- The war in Ukraine has shown how dependent Europe is on natural gas for power. Before the conflict broke out in February this year, Russia supplied up to 40 per cent of Europe’s gas requirements.
- As Russia cuts supplies, these nations are rushing to strike deals in Africa as prices soar.
- Significant investments are needed to build Africa’s trans-regional and intercontinental pipelines to open up 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 exposed and exacerbated tensions in international agricultural commodity markets existing amid the COVID-19 pandemic. Import-dependent countries with low per capita incomes are particularly vulnerable to shocks occurring amid the war in Ukraine, which further increase their risk of food insecurity.
The agricultural sector is not the only one that is experiencing disruptions; the global energy sector is suffering the same fate too. Nonetheless, Southern African countries are finding better positions as alternative energy suppliers to European countries.
In reaction to the invasion of the Ukraine, in April, 2022 the European Union prohibited Russian coal imports, although the full implementation of the restriction as part of the extensive penalties was delayed until 10 August.
At a time when there is already anxiety over diminishing supplies of Russian gas and a severe energy shortage in the winter, the ban on Russian coal imports will put additional strain on coal supplies and drive European consumers to search elsewhere.
According to a May 26, 2022 report by Africa News, as Europe takes steps to limit its imports of Russian gas, the continent’s governments have been considering Africa as a potential source of alternative energy. New deals have been signed with Algeria, Angola, Congo, and Nigeria, and others are thought to be on the way.
That way, disruptions in some exporting regions can be compensated for by exports from another. However, this requires greater collaboration in international trade. African countries that in the past would not have been considered viable energy producers to meet Europe’s demands are now among the top contenders.
More than three million tonnes of coal were imported by European nations from South Africa in the first five months of 2022. Over 40 per cent higher volume was reported this year than was overall the previous year. A growing number of European nations, including the Netherlands, Germany, Poland, Denmark, France, Italy, and Ukraine, were importing coal from South Africa. According to Thungela Resources, Europe and Asia compete with South African coal.
According to data from South Africa’s Richards Bay Coal Terminal (RBCT), 3,240,752 tonnes of coal were sent to European nations by the end of May this year, accounting for 15 per cent of RBCT’s total exports, up from 2,321,190 (4 per cent) in 2021.
According to a report by Euractiv dated June 15, 2022, the Netherlands bought 1.27 million tonnes of coal from RBCT in March, April, and May, with monthly amounts rising. In February, the Netherlands got no coal from RBCT. With 5.76 per cent of all volumes, it was the fourth largest consumer of RBCT coal.
From just 68,005 tonnes throughout the entire previous year to 464,432 tonnes so far this year, France’s coal imports from RBCT increased by almost seven times. Last year, none of the coal from RBCT was imported by Spain, Poland, or Germany. Spain imported 355,250 tonnes in the first five months of this year, Poland imported 181,515 tonnes, and Germany imported 157,383 tonnes.
Japan, which has also said it would ban Russian coal imports, received 388,249 tonnes of coal from RBCT since January, nearly double the tonnage it bought last year. China, the third biggest importer of coal from RBCT in 2021 with 6.09 million tonnes, did not receive any coal from the terminal this year, figures showed, reflecting China’s increased imports of Russian coal.
The war in Ukraine has also shown how dependent Europe is on natural gas for power. Before the conflict broke out in February this year, Russia supplied up to 40 per cent of Europe’s gas requirements.
Some of the countries in Central and Eastern Europe that are most affected by their dependency on Russian gas are Hungary, the Slovak Republic, and the Czech Republic. There is a risk of shortages of as much as 40 per cent of gas consumption and gross domestic product shrinking by up to 6 per cent. However, it is possible to mitigate the effects by securing alternate supplies and energy sources, eliminating infrastructure bottlenecks, promoting energy efficiency while protecting low-income households, and expanding solidarity agreements to distribute gas between nations.
As Russia cuts supplies, these nations are rushing to strike deals in Africa as prices soar.
Senegal, in West Africa, is rapidly expanding its liquefied natural gas sector to turn it to become an exporting nation. European companies are developing projects in Mozambique, much as how Egyptian enterprises are expanding as a result of the discovery of the greatest LNG resources in the Mediterranean.
Mozambique is preparing to ship its first shipment of liquefied natural gas abroad, joining the ranks of the world’s exporters as a result of a worldwide energy shortfall that has driven the cost of the fuel to all-time highs. The first export terminal in Mozambique is now operational.
Eni’s US$7 billion Coral-Sul project has continued to advance despite the epidemic and a Mozambican insurrection with ties to the Islamic State that disrupted a US$20 billion Total Energies SE export plant. The project had been aiming for first deliveries by October. In 2016, BP agreed to purchase all of Coral-Sul’s output, which is expected to yield 3.4 million metric tons of LNG over 20 years.
According to estimates from Oxfam and the Ministry of Finance, Mozambique will receive around US$11.6 billion in revenue from Coral Sul FLNG over its operating life. According to Eni, Mozambique will make US$16 billion in revenue, while up to US$24.5 billion in revenue has been predicted by the Ministry of Mineral Resources and Energy.
Still, like in many other African countries, significant investments are needed to build trans-regional and intercontinental pipelines to open up access to Europe. And they all need plenty of capital.