![[Column] NJ Ayuk: Russia’s invasion of Ukraine has expanded the meaning of “energy transition” in Europe](Images/Key Persons/Nj ayuk-centurion law group.jpg)
[Column] NJ Ayuk: Russia’s invasion of Ukraine has expanded the meaning of “energy transition” in Europe
Russia’s invasion of Ukraine has expanded the meaning of “energy transition” in Europe.
Usually, that term means moving away from the fossil fuels that have driven progress for generations and turning, instead, to emerging green energy sources. But with the U.K. phasing out Russian oil imports following the U.S.’s ban — and more EU countries expected to follow suit — this time the transition refers to finding new hydrocarbon sources.
Currently, Russia supplies about a third of Europe’s crude oil imports and nearly half of its natural gas, some 150 to 190 billion cubic meters of gas per year. It will require a producer with sizable resources to take Russia’s place.
The world is wondering, and rightfully so, if Africa’s gas reserves — an estimated 221.6 trillion cubic feet — could be part of the energy solution Europe so desperately needs.
My answer: Yes, African countries can help fill the gap. They can provide the “Freiheits Gas” that will wrest Europe from its dependence on Russian pipelines.
But getting there will be tough. African countries will need months to ramp up their gas production, especially since until very recently, Western leaders and environmental organizations were aggressively pushing for a rapid halt to African gas investment in the name of climate protection — an effort that sent foreign companies running for cover.
Reducing the time required to get natural gas flowing and exported will require speedy action on the part of European and African stakeholders.
For one thing, while Africa has a wealth of natural gas reserves, it is considerably lacking in gas infrastructure. Without a prompt and significant uptake in investments by European countries, financial institutions, and energy companies, there’s no way Africa will have enough pipelines, storage capacity, or processing facilities to adequately meet Europe’s gas needs.
African leaders must act decisively as well, to smooth the way for European entities to successfully invest in African oil and gas infrastructure projects, make deals rather than engage in unreasonable delays, and get gas production and transportation in motion. And, at the same time, African governments must do as much as possible to consider African needs, even as they attempt to meet Europe’s.
Africans have been arguing that before rushing to renewable energy sources, we need to continue producing natural gas so we can use it to power electricity generation domestically and address the continent’s widespread energy poverty. We have argued that we need time to monetize the natural gas value chain so we can build energy infrastructure, both for fossil fuel and renewable energy operations. Monetizing gas in Africa would create economic opportunities for our young people at home. So many of them today are making the risky journey across the Mediterranean in search of greener pastures in Europe. We can create greener pastures in Africa with clean natural gas and send low carbon LNG and green hydrogen to Europe. African natural gas can be a critical pathway to growing and diversifying African nations’ economies and paving the way for a successful and just energy transition.
As we increase natural gas activity, we must not lose sight of our goals for Africa. We must work together, and strategically, to drive the programs that will make them happen, from commitments to retain some of the natural gas we produce for gas-to-power projects to monetization efforts.
So, yes, let’s work with European countries to help them lessen their dependence on Russian gas, but let’s not fail to meet the pressing needs of African nations at the same time.
Europe, We Must Be Pragmatic
For several years now, European countries, financial institutions, and environmental activities have been placing immense pressure on African countries to abandon gas reserves and make an immediate switch to green energy.
More recently, this pressure has gone further, interfering with foreign investments in African natural gas projects. During the 2021 United Nations Climate Change Conference (COP26) in Glasgow, for example, more than 20 countries and financial institutions pledged to stop public financing for overseas fossil fuel projects.
Environmental concerns that were not backed by science even blocked Dutch multinational Shell from carrying out a seismic survey to prospect for oil and gas reserves along the eastern coast of South Africa last December, despite South Africa’s great need for energy and the role any oil or gas discovered could have played in lessening the country’s energy poverty. (Shell just has a successful discovery in Namibia, and I am confident they will successfully use carbon capture technologies to produce carbon-neutral hydrocarbons.)
But if this pattern of interfering with African oil and gas financing and production continues, existing gas projects in Mozambique, Tanzania, Nigeria, Equatorial Guinea, Mauritania, Congo, and Senegal stand to be at risk. New and expanded gas projects are unlikely. Capital goes where it is welcomed.
Now, with the crisis in Ukraine, it has become clear we are not yet close to the worthy goal of zero-emissions energy, we’re just not there yet. Within days of Russia’s invasion, gasoline prices were already edging higher, a sign of the market’s reliance on crude oil as a transportation feedstock. Today, we’re seeing the highest prices for fuel in decades. As for natural gas, it reached an all-time high in Europe on March 7 and continues to set records. So, no, Europe isn’t there yet, and neither is Africa. Producing, transporting, and using natural gas, the cleanest of all fossil fuels, is not even a necessary evil. It’s a reasonable means of meeting widespread energy needs while keeping carbon dioxide emissions in check.
Imagine if the European Investment Bank and other financial institutions were to start funding gas projects. No, it wouldn’t deliver the gas Europe needs today, but it will help longer-term by providing an alternative to Russian energy. It will help by making African countries a reliable, sustainable source of natural gas for Europe well into the future. And it would position Africa to meet its own pressing energy needs.
I have challenged a large number of companies to commit to signing gas and green hydrogen agreements at African Energy Week this October in Cape Town. The recent green hydrogen development deal signed by German energy company, Emerging Energy Corporation, in Niger Republic is a move in the right direction.
A final thought about Europe: It needs to stop handicapping Africa with handouts and foreign aid. The aid must stop. It is not helping us. We’d much rather see Europe cooperate with us and focus on free-market enterprise, economic freedom, and gas monetization.
Africa’s Next Steps
It would be easy to place all of the blame for Africa’s infrastructure shortfalls on the lack of European investments. But African governments share responsibility. We must do for ourselves what we expect others to do for us. It’s not Europe’s responsibility to build Africa.
African countries for years placed far greater importance on crude oil production, and the resulting revenues they received from oil majors, than they did on producing natural gas and monetizing it to fund infrastructure development. Fortunately, that mindset has been evolving with more African countries, including Nigeria, Equatorial Guinea, South Africa, and Ghana, pursuing natural gas monetization initiatives. But these processes take time.
NJ Ayuk is Executive Chairman of the African Energy Chamber and CEO of Centurion Law Group
