In the Midst of Europe’s Energy Crisis, Africa Offers a Solution
African Energy Week in Cape Town comprises the best platform for European stakeholders to negotiate with African gas suppliers, as the continent offers a critical solution to Europe’s ongoing energy crisis.
Europe’s ongoing energy crisis has not only created, but emphasized, the role that African natural gas will play in global markets. Restricted supply, coupled with heightened prices, has left Europe aggressively pursuing alternative supply solutions, and Africa has emerged as the ideal producer. With African Energy Week (AEW) 2021 coming up on the 9th-12th of November, African solutions to Europe’s gas crisis will be discussed, with stakeholders emphasizing the vital need for enhanced gas networks, infrastructure developments, and pipeline expansions between Africa and Europe.
Europe’s gas crisis can be attributed to several factors. Firstly, the country’s reliance on energy imports has left it at the mercy of international market fluctuations. Eurostat estimates Europe’s natural gas dependency measured 89.5% in 2019, and with domestic production decreasing every year, the reliance on international supply chains has been exacerbated. This has created significant challenges for the continent, both during the COVID-19 pandemic, and in a post-pandemic climate. Secondly, with the global energy transition calling for the shift from ‘dirty’ fossil fuels to cleaner energy solutions, many countries have increased natural gas utilization. Accordingly, demand increases, particularly in Asian markets, have resulted in European supplies being spread thin. In conjunction with weather fluctuations in Asia and South America – leading to increased demand for gas – Europe has seen a significant shortage of supply and subsequent price increases – estimated at over 400%.
However, in the midst of this crisis, African natural gas might just be the solution. The continent’s significant resources can be leveraged not only for domestic use, but export to global markets. Currently, the majority of Europe’s gas supply comes from Russia – approximately 41% -, and with H.E. President Vladimir Putin announcing that the country will not be increasing supplies to Europe, despite the crisis, Africa can capitalize on this new opportunity.
Africa has already established supply linkages with Europe, with major pipeline projects in north Africa supplying the continent with critical natural gas. Notable pipelines include the Maghreb-Europe Gas Pipeline (MEG) – linking the Hassi R’mel field in Algeria through Morocco with Spain – and the Medgaz pipeline – directly linking Algeria to Spain. The pipelines enable Algeria to supply Spain with approximately 9 billion cubic meters (bcm) of gas per year – 3.67 bcm via the MEG pipeline and 5.39 via the Medgaz pipeline. With planned pipeline capacity enhancements expected for the Medgaz pipeline, African natural gas exports to Europe can be increased.
Meanwhile, other export infrastructure projects have been proposed across the continent. Nigeria, for example, is planning the development of a trans-Sahara Gas Pipeline aimed at expanding west-African gas exports and meeting European demand. In the proposal stages, the pipeline will link Nigeria with Algeria, connecting existing pipelines with Europe. Intra-African infrastructure projects such as this will only be further enabled with the implementation of the African Continental Free Trade Agreement in January 2021. Capitalizing on new and improved trade opportunities, countries in west, east and southern Africa will now be able to export natural gas to European markets.
Additionally, in a move to monetize the continent’s significant natural gas resources, African countries have been accelerating the development of Liquefied Natural Gas (LNG) projects, and Europe stands to benefit. Projects such as Mozambique’s 12.1 million tons per annum (mtpa) LNG facility; Tanzania’s 10 mtpa LNG liquefaction plant; and Senegal’s 10 mtpa Greater Tortue Ahmeyim project will not only enhance domestic utilization but will generate new export opportunities between Africa and Europe. By exporting to European markets, Africa’s LNG can not only be used to address global energy demand, but can significantly enhance revenue, driving socio-economic growth and alleviating poverty.
This opportunity will be emphasized at AEW 2021 in Cape Town. With global and African stakeholders meeting to discuss the future of African energy, the platform will be ideal for export negotiations between Europe and African suppliers. In addition to promoting Africa-Europe gas networks, the event aims to promote the role that infrastructure developments will play in global supply chains. Africa’s resources have the potential to transform the global energy space, and with the right investment and development, the continent will emerge as a frontrunner in global gas supply.
At AEW 2021 in Cape Town, representatives from Africa’s large-scale natural gas projects will engage with global stakeholders, making a strong case for the role of African gas in global markets. African gas is the solution to Europe’s gas crisis, and this will be highlighted in Cape Town.
AEW 2021, in partnership with South Africa’s Department of Mineral Resources and Energy DMRE, is the AEC’s annual conference, exhibition and networking event. AEW 2021 unites African energy stakeholders with investors and international partners to drive industry growth and development and promote Africa as the destination for energy investments.
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