Europe makes a complete U-turn on African oil and gas

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

In addition to 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 really happy about it.

“The gas here goes to Bonny and Europe to power homes and industries, but we don’t get any benefit from it,” a local community development activist in the Niger Delta told Bloomberg recently. “Nothing comes to us.”

The comment was part of an in-depth review analysis by Bloomberg on Europe’s rat race for gas that has seen Nigeria, for example, send millions of tonnes of LNG overseas while local communities use illegally manufactured fuels and wood for heat. Nigeria is far from alone.

Mozambique is one of the world’s biggest LNG hopefuls, and current energy security concerns from European leaders have made it even more important. But Mozambique is a troubled country. It suffers extremist attacks against civilians which, in addition to the tragedy of human deaths, deferred 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 projects to develop oil and gas fields and build pipelines across Africa have suffered setbacks due to the reluctance of Western banks and governments to finance new hydrocarbon projects when that the crusade against carbon emissions was gathering pace.

Now, suddenly, the tables have turned with a deafening crash. The G7 is suddenly in favor of new oil and gas investments abroad after pledging to suspend them last November at COP26. And Europe, the same Europe that advised African countries to focus on renewables and keep oil and gas in the ground, is now asking for gas.

The International Energy Agency has joined so does the discourse, adding urgency to the continent’s hydrocarbon development prospects. In a report released last month, the IEA said African gas producers had a limited time to bring their resources to market, saying such producers needed to act quickly because the world would only need gas for a certain amount of time. time before becoming low carbon.

Apparently, the large-scale development of African gas resources was not in contradiction with the objectives of the Paris Agreement, according to IEA Secretary General Fatih Birol. He told Reuters in June that “while we list the top 500 things we need to do to be in line with our climate goals, what Africa is doing with its gas is not on that list.”

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

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

Of course, to do this, energy companies and other funders would have to step up their return on emissions reduction pledges. They probably will, on the basis that “it’s only for a short time”, as the German 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 hard to predict how long this opportunity will be there, especially in the context of the energy transition, with the world moving away from 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 kind of mislead most governments,” he said.

The situation is quite complicated. On the one hand, some, especially the leaders of African countries with oil and gas reserves, believe that these countries deserve the opportunity to exploit these reserves as Western countries have done, which has been instrumental in their evolution towards developed economies.

Whereas a year ago the West would have frowned on this argument, it is now in its interest to support it wholeheartedly, so that it gets a slice of the gas pie – and oil, why not?

But on the other hand, there are also environmentalists in Africa, and they fear that the continent’s gas-rich countries could find themselves in the trap of stranded gas assets. It’s hard to argue with that concern when so many think tanks active in the same field as the NRGI are warning about such locked-in assets.

Of course, the current U-turn by Europe and the United States seems to counter the stranded assets argument and suggests that gas-rich African countries like Nigeria, Senegal, Angola and Equatorial Guinea have enough 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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