Europe looks to Africa to replace Russian gas after war in Ukraine

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DAKAR, Senegal — Just months ago, world leaders pledged to stop funding new fossil fuel projects around the world in a “historic” move against climate change. Now some of those leaders, desperate for energy as Russian flows dwindle, are turning their sights to African countries with burgeoning reserves of oil and natural gas.

“You see the hypocrisy,” said Mamadou Fall Kane, deputy secretary of Senegal’s natural resources management agency. “At the moment, Europe is really knocking on our door.”

The European Union’s energy czar visited his office in February. German Chancellor Olaf Scholz is expected later this month. Senegal presents itself as a replacement for Russia, which covered 39% of Europe’s natural gas needs before the invasion of Ukraine upset the world energy map and triggered an energy crisis.

“The war changed everything,” Kane said.

European officials are pushing to sever ties with Moscow and move to 100% clean energy in the coming decades. But for now, supplies are tight. Prices are skyrocketing. Leaders fear blackouts will darken homes, hospitals, factories and power stations.

The war has highlighted just how dependent Europe is on natural gas in its transition to green energy. Gas provides backup power when the sun isn’t shining or the wind isn’t blowing. It is an essential ingredient of fertilizers. The phasing out will not happen overnight.

Countries are now scrambling to strike new deals in the Middle East and Africa that could lock them into fossil fuel contracts for years longer than they anticipated.

“Europeans are now looking at Africa in a totally different way,” said Vijaya Ramachandran, energy analyst for Africa at the Breakthrough Institute in California. “Europe is discovering that it cannot simply rely on the handful of countries it has always relied on.”

Italy has already struck deals with Algeria, Egypt, Angola and the Republic of Congo to offset nearly two-thirds of the gas it imported from Russia, according to research firm Capital Economics. Germany, the bloc’s economic powerhouse, is rushing to build import terminals for gas shipments from the United States and West Africa. A draft European Union plan to replace Russian gas, reviewed by Bloomberg News, has highlighted Senegal, Nigeria and Angola as potential partners to fill the growing gaps.

It’s a stark change from November, when 20 countries – including Italy and Germany – agreed at the COP26 climate conference in Scotland to halt public funding for fossil fuel projects overseas. this year and invest in green energy instead.

The European Investment Bank had planned to cut funding for gas projects in Africa by the end of 2021, outraged nations with nascent industries. Less than half of people in the sub-Saharan region have access to electricity, and electricity costs on the continent are among the highest in the world.

“Ending gas funding will profoundly affect and thwart our social development efforts,” Senegal’s President and African Union Chairperson Macky Sall said of the Glasgow Pact.

Europe’s pivot to African energy is complicated by more than climate goals. Political instability and conflict have raised concerns among investors. The same goes for the huge expenses involved in developing mining and shipping infrastructure in untested areas.

West Africa has suffered five coups since 2020 and is grappling with fast-spreading Islamist insurgencies. A proposed pipeline would run from Nigeria to Niger, both of which are plagued by extremists.

“Investors are confused,” said Ken Medlock, senior director of the Center for Energy Studies at Rice University’s Baker Institute for Public Policy. “This interest has just formed. In the past two years, there has been no talk of fossil fuels.

The continent could peak gas production at 470 billion cubic meters before 2040, about three-quarters of the amount expected to be produced this year by Russia, according to research from Rystad Energy.

Natural gas from Russia came much cheaper and easily to Europe, passing through a pipeline under the Baltic Sea to Germany. Less than a fifth of the bloc’s gas imports over the past decade came from African countries, and analysts say much of the region’s supply will take years to come online.

Kane, the head of oil and gas, points investors to Senegal to manage longer-term risk.

“Senegal never went to war with anyone,” he said. “Senegal has never had a coup.”

Senegal is also investing in solar energy and wind farms: almost a third of its energy mix is ​​renewable.

As resource detection technology evolved, the country of 18 million people made a series of major discoveries from 2015 to 2017. Boats that work like floating ultrasound found gas deposits to the north from the seaside capital, Dakar, and near the border with Mauritania. Officials named it after the French and Wolof words for “hope”, “hospitality” and “tortoise” (due to its shape on seismic imagery).

The Senegalese government has teamed up with BP and an American company, Kosmos Energy, to develop deposits that the companies say could be mined for the next three decades. Production is expected to start next year.

Not everyone is excited: environmental activists warn damage to Senegal’s sparkling shores, a magnet for tourists and a haven for wildlife.

The first round of gas for overseas customers will mostly go to Southeast Asian countries, officials said – those deals were struck in 2018 – but the next batches are up for grabs. Demand is skyrocketing, Kane said. Senegal aims to use this leverage to sign larger contracts with European nations.

Lawmakers passed a measure this year to protect against what economists call the “resource curse” – the squandering of natural wealth by the political elite. Loans secured by future gas revenues are prohibited. Revenues cannot be spent on government salaries and must support investments for the “future generation”, such as in education and health care.

It’s part of the field, Kane said. Choosing Senegal over, say, more advanced economies like Qatar could bring about more social good.

“Imagine how many hospitals we could build,” he said. “How many schools. How many roads.

At an oil and gas conference this week in Dakar, hundreds of industry insiders gathered for network dinners and drinks, commenting on Ukraine ripple effects of war.

A lecturer at a beachfront hotel lined up for a PowerPoint entitled Russia-Ukraine Conflict: Risks and Opportunities for Africa.

“Europe has done everything to stop fossil fuels here,” a Texan businessman said in the crowd, “and now that a dictator is threatening to cut them off…”.

“The critical part of this,” said a Mauritanian gas official, “is how much of this gas will benefit the people here.”

Halper reported from Washington. Borso Tall in Dakar contributed to this report.

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