Page 10 - DMEA Week 12 2022

DMEA SUPPLY & PROCESSING DMEA

Can the EU replace Russian gas

with North African supplies?

AFRICA EARLIER this month, the European Union (Algeria), another gas-producing state that has
declared its intention to reduce its dependence exported gas to Europe in the past (Libya) and
on Russian natural gas imports. More specifi- another gas-producing state that is looking
cally, it has announced that it will aim to cut the to beef up its export capacity and expand its
volume of gas purchased from Russia by two global clientele (Egypt); and established export
thirds by the end of 2022 and then bring the fig- infrastructure linking North Africa to Europe,
ure all the way down to zero by the end of the including underwater pipelines and LNG plants
decade. with export terminals But are these advantages
In the long term, of course, the EU hopes to compelling enough to justify the effort of seeking
eliminate its need for Russian gas by eliminating extra gas for Europe from the region?
the fuel from its energy mix – that is, by switch-
ing, to the greatest extent possible, to low- or North Africa: Investments needed
zero-carbon energy sources. In the short term, Hamish Kinnear, a Middle East and North
however, it is not clear that solar, wind, hydro- Africa (MENA) analyst for Verisk Maplecroft,
power and other forms of renewable energy believes they are. He told NewsBase earlier this
can serve as immediate substitutes for the vast week that the EU’s move to cut and eventually
amounts of gas that Russia has delivered to the eliminate Russian gas imports had the potential
bloc’s 27 member states. to benefit North Africa.
The EU’s renewable energy capacity has been “Theoretically, yes, he said. “EU consumers
rising very quickly in recent years, to the point require gas from somewhere to replace Russian
that the European Commission reported late exports. The geographical proximity of North
last October that the bloc’s renewable generation Africa and overall neutral/warm relations
capacity now accounted for 38% of the total, out- between the EU and North African countries
stripping fossil fuel generation capacity at 37%. make the region a good option.”
However, this additional capacity has not given Kinnear also pointed out, though, that the EU
European energy markets the resiliency they could not reap the gains of this proximity effort-
need to withstand supply pressures. Even before lessly, saying that European investors would
the eruption of war in Ukraine, European gas need to help cover the cost of new upstream
prices were soaring and there was talk of bring- development projects. “The problem is spare
ing shuttered coal-fired thermal power plants [production] capacity,” he explained. “North
(TPPs) back online – and all because Russia Africa, particularly Algeria, is already a major
was reluctant to acquiesce to European buyers’ source of gas for Europe, and there are limited
requests for more fuel this past winter. supplies available. If the region can boost output,
This leaves the EU in the position of needing however, it could certainly take advantage of a
to secure very large volumes of gas very quickly. European decoupling from Russian supplies and
The amounts involved are large, as data from rising energy prices.”
the International Energy Agency (IEA) show
that the EU imported no less than 155bn cubic Algeria: Focus on conventional gas
metres of Russian gas last year. (Two thirds of Kinnear indicated that he expected any Euro-
that comes to more than 100 bcm.) The time pean investments in Algeria to be channelled
involved is short, as the EU has imposed a dead- into conventional gas projects rather than
line of the end of this year. (And in practice, new unconventional gas projects in the short term.
suppliers will be needed even before December When asked whether the North African
31, as EU member states must begin putting gas state might focus on unconventional gas in the
into storage before the heating season begins in longer term, he expressed some reservations.
October.) More specifically, he told NewsBase that Algeria
Moreover, the EU will have to deal with mul- might have difficulty attracting sufficient invest-
tiple suppliers. Russia is the largest gas producer ment for shale gas projects, even in the face of
and exporter in the world, and no other country increased European demand, along with higher
can replace it outright. Consequently, the bloc prices resulting from changes in global gas trade
will need to secure gas from several different patterns.
sources. “For Algeria, the problem with developing
One logical place to search for gas is North its unconventional reserves has always been that
Africa. The region has some distinct advantages, it needs the help of oil majors to carry out the
including: geographical proximity to Europe; the necessary technical work,” he told NewsBase.
presence of one established gas exporter with a “Algiers hasn’t thus far been able to provide
track record of being a reliable supplier to Europe the necessary incentives for investment. Rising

P10 www. NEWSBASE .com Week 12 24•March•2022