Project review

deemed risky, due to development costs and financing challenges among other issues.

Russia's dominance in the global energy market is an old tale, as it remains the world's third-largest oil producer; supplying nearly a sixth of the global oil and gas supply; pumping US 11.3 billion barrels per day, and is the second-largest exporter and producer of Liquefied Natural Gas (LNG). The country is renowned as a major gas supplier to Europe, accounting for 62 per cent of its gas imports in the past 10 years. However, Africa has similarly maintained a consistent presence on the list of Europe's gas suppliers, with gas exports leveraging 18 per cent over the same period. Nigeria is Europe's fourth largest supplier of LNG, providing 13bcm of LNG in 2021.

According to the International Energy Agency (IEA), in 2021, EU bought 155 billion bcm of Russian gas, accounting for 45 percent of the EU's gas imports, and around 40 percent of its total gas consumption. Solely, Germany imports nearly 555,000 barrels of Russian oil per day. The IEA further estimates, that despite facing sanctions and boycotts from the West; the Kremlin is earning around US$20 billion each month in 2022, from the combined sales of crude and oil products.

According to a recent Rystad Energy report, African nations are well placed to scale up their exports in gas supplies to Europe. With perspective that Africa is already in possession of existing pipelines connected with the wider European gas grid, across the Mediterranean, the traditional oil and gas suppliers in the continent have an upper hand in tapping into European markets, and well poised to scale up their exports. Pipeline exports to Europe from Africa run through Algeria into Spain and from Libya into Italy. However, discussions about long-distance pipelines connecting gas fields in Southern Nigeria to Algeria via the onshore Trans Saharan Gas Pipeline (TSGP); together with the offshore NMGP, have gained momentum since the onset of the war in February.

Benefits of the Nigeria-Morocco Pipeline to Africa The Nigeria-Morocco gas pipeline, is projected to be a game changer in catalyzing the economic and social development of the continent; whose vision is driven by the need for regional stability, security and sustainable development. It will prove especially significant, not only in bolstering the regions' GDP, but also in inter-Africa development and integration, as it is projected to address regional energy security hurdles. According to the Head of the Atlas Center for the Analysis of Political and Institutional Indicator, Mohamed Bowden, the project's primary goal is to stimulate regional development by serving the energy needs of close to 400 million people.

The Pipeline is expected to strengthen energy exports to Europe, improve access to energy across the West Africa region, alleviating the region's most existential barrier to development; the lack of affordable energy. With deeper electricity penetration, countries will be able to generate sufficient electricity for a myriad purpose, from powering homes to agricultural and industrial activities.

Accordingly, this will trigger the expansion of other key sectors, boosting the competitiveness of exports amongst African countries. Moreover, the economies will witness increased employment opportunities, solving the critical unemployment quagmire, similarly plaguing the region. It will reduce gas inflation in Nigeria and encourage diversification of energy.

Furthermore, the project will foster bilateral and multilateral relations, through the mutual cooperation mechanisms such as the AU and regional economic alliances. In addition, under the macro-effects, it will boost African countries in terms of attracting investments, reducing extremist and criminal activities in the region; which will be bolstered by stakeholders' interest in maintaining regional stability, to avert possible shocks to the global energy supply chain, thereby strengthening security.

Moreover, the project will accelerate the rate of the implementation of the cross-continental road, Tangiers-Lagos; consolidating efforts to tackle the perennial Europe-bound irregular immigration. In terms of environmental implications, gaining access to gas will pave way for green manufacturing, whereby emissions will significantly reduce, as manufacturers turn from charcoal to natural gas.

Potential risks

If African countries are to take advantage of this colossal opportunity, presented by the global energy deficit, they need to iron out certain bottlenecks. The lack of investment in gas infrastructure has remained a major roadblock, especially in Sub-Saharan Africa. Consequently, this lack of transnational infrastructure presents challenges, in the export of Africa's natural gas reserves.

