African gas becomes a focus for EU countries trying to replace Russia supply

Even though a new liquefied natural gas project off the western coast of Africa is only 80% finished, the promise of a new energy source has already attracted the attention of the governments of Poland and Germany.

African gas becomes a focus for EU countries trying to replace Russia supply

It is anticipated that the first field between the coasts of Senegal and Mauritania would have roughly 15 trillion cubic feet (425 billion cubic meters) of gas, which is five times more than what gas-dependent Germany used in the entire year 2019. However, it won't likely begin in production until the end of 2019.

That won't assist in resolving the energy problem in Europe brought on by Russia's conflict in Ukraine. The development "could not be more timed," according to Gordon Birrell, an executive for project co-developer BP, as Europe looks to lessen its dependency on Russian natural gas for heating, electricity generation, and running industries.

He stated at an energy sector gathering in West Africa last month that "current international events are highlighting the critical role that (liquid gas) can play in supporting the energy security of governments and regions."

A lack of infrastructure and security issues have long prevented producers in other regions of the continent from increasing exports, despite the fact that Africa has massive natural gas reserves and that nations in North Africa like Algeria already have pipelines connecting to Europe. African manufacturers that are already established are cutting deals or using less energy so they can sell more and increase their profits, but some leaders warn that hundreds of millions of Africans lack access to power and supplies are required at home.

Horatius Egua, a spokesperson for the petroleum minister, said that Nigeria has the greatest natural gas reserves in Africa even though it only supplies 14% of the European Union's ship-borne imports of liquefied natural gas (LNG). Energy theft and excessive expenses are risks for projects. Large gas deposits have been found in other prospective nations like Mozambique, but developments there have been hampered by Islamic extremist conflict.

As Moscow has cut off natural gas supplies to EU nations, raising energy costs and raising fears of a recession, Europe has been rushing to acquire other sources. The 27-nation EU is preparing for the potential of a total Russian cutoff but has still been able to fill gas stocks to 90%. Energy ministers from the EU are meeting this week to discuss a gas price ceiling.

Leaders from Europe have gone to nations like Norway, Qatar, and Azerbaijan, particularly those in North Africa where Algeria has a pipeline connecting to both Italy and Spain.

A month after Egypt negotiated a deal with the European Union and Israel to increase LNG supplies, Italy signed a $4 billion gas pact with Algeria in July. In addition, Angola and Italy have a gas agreement.

While a prior arrangement permitted Italy's largest energy firm to begin production at two gas fields in Algeria this week, the July pact's lack of specifics made it unclear when flows would begin, according to experts.

African presidents are being discouraged from pursuing fossil fuels but still want their nations to profit from these projects, like Senegalese President Macky Sall. Given that an estimated 600 million people in Africa lack access to power, they also do not want to export all of it.

"It is legitimate, fair, and equitable that Africa, the continent that pollutes the least and lags the most behind in the process of industrialization, should exploit its available resources to provide basic energy, improve the competitiveness of its economy, and achieve universal access to electricity," Sall said last month to the U.N. General Assembly.

Although Algeria is a significant supplier—it and Egypt produced 60% of the natural gas in Africa in 2020—Mahfoud Kaoubi, an economist and expert on energy problems at the University of Algiers, said that at this point, Russian gas to Europe cannot be countered by Algerian gas.

Russia produces 270 billion cubic meters annually, which is a sizable amount, according to Kaoubi. "Of the 120 billion cubic meters in Algeria, 70.50% is destined for domestic use."

According to Tom Purdie, a gas analyst at S&P Global Commodity Insights who focuses on Europe, the Middle East, and Africa, Algeria is expected to export 31.8 billion cubic meters of gas this year.

Given how much gas Algeria consumes domestically, Purdie said, "the primary issue here revolves on the degree of production step-up that can be realized, and the impact local demand may have."

Cash-strapped Egypt wants to export more natural gas to Europe and has even controlled street lighting and air conditioning in malls to conserve energy.

According to official media, Egypt's prime minister, Mostafa Madbouly, intends to earn an extra $450 million in foreign currency each month by diverting 15% of its domestic gas use for export.

Power plants continue to require more than 60% of Egypt's natural gas usage to keep the nation operating. Asian markets receive the majority of its LNG.

Israel will now be able to transport additional gas to Europe via Egypt, which has the infrastructure to liquefy it for marine export, thanks to a new three-party agreement. According to the EU, it will assist the two nations in boosting gas exploration and production.

Despite years of preparation, ambitious plans in Nigeria have not yet produced any results. Last year, fewer than 1% of the nation's enormous natural gas reserves were exported.

Since 2009, plans for a 4,400-kilometer (2,734-mile) pipeline that would transport Nigerian gas to Algeria via Niger have been on hold, mostly due to the $13 billion price tag.

Many are concerned that even after construction, the Trans-Sahara Gas Pipeline will still face security dangers similar to those faced by Nigeria's oil pipelines, which have frequently been targeted by terrorists and vandals.

Increased gas shipments to Europe will be hampered by the same issues, according to Lagos-based oil and gas specialist Olufola Wusu.

Others start to doubt our capacity to send gas to Europe "if you look at the reality on the ground — difficulties that have to do with crude oil theft," he added.

Considering LNG to be the "most lucrative" gas option to date, Wusu advised pursuing it.

Even that has its problems. The largest natural gas company in the nation, Nigeria LNG Limited, said in July that oil theft was the major reason why its facility was only operating at 68% of capacity.

Mozambique is expected to grow into a large LNG exporter in the south after huge resources were discovered near the Indian Ocean coast in 2010. In Palma, in the northern Cabo Delgado region, TotalEnergies TTE, -0.65% TTE, -1.41% of France spent $20 billion and began work to harvest gas that would be liquefied there.

But last year, TotalEnergies was compelled to put the project on hold indefinitely due to attacks by Islamic extremists. Officials from Mozambique have promised to secure the Palma region so that construction may resume.

While this was going on, the Italian company Eni ENI, -1.21% continued with its plan to pump and liquefy part of its gas resources found in Mozambique in 2011 and 2014. Away from the unrest in Cabo Delgado, Eni built a platform in the Indian Ocean 50 miles (80 km) offshore.

According to Eni, with a 3.4 million ton per year capacity for gas liquefaction, it is the first floating LNG facility in the deep seas off of Africa.

According to Africa Energy, the platform liquefied its first gas on October 2. The first shipment is anticipated to leave for Europe in the middle of October.


Post a Comment (0)
Previous Post Next Post