Europe Could Look To Africa If Ukraine Conflict Threatens Gas Flow
With the conflict between Russia and Ukraine taking center stage, the supply of Russian gas to European markets is being threatened. Here, African gas producers see their chance to profit.
Significant progress has already been made to establish Africa as a viable gas export market and with geopolitical tensions rising, Africa has its chance to focus on establishing itself as the preferred supplier to international markets.
The withdrawal and disruption of supply channels from Russia, as the second-largest gas producer globally and the biggest supplier of natural gas to Europe will put Europe into a deeper energy crisis and cause price hikes globally.
On February 22, 2022, member states of the Gas Exporting Countries Forum (GECF) met in Qatar to discuss the impact of the mounting tensions between Russia and Ukraine and its impact on the global gas market. In a declaration issued after the meeting concluded parties emphasized that despite their commitment to increasing gas production to meet growing energy demand globally, they cannot help Europe replace 40 percent of its energy consumption in the event Russia cuts supply.
“Infrastructure is going to be critical. Investors in Europe may be selling solutions to be able to put as many terminals as possible, which will allow us to export gas to them. That is what we need to be competitive in gas,” Gabriel Mbaga Obiang Lima, Equatorial Guinea’s Ministry of Mines and Hydrocarbons, told the African Energy Chamber.
African producers can take advantage of the outcome 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.
“The ongoing European energy trilemma and challenges provides a golden opportunity for African gas producers to develop a robust, bankable gas strategy to cater for motherland Africa and our European friend’s energy demand. I believe Africa can leverage current trends to attract much-needed investment to develop the infrastructure needed to accelerate production for regional consumption and exportation. The time to act on the Trans Africa Gas plan is now," says Abdur-Rasheed Tunde Omidiya, President of the African Energy Chamber for Nigeria and West Africa.
Production ramp-up in Africa has already begun. The Chamber predicted that Nigeria would increase gas production from 2016 of about 1,550 billion cubic feet to up to 1,780 billion cubic feet in 2022. These production increases will enable Nigeria to increase domestic capacity, ensuring energy security both domestically and continentally, while creating the opportunity to scale-up exports to European markets.
Other African producers such as Algeria and Niger – which with Nigeria are paving the way for the construction of the 2,565-mile Trans-Saharan Gas Pipeline, set to run through the three countries into Europe – now have an opportunity to attract funding for the project rollout and expand their production and exportation capabilities to Europe.
Once completed, the pipeline is expected to transport 30 billion cubic meters of gas per annum which Europe will desperately need to meet demand and find an alternative for Russian gas.
Algeria, a country very close to Europe and strategically located to become a potential gas supplier for the continent, is the world’s sixth-largest gas exporter and the largest gas producer in Africa. It has already expressed its plan to double exploration and production in the next five years.
In 2021, Algeria increased its export volumes to Europe to 1.87 trillion cubic feet from 1.4 Tcf in 2020 and is estimated to export 1.62 Tcf or more in 2022 as demand in Europe is expected to continue rising.
At the same time, Equatorial Guinea, with over 1.5 trillion cubic feet of natural gas reserves, still untapped, can also take advantage of the anticipated European gas crisis to attract more investment for its natural gas market growth and development.
Before all that happens, African gas producers need to improve policy planning and enactment, as well as deal with negotiation to make themselves attractive markets to partner with.
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