For African countries to fill Russia's gap in meeting Europe's gas needs, it needs adequate pipelines coupled with processing and storage facilities. Therefore, there is need for deepening investment pools from financial institutions, energy companies and European countries. Undoubtedly, the project requires a large network of international collaborators and stakeholders, from the public and private sectors. Minimizing Europe's reliance on Russian gas is no child's play, therefore massive capital is needed to build Africa's gas infrastructure. Gaining international investment will help the project reach its long-term objectives, and become more sustainable.

The security of energy supplies is another hurdle to contend with, given that most of the energy exported from Sub-Saharan Africa, needs to pass through the Sahelian region; that is often rife with long-running security challenges emanating from political, economic and social issues. This is further exacerbated by terrorism, violent extremism from radical Islamist groups, such as Nigeria's Boko Haram and ethnic violence. Similarly, Africa's eastern coast faces the same quagmire, where Islamist insurgency in Mozambique's Cabo Delgado, forced Total Energies to halt work and withdraw its personnel due to growing insecurity.

How can Africa Tap into this opportunity and make its oil valuable?

The Russian-Ukraine crisis has led Europe to reassess its energy transition agenda, placing the continent under Europe's radar, as a potential future gas supplier. Africa's energy powerhouses, are garnering attention especially from Europe such as Nigeria, Angola and Senegal, which offer largely untapped potential for LNG. African LNG exports predominantly emanate from Nigeria and Algeria, with smaller volumes from Angola, Egypt and a fraction from Equatorial Guinea. Nigeria is a member of the OPEC group of major oil producers, and possesses a wealth of gas resources, boasting of the largest proven reserves in Africa, and ranks seventh globally, as a major supplier of gas and LNG.

Africa should seize this economic opportunity driven by the rapid rise in oil and gas prices, especially from Europe, as it seeks to break its dependence on Russian hydrocarbon. At a glance, Africa's hydrocarbon resources appear to be a promising solution to Europe. However, does Africa have the requisite capacity to meet European energy demands? Inarguably, it's tempting for European leaders to eye Africa, given the continent's proximity, vast fossil fuel reserves and its growing LNG market.

Africa's crude oil reserves as of 2021, amounted to 125.3 billion barrels, whilst natural gas reserves stood at 625 trillion cubic feet. Nonetheless, the capability of African countries to fill this gap; a demand equivalent to lie between 50 to 190 bcm annually, as Russia has been supplying, is contingent on numerous factors; such as adequate energy infrastructure and access to adequate capital, necessary to build the requisite infrastructure thereof.

The report from Rystad Energy, quoted by OilPrice indicates that Africa is likely to reach peak gas production capacity by 2030; at 470Bcm, 75 per cent of Russia's 2022 production capacity. Furthermore, the report reveals that the continent will still boost its gas output from 260Bcm this year, to as much as 335 Bcm in 2030. In the scenario that oil and gas operators decide to scale operations, Africa's short and mid-term gas output will exceed the reported estimates.

"The geopolitical situation in Europe is changing the landscape for risk globally. While LNG flows from US are substantial, demand is much higher. Asian and European importers will need to consider African priorities as they develop projects, as many African producers are focusing on supplying energy locally, as well as to intra-African markets along with catering to global markets. Siva Prasad, Senior Analyst at Rystad Energy explained to OilPrice. Moreover, the expert noted that the existing pipeline infrastructure from Northern Africa to Europe and historical LNG supply relationships, make Africa a strong alternative for European markets, post the ban on Russian imports.

The project is of strategic importance to many international players. The recent frequency of high-level meetings between Nigerian officials and the American energy department, indicates that the US has interest in supporting the project. Given that China has already invested US$16billion in the Nigerian oil industry, it's keen to see that the pipeline crosses with its Belt and Road initiative. Russia has also indicated growing interest in the project, as the country seeks to overcome west-imposed sanctions, by diverting its investments towards Africa.