Italy and other European Union nations have kicked off a 21st century scramble for African energy in a search for alternatives to cheap and reliable Russian natural gas.
Last Wednesday, Italian energy giant Eni signed an agreement with Egypt’s Natural Gas Holding Company to boost gas production and the export of liquefied natural gas (LNG) to Europe. The company, which already holds stakes in the African nation’s gas fields and the Damietta LNG plant, promises that the deal could result in the delivery of as much as 3 billion cubic meters (bcm) of Egyptian gas supplies to Europe before the end of the current calendar year.
That agreement came on the heels of Italian Prime Minister Mario Draghi’s visit to Algeria last Monday to search for gas supplies. Eni and Algeria’s Sonatrach penned an agreement to increase bilateral natural gas trade to up to 9 bcm by 2023-2024. Eni has been operating in Algeria since 1981, with the North African delivering gas supplies to Italy and Spain using several pipelines running through the Mediterranean.
Italy, the EU’s third-largest economy, relied on Russian gas for about 40 percent of its consumption in 2021. Rome has promised to completely end its reliance on Russian supplies by 2025, but stressed that halting imports completely was currently “not on the table” at the EU level at the moment.
Gas Safari
South of the Sahara, the Nigerian National Petroleum Company (NNPC) announced last week that ambassadors from the European Union had visited the country in search of a ‘strengthened partnership’ in the energy sector. The delegation included EU envoy Samuela Isopi, and ambassadors from Portugal, Spain, Italy and France. No agreement was announced after the meetings.
The Europeans’ embrace of their newfound (hoped for) Nigerian partners comes after years of efforts to defund regional natural gas projects on environmental grounds. Last year, Nigerian Environment Minister Mohammad Mahmood Abubakar accused wealthy Western nations of deliberately “limiting financing for gas projects for domestic use in Sub-Saharan Africa”.
In late March, Nigerian Minister of State for Petroleum Resources Timipre Sylva called on foreign oil and gas companies such as Eni, Shell and Total to invest in his country. In February, European Commission Vice-President Margrete Vestager and Nigerian Vice President Yemi Osinbajo agreed to “explore all options for increased supply of liquefied natural gas from Nigeria to the EU.” Presently, over 90 percent of the country’s gas is bought by China.
On Thursday, Bloomberg reported that Italy’s Draghi was planning to carry out a whirlwind trip to central and southern Africa this week in search of gas deals with Angola and the Republic of Congo. According to the business outlet’s calculations, Rome’s wheeling and dealing could replace half or more of the supplies it currently gets from Russia. The outlet did not specify how much the new contracts would cost compared to the gas the country gets from Gazprom – which has long been seen as more cost competitive and reliable by Italy and other European countries thanks to the use of pipelines – instead of more expensive LNG terminals and special tanker ships.
Draghi unexpectedly cancelled his trip to Africa on Monday, saying he had come down with “asymptomatic” Covid. Foreign Minister Luigi Di Maio and ecology minister Roberto Cingolani are expected to go ahead with the visit.
Draghi has stated explicitly that his country’s push to move away from Russian gas is a political, rather than an economic, decision. “We no longer want to depend on Russian gas, because economic dependence must not become political subjugation. To do this, we need to diversify energy sources and find new suppliers,” he said in an interview with the Corriere della Sera newspaper published Sunday.
Italy and other European countries and the United States have faced a surge in inflation, fuel and cost of living costs in recent weeks in the self-inflicted fallout from sweeping sanctions slapped on Russia over its military operation in Ukraine.