With the never-ending Russia-Ukraine crisis, energy-stricken Europe now turns to Africa. Notwithstanding the distance, European Union members have set their eyes on African oil and gas producing countries that could be potential alternative suppliers. EU is heavily dependent on Russian energy. Russia is the largest supplier of gas to Europe. Russia, with the largest gas reserve in the world produces about 17% of global natural gas and supplies about 30-40% of the gas consumed in Europe through a network of pipelines to Europe.
During the first Russia-Africa summit, a number of African countries were soliciting Russia’s assistance in exploring their oil and gas reserves in Africa. Some agreements were signed with Russian companies such as Bashneft, Gazprom Neft, Lukoil, Rosneft et cetera. Long before that start of the February 24 “special military operations” in Ukraine, many African leaders illogically failed to understand that Russia has always claimed global leading position in oil and gas supply. Experts have said that Africa’s supply would affect the aggregate global supply and consequently its prices.
Moreover, the first Russia-Africa summit results are highly credible. Summit reports point to so many protocols and agreements with Africa. Russian companies, for their part, have a wealth of experience leading exploratory work and are interested in working on the African continent. With the geo-political changes and its logical implications, the investment in the energy sector must now come from Europe.
As a direct result of the “special military operation” launched since February 24, Russia has come under a raft of unprecedented stringent sanctions imposed by the United States and Canada, European Union, Japan, Australia, New Zealand and a host of other countries.
This has to be analysed and its geopolitical and business implications. The fact is that bilateral business relations and geopolitical impact are changing, some degree. The crisis has absolutely posed challenges, but at the same time opened possibilities and prospects for establishing new partnership cooperation between state institutions as well as between foreign countries and Africa.
In the latest research developments, EU members are now rapidly moving in the African direction, ultimately aiming at cutting the dependency due to sharp political and economic differences that have emerged connected to Ukraine. Generally, EU is closely coordinating with Algeria, Angola, Equatorial Guinea, Egypt, Nigeria and Mozambique.
There has been a long history of Soviet and Russian specialists participating in and supporting the systemic geological study of a number of countries in the African continent. Their work on natural resource bases has done a great deal to aid mineral extraction. These countries now have the opportunity to leverage modern means of geological research and exploration, and in doing so, strike new deals with Europe. Russia is energy self-sufficient, it is Europe rather needs imports and that offers revenue for African producers, experts have argued.
After comprehensive studies, Dr Elisée Byelongo Isheloke, Associate Professor at ISP Ba, Rector at Université Espoir du Congo (UEC) and Researcher and Consultant in South Africa, argues in an emailed message: “it will be hard for Russia to invest in oil and gas in in Africa in order to export it to Europe. The war in Ukraine is affecting Russian business in a negative way and European countries are many to opt for sanctions against Russia. In practical sense, the emphasis should be on strengthening cooperation in the energy sector between Africa and Europe.”
Europe and America need to stop curling conflict by their inflammatory declarations and both the western countries and Russia as well as Ukraine should refrain from any irresponsible statements. Human right abuses must be discontinued, and law must take its course especially where abuse on civilians has been publicly reported. In time of war, it is impossible to talk about meaningful investment, argues Professor Byelongo Isheloke.
Europe to leverage west and North Africa’s oil and gas resources to meet demand, said NJ Ayuk, Executive Chairman of the Johannesburg-based African Energy Chamber, assuring that “with direct involvement from a combination of private and public sector partners, Africa can produce a significant share of the capacity needed by Europe.”
He further stressed the need for regulatory reforms and production improvement in the energy producing African countries. In order to produce and supply effectively, there is the need to build more infrastructure to process its energy. Despite pitfalls and challenges, African leaders have to prioritize efforts to improve exploration, production, infrastructure development and the energy portfolio. Africa’s energy resources remain untapped, and there are huge reserves to meet local demand and to increase exports.
As the infographic by research company Statista shows, the continent’s largest natural gas exporters by far are Algeria and Nigeria, each with between 35,000 and 40,000 million cubic meters shipped abroad in 2020 (ranked 7th and 8th globally).
Last year, these countries were the only two African suppliers of gas to the European Union, accounting for 17 and 4 percent of the EU’s natural gas imports, respectively. The other major players in the region are Egypt, Libya, Equatorial Guinea, and Angola. While countries in sub-Saharan Africa have gas reserves, they have not had the interest from abroad and investment needed for the industry to open up access to Europe, according to Al Jazeera.
Three pipelines currently bring natural gas from Africa to Europe; the Transmed, which allows the export from Algeria to Italy (via Tunisia), the Medgaz, which connects Algeria to Spain under the sea, as well as the Greenstream, more modest in capacity, which connects Libya to Sicily. Due to diplomatic tensions with Morocco, Algeria closed the Maghreb-Europe (GME) pipeline, which passes through its neighbour’s territory, last October. From 2027, the NIGAL pipeline is expected to transport natural gas from Nigeria (which exports mainly by sea), but construction of this pipeline has not yet begun.
