Understanding Israel's Recent Attacks on Lebanon
Israel says the major attacks that levelled multiple residential buildings in southern Beirut targeted Hezbollah’s ‘central command’.
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African countries can meet the EU's growing energy demands only by sacrificing their own interests.
The energy crisis continues in the European market. This was caused by several factors: accumulated structural imbalances in global energy markets, EU energy policy, the pandemic and armed conflict in Ukraine that began in February 2022, and a significant reduction in Russian gas supplies. In 2022, electricity production in the EU has fallen to 2,641 TWh (2,785 TWh). In the bloc's history, this figure has decreased only twice - in 2009 due to the global financial crisis and in 2020 due to the COVID-19 pandemic (140 TWh per year is equivalent to the annual production of Pakistan or Kazakhstan). In 2023, electricity production declined further. Gas consumption, an important source of energy in Europe, is also falling. Gas consumption in 2022 decreased by 13% to 343 billion cubic meters and continued to decrease in the first half of 2023. At the same time, consumption is decreasing in the most dependent sectors of the economy: energy production (-18% ) and industrial production (-13%). We should not think that EU countries are watching this decline with indifference. The European Council made a political commitment to reduce gas consumption by 15% by 31 March 2024 compared to the average level between 2017 and 2022. In addition, the EU plans to increase LNG imports by 50 billion ㎥ to 227 billion ㎥ next year.
However, these "defensive" measures show that the EU could not easily replace Russian gas with other sources. Africa played an important role in Europe's search for alternative energy sources. In the spring of 2022, high-level European delegations visited the African country almost weekly in search of gas. But even then it was clear that they would not be able to squeeze large quantities of gas out of Africa.
Chronological overview of failures
It turned out to be worse than expected. According to the HSE Africa Research Centre, Africa's gas exports to the EU will reach 72 billion cubic meters in 2022, down about 2 billion cubic meters from the previous year. Algeria (-5 billion cubic meters), Nigeria (-0.7 billion), and Libya (-0.5 billion) are among the countries that cut their gas exports the most.
Most African gas exporters (especially western LNG plant operators who control LNG trading) have transferred additional volumes to the EU, where they export to Asia. For example, Angola plans to send 56% of LNG (17% in 2021), Egypt - 46% (13%), Cameroon - 61% (0%) and Equatorial Guinea - 30%. In addition, Mozambique, a new African country, will enter the global LNG market in 2022. Last December, the first batch of LNG produced by British oil and gas company BP at its Coral Sul Floating LNG (FLNG) plant off the coast of Mozambique arrived in Spain. Mozambique exported a total of 400,000 tonnes of LNG in 2022. The joint efforts increased LNG exports from Africa to the EU by 2.7 million tonnes (equivalent to 3.8 billion cubic meters), reaching a total of 19 million tonnes.
However, except Egypt, these countries are not major exporters of LNG to Africa. In addition, Algeria and Nigeria, which account for 60% of Africa's LNG exports, have also reduced their gas exports to Europe.
The two countries are Africa's largest gas exporters and have faced many challenges in recent years. Algeria and Nigeria have much in common, with gas exports playing an important role in their economies and domestic markets. Gas-fired power plants account for up to 98% of Algeria's total electricity and even 80% in Nigeria. However, each country has its problems and the ways to solve them are also different.
The success of Algeria's independent economy
Unlike Nigeria, Algeria is taking concrete steps to develop its domestic gas market. As a result of consistent policies to promote gas transport infrastructure, power plants, domestic gasification, and subsidies, Algeria's gas consumption has increased by 60% over a decade to around 45 billion cubic meters per year. It's the same as in France. A little more than Australia. In Algeria, gasoline prices on the domestic market are 40 times cheaper than in Europe (about $15 per 1000 cubic meters domestically, compared to $600 on the EU spot market). This will ensure the country's energy security and increase the competitiveness of local industries in the future. By 2030, consumption could reach 70 billion cubic meters. However, due to increased domestic consumption, Algeria's proven gas reserves are gradually depleted. This is a problem compounded by the need to continue exporting gas due to record prices on global markets. Algeria is facing pressure from potential European customers and Western companies such as Eni and Total, who are lobbying for a systematic solution aimed at increasing gas exports. For example, the refusal to develop renewable energy sources, to establish gas and chemical companies, etc. So far, Algeria has resisted increasing exports at the expense of the domestic market, keeping them at 40 to 45 billion cubic meters.
