Benin Halts Niger's First Crude Shipment Amid $400M China Deal

Key Takeaway

• Benin has blocked Niger's first crude shipment over a border dispute, affecting three vessels and Niger's export plans.
• The blockade is tied to a $400 million loan agreement between Niger and China National Petroleum Corporation for oil exports to China.
• This conflict threatens Niger's economic growth prospects, previously projected by the IMF to exceed 11% this year.

Benin-Niger Tensions Halt Crude Exports

Benin has taken a decisive stance by blocking the export of Niger's crude oil through its port, a move that directly responds to Niger's refusal to open its land borders for goods from Benin. This development has led to at least three vessels, poised to carry Niger's inaugural crude shipment, being barred from docking. President Patrice Talon of Benin articulated the country's position, emphasizing the contradiction in Niger's actions of treating Benin as an adversary while expecting to utilize its territorial waters for oil export. "If you want to load your oil in our waters, you can’t view Benin as an enemy and at the same time expect your oil to cross our territory," Talon stated, highlighting the deadlock over collaborative efforts between the two nations.

Niger's Crude Export Ambitions

Niger was on the cusp of exporting its first shipment of crude oil this month, a significant milestone underpinned by a $400 million commodity-backed loan agreement with the state-owned China National Petroleum Corporation (CNPC). This deal entails Niger sending oil to China over a 12-month period as repayment, with a 7% interest rate. The arrangement is supported by a substantial infrastructure investment from CNPC, which includes the construction of a 1,200-mile pipeline connecting Niger to Benin, part of a broader $4.6 billion investment in Niger’s petroleum sector. The initial export expectation was set at 90,000 barrels per day, with projections to increase to 110,000 barrels per day upon full operational capacity of the pipeline.

Regional Dynamics and Economic Implications

The backdrop to this export blockade is a complex web of regional politics and economic sanctions. Following a military coup in July, the Economic Community of West African States (ECOWAS) imposed land and air border closures on Niger, aiming to pressure the junta towards restoring civilian governance. Although these sanctions were lifted earlier this year, Niger has maintained its land border closures with Benin, exacerbating tensions. The anticipated commencement of oil production was projected to propel Niger’s economic growth to over 11% this year, positioning it as the fastest-growing economy in sub-Saharan Africa, as per the International Monetary Fund (IMF). This growth trajectory is now under threat due to the halted crude exports, underscoring the broader economic stakes tied to the resolution of this dispute.

Management Quotes

• President Patrice Talon:

  "If you want to load your oil in our waters, you can’t view Benin as an enemy and at the same time expect your oil to cross our territory. We’re open to collaborate. They’re the ones that refuse to collaborate with us and to let the trucks coming from Benin cross into Niger."