Our own research shows that Angola is Africa’s second biggest oil producer after Nigeria. Nigeria is the 10th largest gas reserve country in the world. For Nigeria to take gas to Europe, it would have to build a network of pipelines across the Trans-Saharan Region from Algeria and Morocco. This network of pipelines would have to run through the Northern-most part of Nigeria and connect with Niger. Angola has 1.7 billion tonnes of proven oil reserves and a resource portfolio of up to 3.5 billion tonnes, with liquid hydrocarbons predominating. Angola mainly develops fields under production-sharing agreements; Sonangol has a stake in the majority of them.
Media reports have said that Italy and a number of other EU members scramble to break away from Russian gas over the Ukraine war. In April, many of them with high exploring ambitions turn to Africa. Angola and Italy have already signed a declaration of intent to develop new natural gas ventures and to increase exports to Italy, said a statement from the Italian Foreign Ministry.
“We have reached another important agreement with Angola to increase gas supplies. Italy’s commitment to differentiate energy supply sources is confirmed,” Foreign Minister Luigi Di Maio said in the statement at the end of a two-and-half-hour long visit to Luanda.
Prime Minister Mario Draghi wants to add Angola and the Congo Republic to a portfolio of suppliers to substitute Russia, which provides about 45 percent of Italian gas.
“We do not want to depend on Russian gas any longer, because economic dependence must not become political subjection. Diversification is possible and can be implemented in a relatively short amount of time — quicker than we imagined just a month ago,” he said in an interview with the Corriere della Sera daily published this April.
The deal was described as “an important agreement that gives impetus to the partnership between Italy and Angola in the fields of renewables, biofuels, LNG and training in technology and environment.”
The Italy delegation headed to neighbouring Brazzaville, the Republic of Congo, to meet President Denis Sassou Nguesso. A similar declaration signed in the Republic of Congo. It provides for the acceleration and increase of gas production in Congo, primarily through the development of a Liquefied Natural Gas (LNG) project with start-up expected in 2023 and a capacity of over 3 million tons / year (over 4.5 billion cubic meters / year) once fully operational. LNG exports will allow to valorize the production of gas that exceeds Congo’s internal market needs, and exports to Europe.
Italy’s ENI has been the second largest oil operator in the Congo for nearly 50 years. It has finalized its latest deals to secure fresh gas supplies from the Congo and Angola, a move directly aims at reducing energy reliance on Russia. Italy and Angola signed a declaration of intent to develop “new” natural gas ventures and increase exports to Italy, according to a statement from the Italian Foreign Ministry.
The foray follows the signing of agreements with Algeria and Egypt in recent weeks. Algeria is currently Italy’s second-largest supplier, providing around 30 percent of its consumption. ENI said the deal with Algeria’s Sonatrach would boost deliveries of gas through the Transmed undersea pipeline by “up to nine billion cubic meters per year” by 2023-24. Transmed only had spare pipeline capacity of 7.8 billion cubic meters per year in 2021 — though it has said it is ready to expand. Italy has also been in talks with Azerbaijan over the expansion of the Trans-Adriatic Pipeline (TAP).
Our research confirms that with the European Union banning crude oil imports from Russia by increasing trade with other non-Russian economies and the Russian government promising to cut gas supplies if sanctions from western countries continue, potential supply disruptions still anticipated. Nigeria, with over 37 billion barrels of crude oil reserves, has the potential to improve its energy exports to Europe and fill in crude oil and natural gas shortages.
Majors including ExxonMobil, Shell and TotalEnergies have been top producers of oil and gas in Africa. Quite recently, TotalEnergies plans to invest $20 billion in Mozambique, and has similar agreements with neighbouring Rwanda.
Many more experts have scholarly written about the implications of Russia-Ukraine crisis, and what that means especially for Africa. For example, Research Fellow Danielle Resnick from the Brookings wrote that the crisis casts a long shadow across Africa. Despite the geographical distance, there are implications for pan-African solidarity and adherence to multilateralism increasingly uncertain.
She further stressed that a few countries are sensing long-term growth opportunities from the crisis. Specifically, Africa’s natural gas could reduce Europe’s dependence on Russian energy. The African countries mentioned earlier in this article with dreams of re-outlining serious business on the global landscape, Tanzania has revamped negotiations with energy companies in the hopes of attracting $30 billion in foreign investment to revive construction of offshore liquified natural gas projects in 2023.