However, there is still a significant downward trend; each year, Algeria exports pipeline gas to fewer countries. Exports to Morocco and Portugal stopped in 2021-2022 and exports to Spain are currently in decline. In this context, Italy has established itself as a major center for Algerian gas in Europe. Exports to Italy reached 22.6 billion cubic meters in 2022, the highest in the last 10 years. This was possible due to the global decline in LNG exports and lower exports to Spain.
Nigeria's Postcolonial Challenge
However, Nigeria's gas consumption has not exceeded 11 to 13 billion cubic meters in the last eight years. This is similar to the annual gas consumption of Singapore, which has a population 30 times smaller than Nigeria and an area smaller than Lagos. The country's oil and gas industry is subject to regulations that encourage exports of raw materials and energy resources even if domestic market demand is not met. International corporations often play a key role in creating postcolonial legal frameworks that artificially limit the amount of energy resources flowing into African domestic markets to feed production chains outside of Africa. For example, Shell exports gas to Nigeria at double the price it sells for on the market. The company found every excuse to focus its transport capabilities on export, without making significant efforts to expand its offer on the domestic market. These export-oriented policies that seek to maximize profits and marginalize domestic markets and infrastructure while ignoring community needs and environmental demands are causing many problems in Nigeria. Currently, no one is thinking about developing the domestic market because maintaining export volumes is the biggest problem. As of October 2022, NLNG Limited, the operator of the Nigerian LNG plant for Total, Eni, and Shell, has declared "force majeure" due to "flooding" of its pipelines and gas fields. Other problems have arisen, including resource depletion (due to delays in commissioning new gas fields) and infrastructure deterioration. Consequently, this plant, with a production capacity of 22.5 million tons, produced 16 million tons of LNG in 2021, but LNG production was limited to 14.2 million tons.
In 2019, NLNG shareholders made a final investment decision to build the plant's seventh processing unit. This will increase the production capacity to 30 million tons per year. This made the situation even more absurd. A report by the HSE Africa Research Centre, titled “NLNG T7: How to euthanize Nigeria’s energy sector”, said Western companies will seek gas for a seventh processing unit (10-11 billion cubic meters per year). It happens. Forget developments in Nigeria's domestic gas market. Gas plants in African countries will run out of gas, the duration and frequency of power outages will increase, and people will continue to spend more on diesel generators and rely on other solutions (such as LPG). Under these conditions, industrial development stagnates because the construction of any industrial enterprise in Nigeria (not even a refinery, let alone a factory) requires additional costs for continuous power supply.
When is the next tour?
Although Europe's 2022 charm offensive has failed, it is clear that the EU is trying to gain access to additional African gas. European delegations will continue to visit Algeria, Nigeria, and Egypt regularly, even as smaller LNG plants are expected to come online in Senegal and the Republic of Congo.
European multinationals, international development assistance institutions, and organizations continue to work together to advance the energy agenda, including through legislative proposals, white paper proposals, analytical reports, and staff training. You can say it like this: We import gas and instead build sustainable power plants on credit. For example, German and Nigerian companies signed two memorandums of understanding (MOU) on November 21, 2023. One concerns the export of gas from Nigeria to Germany and the other involves German companies building sustainable power plants in Nigeria.
In this case, industrial development is excluded. The future of Africa and its industries depends on the ability of the continent's governments to bring resources to market. Algeria's experience proves that this strategy is possible. Vsevolod Sviridov, an expert at the Center for African Studies, HSE University
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