Analysis: Can African gas replace Russian supplies to Europe? | Economy

Lagos, Nigeria – On February 22, German Chancellor Olaf Scholz introduced throughout a information convention that the European superpower was halting approval of Russia-owned Nord Stream 2 after President Vladimir Putin formally despatched troops into jap Ukraine.

Nord Stream 2, an $11bn fuel pipeline undertaking owned by Moscow-backed vitality firm Gazprom, runs from western Siberia to Germany. The undertaking was constructed to make sure a sustainable vitality distribution throughout the European Union, particularly as fuel costs reached document highs in Europe – which will get greater than a 3rd of its pure fuel from Russia.

Because the battle continues in Ukraine, European fuel costs have soared and there may be the chance that Moscow may shut off provides of fuel, extensively thought-about a part of Putin’s leverage towards the West in his obsession with Ukraine.

Earlier than that, European international locations will likely be pulling the stops to seek out contingency provide networks within the coming weeks. In truth, sources say america is already in talks with Qatar over supplying fuel to the EU as an important substitute for Russia.

Nevertheless, throughout a discussion board of fuel exporting international locations held final week in Qatar, the bloc stated it will be unable to offer a substantial quantity of substitute fuel to Europe within the occasion of sanctions towards Russia. They confused the necessity for vital funding in fuel infrastructure, in addition to long-term contracts, to ensure a big provide to Europe.

Filling the hole

This has led to an rising debate about whether or not African international locations, which have among the world’s deepest fuel reserves, can step in to fill the hole – a requirement of 150-190 billion cubic metres yearly that Russia has normally equipped to Europe.

Just lately, Tanzanian President Samia Suluhu Hassan stated the Russian invasion of Ukraine may show to be a chance for fuel gross sales because the East African nation makes efforts to safe a brand new vitality market outdoors Africa. “Whether or not Africa or Europe or America, we’re searching for markets,” stated Hassan. “And happily, we’re working with firms from Europe.”

Tanzania, which has the sixth-largest fuel reserves in Africa – an estimated 57 trillion cubic ft (1.6 billion cubic metres) of fuel reserves – says it has been working with Shell to utilise its huge offshore fuel assets and export to Europe and elsewhere.

Africa’s largest fuel producer has comparable plans too. Timipre Sylva, Nigeria’s junior petroleum minister, advised the press on the fuel exporting international locations’ discussion board in Doha, “We wish to construct a pipeline, a trans-Sahara pipeline, that’s going to take our fuel to Algeria, then to Europe.”

Nigeria’s feedback are buoyed by the latest signing of an MoU with Algeria and the Niger Republic and the continuing development of the Trans-Saharan Fuel Pipeline, a 614km (381.5 miles) lengthy pure fuel pipeline starting in northern Nigeria.

There is no such thing as a official phrase on when the pipeline, first mooted within the Nineteen Seventies, will likely be accomplished however it’s slated to run via northern Nigeria into Niger and Algeria, connecting to Europe ultimately.

However there are considerations about whether or not African international locations can turn into a correct stopgap answer for pure fuel as Europe tackles Russia’s army onslaught towards one in every of its personal – or long-term suppliers.

Lack of infrastructure

Consultants say a historic lack of funding in fuel infrastructure has hampered the vitality trade in sub-Saharan Africa, in contrast to in Northern Africa.

For example, the Maghreb-Europe Fuel Pipeline in Algeria – Africa’s largest pure fuel exporter – conveys pure fuel via Morocco to Spain and Portugal, and the Medgaz pipeline hyperlinks Algeria on to Spain.

Consultants estimated that Algeria exported 9 billion cubic ft (255 million cubic metres) of fuel to Spain in 2020 and as much as 17 billion cubic ft (481 million cubic metres) yearly earlier than that. The drop was on account of fuel manufacturing dipping in a breakdown in relations with Morocco; final October, Algeria introduced that it will instantly start exporting fuel on to Spain.

“You will need to be aware that [North] Africa already has a longtime fuel export market with Europe [before the Ukrainian crisis],” stated Linda Mabhena-Olagunju, oil and fuel lawyer and CEO of Johannesburg-based impartial energy producer DLO Power Useful resource Group. “The Medgaz pipeline capability enhancements [in Algeria] are additionally anticipated to extend exports to Europe.”

However many African international locations with large fuel reserves have additionally struggled to draw funding to construct fuel infrastructure initiatives to produce the European market.

Angola, which has 13.5 trillion cubic ft (382 billion cubic metres) of confirmed fuel reserves, has skilled a pointy decline in oil and fuel manufacturing within the final 5 years on account of a mix of technical and operational issues, in addition to an absence of upstream funding and incentives.

In 2020, the Muhammadu Buhari administration introduced “The Decade of Fuel”, a Nigerian initiative to prioritise the fuel trade and benefit from a worldwide transition to cleaner fuels.

As a part of that drive, it has commenced development of the 614km-long, $2.5bn Ajaokuta-Kaduna-Kano Pure Fuel Pipeline. Many of the funding comes as a mortgage from Chinese language banks.

Nonetheless, like in lots of different African international locations, vital investments are wanted to construct trans-regional and intercontinental pipelines, as a way to open up entry to Europe. They usually all want a great deal of capital.

Nigeria is hoping that its new trade laws – signed final August – can present a brand new framework to chop down on waste and corruption within the oil sector, reshape host group relations and in the end, funding.

“Nigeria will not be presently a prime funding vacation spot for the oil and fuel trade,” stated Joe Nwakwue, former chairman of the Society of Petroleum Engineers in Nigeria and ex-adviser to the junior petroleum minister. “This was why we pushed for a aggressive fiscal association within the invoice.”

“Moreover, to handle the infrastructure problem, we have to open up the sector to personal capital,” he stated. “Our present oligopoly wouldn’t suffice because the Nigerian Nationwide Petroleum Company lacks the capital to construct our required infrastructure.”

Utilizing vessels for direct transport of liquefied pure fuel throughout the seas may additionally put sub-Saharan African international locations in prime place to turn into aggressive producers and exporters, Mabhena-Olagunju advised Al Jazeera.

Safety of provide

There are additionally different existential problems that specialists say African international locations have to repair first to be a prepared various for Europe in conditions of urgency.

Mozambique holds roughly 100 trillion cubic ft (2.8 trillion cubic metres) of confirmed pure fuel reserves, accounting for roughly 1 % of the world’s whole reserves. However an ongoing armed rebellion within the northern Mozambican province of Cabo Delgado, a gas-rich space that borders Tanzania, has hampered exercise on a deliberate $50bn undertaking.

Elsewhere, a wave of safety threats from armed teams has affected oil and fuel exploration in Nigeria’s oil-rich Niger Delta.

“The important thing issue that is still a problem for Africa as a dependable LNG producer and exporter revolves round safety of provide,” stated Mabhena-Olagunju. “While the LNG discoveries in Mozambique are an excellent discover, it’s also necessary to recognise that insecurity results in delays and instability of provide.”

Can African international locations wing it?

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