From Nigeria to Niger to Algeria, the Trans-Saharan Gas Pipeline has specific importance as it can help to increase exports of natural gas to European markets. On February 16, the three countries signed an agreement to develop the pipeline, estimated to cost $13 billion. Europe is likely to be a key financer, bolstered by the EU’s controversial decision in early February to label investments in natural gas as green energy.
Now there are a few key questions: Can Africa really become the preferred gas and oil supplier to Europe? Will Russia invest in exploring and producing Africa’s oil and gas? Do African leaders understand that Russia wants to be the global leader and helping them explore oil and gas is illogical?
As European Union has already indicated during the last EU-AU summit, it looks at Africa from different perspectives, and more importantly pushing for their economic footprints on the continent. Fresh from that EU-AU summit, there are agreements on several investment projects.
Our research shows that EU is committing approx. €300 billion ($340 billion) for financing new investment initiatives — similar to China’s Belt and Road initiative — an investment program the bloc claims would create links, not dependencies. EU and SADC, for instance, have been worrying on facilitating and coordinating implementation of the regional agenda in Southern Africa.
Ms. Josefa Sacko, AUC Commissioner for Agriculture, Rural Development, Blue Economy and Sustainable Environment (ARBE), and Dr Ibrahim Mayaki, Chief Executive Officer of AUDA-NEPAD, have suggested that African countries must improve their oil and gas production and exploration capability to fill any gaps resulting from supply chain disruptions among the major global producers.
In a joint opinion article believe that African countries that produce fuel and gas such as Algeria, Angola, Cameroon, Republic of Congo, Egypt, Equatorial Guinea, Libya, Mozambique, Nigeria, Senegal, Sudan, and Tanzania should explore boosting production and filling the gas and oil gap within the continent and beyond to alleviate fuel price shocks.
“In addition, African governments should invest in or attract greater international investment in oil and gas exploration, particularly in countries where subterranean oil reserves are believed to exist but have yet to be explored,” both experts opined, further reminded that while the conflict severely impact on the economy, it opens the doors for some kind of strategic transformations in Africa.
As Research Fellow Danielle Resnick from the Brookings explicitly pointed out there would be tensions between the United States together Europe on one side and Russia, on the other, over Ukraine. Nevertheless, Africa leaders have to analyse this within the geopolitical context, take into account various scenarios for the near future.
The proximity of the European market gives especially Maghreb, the North African countries strategic significance to become potential gas suppliers. She cited Algeria, as the world’s sixth-largest gas exporter and the continent’s largest gas producer. It has already stated its intention to double exploration and production in the next five years, according to the International Energy Agency.
Algeria increased its export volumes to Europe from €40 billion in 2020 to €53 billion in 2021, and it is expected to export €46 billion or more in 2022, as demand in Europe is expected to continue to rise.
The time has arrived. African countries, can capitalize on current trends to attract much-needed investment in order to develop the infrastructure necessary to accelerate production for regional consumption and exportation while also reducing costs. According to Abdur-Rasheed Tunde Omidiya, President of the African Economic Commission, “the time to act on the Trans-African Gas plan is now.”
African Development Bank (AfDB) President Akinwumi Adesina said in an interview with Reuters that a huge opportunity are emerging for Africa due the Russia-Ukraine crisis. African Development Bank (AfDB) is aiming to raise $1bn to rapidly ramp up agricultural production in Africa and stave off a potential food crisis brought on by Russia’s invasion of Ukraine.
While Adesina decried the war’s impact on Ukraine and its people, he acknowledged that the geopolitical shifts has sparked new roles for Africa. “The biggest challenge Europe has is securing its energy supply. Europe needs to look, and it is looking, for alternative supplies of gas. Africa can be that place. Africa boasts a host of major oil and gas producers, including Algeria, Nigeria and Angola.
And new offshore gas discoveries – the viability of which had been questioned due to the global shift to renewables – could now become critical to Europe’s energy security as it weans itself off Russian supplies. France’s TotalEnergies, along with US firm Exxon Mobil and Portugal’s Galp are currently developing projects to exploit Mozambique’s estimated 100 trillion cubic feet of gas reserves and make it a major liquefied natural gas player.
Europe can look to Africa as preferred energy supplier. On the other hand, Africa is ready to welcome investors currently pulling out of Russia, according to Adesina, and added: “There are a lot of investors that are going to be diversifying out of Russia, of course … That’s a real opportunity, I think, for Africa at this point in time.”
Nearly our research results show positive signs and several interviews with experts especially inside Africa, we can conclude that Russia-Ukraine crisis has brought into its fold good opportunities. Understandably, Russia is energy self-sufficient, it does not need to import energy from Africa, it can only act as a fortified gatekeeper so that Africa’s energy production do not enter the global market. Popular opinion is that African producers can take advantage to attract investments required to build infrastructure that would enable them to expand exploration, production and exportation to meet the anticipated increase in demand in Europe.
