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Europe Does A Complete U-Turn On African Oil And Gas

  • As European governments race to secure every drop of natural gas that they can, consumers in countries like Nigeria and Mozambique are losing out.
  • The hypocrisy of Europe asking for oil and gas from countries that, just last year, it had told to keep fossil fuels in the ground only makes it harder to take.
  • While there is uncertainty regarding whether African oil and gas countries have time to exploit their resources, this reversal from Europe certainly gives them a chance.

European governments are scouring the world for natural gas as they seek to reduce their overwhelming and increasingly uncomfortable dependence on Russia's Gazprom.

Besides the United States, which has done its best to supply as much LNG as possible to its European allies, several African countries have emerged as potential sources of additional gas supplies. But they are not exactly happy about it.

"The gas here goes to Bonny and Europe to power homes and industries but we have no benefits from it," one local community development activist from the Niger Delta told Bloomberg recently. "Nothing comes to us."

The comment was part of an in-depth analysis by Bloomberg on Europe's mad dash for gas that has seen Nigeria, for example, send millions of tons of LNG abroad while local communities use illegally made fuels and wood to stay warm. Nigeria is far from the only one.

Mozambique is one of the biggest LNG hopefuls in the world, and the current energy security anxieties of European leaders have made it even more important. But Mozambique is a troubled country. It is suffering extremist attacks on civilians that have, in addition to the tragedy of human deaths, delayed the development of the country's gas reserves.

Yet there is a much bigger problem with Europe and its thirst for African hydrocarbons. Hypocrisy.

For years, new oil and gas field development and pipeline construction projects across Africa have suffered setbacks because of Western banks and governments' unwillingness to fund new hydrocarbon projects as the crusade on carbon emissions gathered pace.

Now, suddenly, the tables have turned with a deafening crash. The G7 is suddenly all for new oil and gas investments abroad after committing to suspend these just last November at the COP26. And Europe, that same Europe that has been advising African countries to focus on renewable energy and keep the oil and gas in the ground, is now asking for gas.

The International Energy Agency has joined the discourse, too, adding urgency to the continent's hydrocarbon development outlook. In a report released last month, the IEA said African gas producers had limited time to commercialize their resources, saying these producers needed to act quickly because the world would only need gas for a while before going low-carbon.

Apparently, the large-scale development of African gas resources was not at odds with Paris Agreement targets, according to the IEA's secretary-general, Fatih Birol. He told Reuters back in June that "If we make a list of the top 500 things we need to do to be in line with our climate targets, what Africa does with its gas does not make that list."

He also said that if African countries with gas reserves turned all of these reserves into production, this production could reach 90 billion cubic meters per year by 2030, of which two-thirds could be used domestically and the rest exported.

That would be 30 billion cubic meters for exports, equivalent to what the United States and Qatar, taken together, can supply annually to Europe. For context, Russian gas exports to Europe totaled 158 billion cubic meters last year.

Of course, to do that, energy companies and other funding providers would need to strengthen their walk-back on emission reduction commitments. They will probably do just that, on the basis that 'it's only for a short while", as Germany's government said when it decided to restart coal plants.

But there are environmental concerns about the long-term viability of gas production in Africa itself.

"It's difficult to predict how long this opportunity will be there, especially in the context of the energy transition, the world moving away from the fossil fuels," Silas Olan'g, Africa co-director of the Natural Resources Governance Institute, a New York-based environmental NGO, told NPR recently. "I think they are kind of misleading most of the governments," he said.

The situation is pretty complicated. On the one hand, some, notably the leaders of African countries with oil and gas reserves, feel that these countries deserve the chance to exploit these reserves the way Western countries did, which was instrumental in their evolution into developed economies.

While a year ago, the West would have frowned at this argument, now it is in the West's interest to support it wholeheartedly, so it gets a piece of the gas—and oil, why not—pie.

But on the other hand, there are environmentalists in Africa, too, and they are concerned that the continent's gas-rich countries may be going into a trap of stranded gas assets. It is difficult to argue with this concern when so many think tanks active in the same area as the NRGI are warning about such stranded assets.

Of course, the current U-turn being made by Europe and the U.S. appears to counter the argument of stranded assets and suggests that gas-rich African countries such as Nigeria, Senegal, Angola, and Equatorial Guinea have sufficient time to monetize their resources. If the U-turners are willing to provide the money for it.

By Irina Slav for Oilprice.com

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  • George Doolittle on July 21 2022 said:
    My understanding is that coal from Columbia is what Europe is using to offset whatever has been lost *because Putin.* lng is only hugely expensive right now for Europe because of an odd weather situation both in Europe and in Texas.

    Either way the bulk of US natural and all pricing is determined at the Waha Hub in Midland, Texas...the biggest energy boomtown on Earth at the moment...with exports heading into Mexico...so Europe does have to compete with that absolutely. Of course the Netherlands could solve this so called crisis if Europe would allow for that. There are also very profound nuclear power issues at play as well in Europe something Germany is averse towards confronting too. Point being July will soon turn to August and with that perhaps something at least *less hot.* In the meantime there is IBM and Tesla still.

    Plus Brazil and Libya for all the energy product imaginable not from Russia, the USA, Azerbaijan etc. Point being the entire Western World is simply swimming in energy product save for ironically Canada which has its own set of problems but as far as an actual glut of energy product nothing beats the USA going on forever now with the PHEV vehicle sales only now just very suddenly becoming *The Big Thing* in the USA with the Jeep Wrangler Xe leading the way.

    Presumably the Ford Bronco indeed entire Ford vehicle Fleet will not let that challenge go unanswered. "Waste not want not" as they say. The economic impact in the USA of a Jeep PHEV becoming a huge sales hit cannot be overstated. Gasoline consumption in the USA could really and truly plunge if that suddenly becomes part of "It's a Jeep Thing." In the old days Gleaner Combines used to run on perfectly awesome Chevy V8s in point of fact.
  • Desmond Mlatha on July 21 2022 said:
    How does the risk of stranded assets even arise when Africa has such a huge energy demand that is unfulfilled? Millions of African families don't have access to electricity and its industrial base (which will demand energy to power it) is vastly underdeveloped. It seems the only energy crisis that justify the "emergency" use of fossil fuels is the European energy crisis and not the chronic lack of access to electricity of millions of African households. As for the so called "African environmental activist" they are increasingly coming across as a self serving group that don't mind a sea of human misery as long as it is on a prestine planet. The problem with some of the "activism" that is out there is that it has become a career for the activist - a self serving means of sustaining ones livelihood which has the added benefit of making one come across as virtuous.
  • Kamaldeen Uth on July 23 2022 said:
    You could imagine all sort of extremism. How could they, who in the hell do they think they are. We have not even settled all shits brought upon us by them and now here they come smiling saying 'hey hurt yourselves for us, remember we own you'. But that's far long ago cos we go march no more cos those demons ain't listen to marching. don't they get it their problems cannot be ours cos ours has never been theirs They are not getting a dime and here comes winter(time tells) #UntilAfricaLivesMatter#

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