1 By NJ Ayuk, CEO of the African Energy Chamber (www.EnergyChamber.org) In the months since the European Union declared that it would reduce its dependence on Russian oil following that country’s invasion of Ukraine, much has been said about the new opportunities.
2 this moment is creating for Africa’s natural gas industry.
3 I myself have been part of that conversation and stand by my past statements.
5 What’s more, certain developments within Europe are putting African natural gas producers in a stronger position than before with respect to being able to fight for and win larger market share.
6 Quite simply, there are gaps in the European gas market that did not exist in the past, gaps that urgently need to be filled.
7 The existence of these gaps means that there is now more room for African gas than ever before, particularly liquefied natural gas, which is easy to store and transport.
9 And interest in African LNG is not likely to be a momentary problem.
10 In the future, new technologies and changing geopolitical conditions should make it easier for African producers to maintain their market share in Europe.
11 In short, things are changing.
12 More market space right now For decades, Russia was the EU’s largest single supplier of gas, supplying at least a quarter to a third of its total consumption.
13 According to data from the International Energy Agency (IEA), the figure was even higher in 2021, when it supplied 155,000 million cubic meters (bcm) of gas, equivalent to 45% of total imports and 40% of total consumption.
14 The numbers for 2022 will surely be different.
15 The volume of Russian gas entering European markets began to decline significantly soon after the start of the war in Ukraine.
16 In April 2022, the share of Russian gas in total EU imports was reported to be 31%, up from 45% in April 2021.
17 There is no reason to believe that the figure has increased since then, as that April was the last month Russia was willing to accept payments from most EU customers in US dollars or euros instead of using special ruble-denominated accounts that are subject to sanctions.
18 Indeed, since Russia’s new payment requirement took effect, European customers have had to learn to live with abrupt cuts or reductions in pipeline gas deliveries, with their Russian supplier Gazprom citing payment difficulties or lack of resolution of technical problems as reasons for outages Since the end of April, such outages have occurred in Poland and Bulgaria, in Finland, in Germany and in all other countries served by the Nord Stream I network.
19 cuts occur before the end of the year, and no one knows exactly how much they will affect the total volume of Russian gas shipments to Europe.
20 The result, however, is that in 2022 the volume of gas delivered is likely to be slightly lower than the 2021 figure of 155 bcm.
21 And that’s where African gas starts to come into the picture.
22 If the EU doesn’t have enough Russian gas this year, it will have to make up the shortfall elsewhere in order to make it through the upcoming heating season.
26 More market space for years to come And European buyers are not just treating African gas as a quick fix, but as something to fill the gap for now.
32 EU gas company in an exclusive interview with Premium Times.
33 He noted that the West African country already accounted for 14% of EU LNG imports, suggested the figure could rise to 30% or more in the long run, and described Nigeria as a supplier that European gas buyers they can count.
34 “We need more gas from Nigeria as a result of the terrible war of aggression that Russia has mounted against Ukraine,” Baldwin declared.
35 “We can no longer count on gas coming from the Russian Federation, and we want to build a new partnership with countries like Nigeria with whom we already have a well-established partnership to get more gas and LNG from you on good commercial terms.”
36 The window of opportunity will remain open It is somewhat tempting to greet these statements with skepticism, given that the EU has talked about diversifying gas supplies for more than 20 years and has done relatively little to make that diversification a reality.
38 However, in the time it took to carry out that project, Gazprom managed to plan a bigger gas pipeline across the Black Sea (South Stream), scrap that plan, come up with a plan for another bigger oil pipeline (TurkStream), and then execute that plan, all while working on an even bigger undersea pipeline to Germany , Nord Stream 2.
39 However, I think such skepticism would be misplaced at this point.
40 The EU no longer works in a context where the benefits of supply diversification are theoretical and abstract; now it is a concrete and immediate matter.
41 For political reasons, the EU wants to deny Russia access to revenue from gas sales and strip it of its status as a normal trading partner.
42 For practical reasons, European gas buyers need to find a way to make up for missing supplies in Russia.
43 And for both political and practical reasons, Brussels wants to deny Moscow the opportunity to continue using gas supplies as a blunt instrument with which to threaten Europe in the future.
44 The change will not be immediate.
45 It will take time to lower Russia’s profile in the EU’s energy mix.
46 But the process of supply reduction is underway and has already opened up new opportunities for African gas producers to gain market share in Europe.
47 I expect those opportunities to last beyond the short term, as the EU tries to establish a new mix of gas suppliers to replace Russia in the coming years.
48 I also hope that emerging gas producers in Africa will take advantage of new LNG technologies, such as Fast LNG modular solutions offered by New Fortress Energy (NFE), a US-based company, to meet European gas demand.
49 With these technologies, they won’t have to wait as long or spend as much money to start producing the LNG that European consumers are clamoring to buy.
50 They can start in two years or less, instead of waiting five years or more, as is common with more conventional land projects.
52 I encourage you to read the 2022 State of Energy in Africa Report Q2 2022 and find out more for yourself.
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