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Gas shortage in Europe propels Algeria to the forefront

arabnews.com
arabnews.com
The aggression against Ukraine is having ripple effects on the European economy, due to the massive sanctions imposed on Moscow and subsequent retaliatory measures, that are escalating the confrontation between Russia and the West. Already facing the gas crisis emerged in the aftermath of the COVID-19 pandemic and the disruption of the supply chain worldwide, Europe is seriously looking to diversify its energy supplies away from Russia. Unfortunately, Germany’s breakthrough decision to suspend the Nord Stream 2 project leaves Brussels with no other option than to look south to meet its natural gas needs.
Given the chronic instability in Libya, Algeria seems in a privileged position to become a key energy hub, also considering the existing network of pipelines linking the Maghreb country to Europe. Following a visit by an Italian delegation, including Foreign Minister Luigi Di Maio and the chief executive of ENI Claudio Descalzi, the Algerian national oil company said it was ready to supply Europe with more gas. In an interview with the Algerian daily Liberté, Sonatrach’s CEO Toufik Hakkar hinted at the possibility to push the 32-million cubic meters per year offshore Trans-Med gas pipeline to Italy to full capacity, as well as suggesting the option to further expand supplies of liquified natural gas (LNG) via tankers.
However, it is very unlikely that Algiers can compensate for the declining Russian gas supply in the short term, given not only the considerable difference in volumes exported, but also the unforeseen consequences of the divisive geopolitics of the Maghreb. Indeed, Algeria’s decision to close the 12-billion cubic meters per year Maghreb-Europe Gas Pipeline (MEGP) last October has left the 10-billion cubic meters per year offshore Medgaz pipeline as the only route to supply natural gas to Portugal and Spain. Interestingly, just a few weeks before the visit of the Italian delegation in Algiers, Spain had preliminarily agreed with Morocco to reopen and reverse the flow of the MEGP, to supply gas to the Alawite kingdom.
Despite the need to maintain a delicate balance between its strategic partnership with Russia and the need to take full advantage of the recent spike in oil prices caused by the invasion of Ukraine, recent steps suggest that Algeria has every intention to seize the moment, increase gas supplies to European partners and consolidate a legitimacy eroded by years of anti-regime protests. In January Hakkar said that Sonatrach will invest more than US$40 billion in oil exploration, production and refining, while pressure is mounting to untap the vast shale gas reserves, despite environmental concerns.
More importantly, at the third edition of the Mining and Petroleum Forum of the Economic Communities of West African States (ECOWAS) held in February in Niamey, Algeria, Niger and Nigeria agreed to resume the Trans-Saharan Gas Pipeline project, which, upon completion, will carry 30 billion cubic meters per year from Nigeria to the European markets. The move, confirming the resilience of the Algiers-Abuja-Pretoria axis on the African continent despite inroads made by Rabat in recent years, shows the crucial role that Algeria intends to play in the long term, but it is also likely to produce further frictions in the Maghreb, where Rabat is pursuing other avenues sponsoring the Nigeria-Morocco Gas Pipeline project.

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