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EU looks for alternatives in Africa and the Middle-East

The halt of Russian gas supplies to Ukraine and the possible complications that may follow are prompting the EU to diversify its alternative supplies, namely in Africa and the Middle East.

The halt of Gazprom’s supplies to Ukraine on the last 16 June, in the context of the political crisis with Russia has encouraged the European Union to diversity its sources of supply. During their last 13 June Council, European Ministers of Energy decided to strengthen energy security, both through such diversification and the increase of storage and terminal capacities. They also discussed the strategy proposed on the last 28 May by the European Commissioner for Energy, Günther Oettinger.
In a report to the EU ministers, he reminded that in 2013, supplies from Russia accounted for 39% of EU natural gas imports, in a context where gas imports which represent about 70% of EU consumption, re expected to increase up to 85 % by 2030. “Accessing more diversified natural gas resources is a priority whilst maintaining significant import volumes from reliable suppliers”, recommends the report which mentioned Norway (33%), Algeria and Libya (22%) as the main other sources of supplies, while the rest (about 6%) consisted in liquefied natural gas (LNG) imports from countries such as Qatar or Nigeria.
On the supply side, there is also an awareness about the EU’s diversification needs. During the Financing Summit for Africa’s Infrastructure which took place on the last 14 and 15 June in Dakar organised by President Macky Sall of Senegal,in his capacity of Chairperson of the New Partnership for Africa’s Development (NEPAD), participants insisted on the need to promote the construction of the Trans-Sahara Gas Pipeline (TSGP) between Nigerian gas fields whose reserves are estimated as the world’s 7h largest with a total of 183 trillion cubic feet. This 4,400 km pipeline is to link the Qua Ibom Terminal in the state of Calabar in the Niger Delta (Nigeria), through Niger to Hassi R’Mel in Algeria and beyond to the existing Maghreb-Europe, Medgaz and Galsi pipelines across the Mediterranean sea.

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The NEPAD staff stressed the high quality of Nigerian gas which is rich in liquids and low in sulphur and the cost-competitiveness of the project whose cost is valued at US $ 23 billion, since the estimated gas wastage of the liquefaction process can be as high as 18%. NEPAD also insists on the relevance for both Europe and Africa of the TSGP project planned by the Nigerian National Petroleum Company (NNPC), Algeria’s Société nationale pour la recherche, la production et le transport des hydrocarbures (Sonatrach) and the Société nigérienne des produits pétroliers (SONIDEP). Accordingly, the pipeline would partly compensate for the depletion of the Dutch and British gas fields. According to its promotors, the TSGP would also contribute to eliminating natural gas flaring in Nigeria and supply gas to Northern Nigeria, Niger, Southern Algeria, as well as to Burkina Faso, and Southern Mali which are currently affected by low energy access, high energy prices and desertification.

EU Alternatives_1408NE-3However, the EU strategy at the moment is rather pro-LNG than in favour of the TSGP which it still favoured in 2010. Since then, the spread of terrorist attacks by the jihadist group Boko Haram in Nigeria or the war in Sahel waged by Al Qaida in the Islamic Maghreb and its allies from the Movement for Unicity and Jihad in West-Africa, has discouraged attempts to go ahead with the implementation of the project. In this context, the EU states that “LNG will remain and grow as a major potential source of diversification in the years to come. New LNG supplies from Northern America, Australia, Qatar and new discoveries in East-Africa (such as Tanzania or Mozambique) are likely to increase the size and liquidity of the global LNG markets”.
Some European companies are also negotiating LNG supply contract with US LNG producers which will be able to export shale gas from a liquefaction plant which will be built on the East-Coast of United States and should be operational by 2015-2017. At the same time, says the Commission, imports from Norway and North Africa which boasts from potentially huge unexplored or unexploited hydrocarbons resources and the advantage of geographical proximity, “have potential to grow”.

EU Alternatives_1408NE-4The establishment of the Southern Corridor prepares the ground for supplies from the Caspian region and beyond. In a first phase it is expected that by 2020, 10 billion cubic meters/year of natural gas produced in Azerbaijan will reach the EU. This new pipeline connection is vital in providing a connection to the Middle East. The currently envisaged infrastructure in Turkey could accommodate up to 25 billion cubic meters/year for the European market. In the longer term perspective, countries such as Turkmenistan, Iraq and Iran, could also significantly contribute to the enlargement of the Southern Gas Corridor. But “a coherent and targeted EU Foreign policy vis-à-vis these countries is required” says the EU Commission which recommends the intensification of political and trade dialogue with Northern African and Eastern Mediterranean partners, with a view to creating a Mediterranean gas hub in the South of Europe.

François Misser

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