bakari told Bloomberg.

A Niger junta spokesperson didn’t respond to a request for comment.

(Updates with comment from Chinese ambassador in third paragraph, adds background)

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