- The war in Ukraine has shown how dependent Europe is on natural gas for electricity. Before the conflict broke out in February this year, Russia supplied up to 40% of Europe’s gas needs.
- As Russia cuts supplies, these countries are rushing to strike deals in Africa as prices soar.
- Significant investments are needed to build Africa’s trans-regional and inter-continental pipelines to open access to Europe
The global realignment triggered by the war in Ukraine ushered in a period of transition on the African continent. The current conflict has exposed and exacerbated the tensions in international agricultural commodity markets existing amid the COVID-19 pandemic. Import-dependent countries with low per capita income are particularly vulnerable to shocks during the war in Ukraine, which further increase their risk of food insecurity.
The agricultural sector is not alone in experiencing disruption; the global energy sector is also suffering the same fate. Nevertheless, Southern African countries are finding better positions as alternative energy suppliers to European countries.
In response to the invasion of Ukraine, in April 2022 the European Union banned imports of Russian coal, although full implementation of the restriction under heavy sanctions was postponed until August 10.
At a time when there are already concerns about dwindling Russian gas supplies and a severe winter energy shortage, the ban on Russian coal imports will put additional pressure on coal supplies and encourage European consumers to look elsewhere.
According to a May 26, 2022 report by Africa News, as Europe moves to limit its imports of Russian gas, governments across the continent are looking to Africa as a potential source of alternative energy. New agreements have been signed with Algeria, Angola, Congo and Nigeria, and others are reportedly on the way.
In this way, disturbances in some exporting regions can be offset by exports from another. However, this requires greater collaboration in international trade. African countries that in the past would not have been seen as viable energy producers to meet Europe’s demands are now among the main contenders.
More than three million tons of coal were imported by European countries from South Africa in the first five months of 2022. More than 40% more volume was reported this year compared to all of the previous year. A growing number of European countries, including the Netherlands, Germany, Poland, Denmark, France, Italy and Ukraine, imported coal from South Africa. According to Thungela Resources, Europe and Asia are in competition with South African coal.
According to data from South Africa’s Richards Bay Coal Terminal (RBCT), 3,240,752 tons of coal were sent to European countries by the end of May this year, accounting for 15% of RBCT’s total exports. , compared to 2,321,190 (4%) in 2021.
According to a EURACTIV report dated June 15, 2022, the Netherlands purchased 1.27 million tonnes of coal from RBCT in March, April and May, with monthly quantities rising. In February, the Netherlands did not receive any coal from RBCT. With 5.76% of all volumes, it was the fourth largest consumer of RBCT coal.
From just 68,005 tonnes throughout the previous year to 464,432 tonnes so far this year, French imports of RBCT coal have increased nearly sevenfold. was imported by Spain, Poland or Germany. Spain imported 355,250 tons in the first five months of this year, Poland imported 181,515 tons and Germany imported 157,383 tons.
Japan, which has also said it will ban imports of Russian coal, has received 388,249 tons of coal from RBCT since January, nearly double the tonnage purchased last year. China, RBCT’s third-largest coal importer in 2021 at 6.09 million tonnes, received no coal from the terminal this year, the figures showed, reflecting rising Chinese imports of Russian coal.
The war in Ukraine has also shown how dependent Europe is on natural gas for electricity. Before the conflict broke out in February this year, Russia supplied up to 40% of Europe’s gas needs.
Some of the Central and Eastern European countries most affected by their dependence on Russian gas are Hungary, the Slovak Republic and the Czech Republic. There is a risk of a shortage of up to 40% of gas consumption and a reduction in gross domestic product of up to 6%. However, the effects can be mitigated by securing alternative energy supplies and sources, removing infrastructure bottlenecks, promoting energy efficiency while protecting low-income households and expanding solidarity agreements to distribute gas between nations.
As Russia cuts supplies, these countries are rushing to strike deals in Africa as prices soar.
Senegal, in West Africa, is rapidly developing its liquefied natural gas sector into an exporting nation. European companies are developing projects in Mozambique, just as Egyptian companies are expanding following the discovery of the largest LNG resources in the Mediterranean.
Mozambique is preparing to ship its first shipment of liquefied natural gas overseas, joining the ranks of global exporters due to a global energy shortage that has driven the cost of fuel to unprecedented levels. The first export terminal in Mozambique is now operational.
Eni’s $7 billion Coral-Sul project has continued to move forward despite the outbreak and an Islamic State-linked Mozambican insurgency that disrupted a $20 billion Total Energies SE export plant. The project aimed for the first deliveries by October. In 2016, BP agreed to buy all production from Coral-Sul, which is expected to produce 3.4 million metric tons of LNG over 20 years.
According to estimates by Oxfam and the Ministry of Finance, Mozambique will receive approximately $11.6 billion in revenue from Coral Sul FLNG over its lifetime. According to Eni, Mozambique will realize $16 billion in revenue, while up to $24.5 billion in revenue has been projected by the Ministry of Mineral Resources and Energy.
Yet, as in many other African countries, significant investment is needed to build trans-regional and inter-continental pipelines to open up access to Europe. And they all need a lot of capital.