African countries are among those hoping to increase their exports of gas to the European Union, after the EU committed to reduce its reliance on Russian supplies following the invasion of Ukraine.
Russia’s suspension of deliveries to Poland and Bulgaria over their refusal to pay in roubles, the Russian currency, was a stark reminder of the threat facing the Eurozone. Russia has the largest natural gas reserves in the world and is the largest exporter, accounting for around 40% of Europe’s imports.
The EU wants to cut supplies by two-thirds by the end of the year and become independent of all its fossil fuels by 2030.
However, energy economist Carole Nakhle says that with the combined exports of Africa’s big players in the industry – Algeria, Egypt and Nigeria – amounting to less than half of what Russia supplies to Europe, they are “unlikely at the moment to compensate for any losses in Russian supplies”.
“The good news is there will be greater interest in countries that already have the resources to replace Russian gas and Africa is in a very good position. We’re going to see more investment,” she says.
However, this will take time because if various logistical issues in the continent’s major exporters.
Last month Italian Prime Minister Mario Draghi signed a new gas supply deal with Algeria to increase gas imports by around 40%.
It was Italy’s first major deal to find alternative supplies following Russia’s invasion of Ukraine.
However, there are concerns over Algeria’s ability to boost capacity due to rising domestic consumption, underinvestment in production and political instability, says Uwa Osadieye, the senior vice-president of Equity Research at FBNQuest Merchant Bank.
He points out that the amount of gas exported from Algeria to Europe has fallen sharply recently because of a dispute with Morocco, leading to the closure of a vital pipeline to Spain, from 17 billion cubic feet a year to around nine billion.
Pier Paolo Raimondi, an energy research fellow at Rome’s Instituto Affari Internatzionali, echoes these concerns.