Angola is the African country with the most potential to meet Europe’s gas needs – analyst

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Angola is the African country with the most potential to meet Europe’s gas needs – analyst

11:09 CAT | 12 May 2022

FILE - For illustration purposes only. [File photo: ANGOP]

The Control Risks analyst who follows Portuguese-speaking economies told Lusa on Wednesday that Angola is the African country with the most potential to meet the energy needs of Europe, which is seeking to move away from Russia.

“Angola has the greatest potential to meet the European Union’s energy needs in the short term; it is one of the few countries in the region that already exports gas to international markets, including Brazil, Japan, China and South Korea,” Marisa Lourenço told Lusa, speaking about the new European energy policy.

At issue is the attempt by Western countries to diversify gas purchases from Russia and the prospect that African gas-producing countries may be a viable alternative.

“The ability to increase gas production, along with the well-established supply chain, makes this country the immediate winner of the geopolitical shift brought about by the war in Ukraine, with Equatorial Guinea, the Democratic Republic of Congo, Mauritania and Senegal well-positioned to benefit in the next two to three years,” the analyst said.

“Not only does Angola have an export infrastructure that gives it an advantage over regional peers, allowing the European Union to access supply chains, but the major oil companies do not have to invest as much capital to access reserves and are capable of increasing production,” the analyst added.

Praising Sonangol as “a competent company that can attract highly qualified foreign workers,” the Control Risks analyst noted that European countries are looking at Angola, exemplifying this with the “important agreement” between Italy and the Portuguese-speaking African country to “diversify energy sources.

Opportunities for Angola will also arise from “the deep historical ties with Portugal and France and the strengthening of the relationship with Germany since João Lourenço came to power in 2017.

Asked about the prospects for Equatorial Guinea and Mozambique, which will be one of the world’s largest gas producers by the end of this decade, Lourenço said: “Mozambique, like Nigeria, will not be able to seize the opportunity, the former due to the volatile security situation and the latter due to the limited development of the gas sector and a confusing regulatory framework.

The military insurgency in Mozambique’s Cabo Delgado province “is delaying the country’s progress from a small producer selling most of its production to South Africa to a global exporter”, with exports due to start in 2026, “but this date is still subject to the volatile security environment.”

On Equatorial Guinea, the South African analyst said the country should benefit from its link with Spain, which is its largest trading partner, “meaning it will have the opportunity to revive dormant gas fields to serve other markets in the European Union in the next two to three years.”

Equatorial Guinea, like Angola, “has the export infrastructure ready, with shipments not only to Spain but also to Chile and the United States, but an inefficient bureaucracy hampers the market’s attractiveness, although increased demand and the opportunity for major oil companies to move away from Russia may motivate improvements in the business environment.”

Russia invaded Ukraine on 24 February, and the military offensive has already caused the deaths of more than 3,000 civilians, according to the UN, which warns that the actual number is likely to be much higher.

According to the latest UN figures, the military offensive has caused more than 13 million people to flee, including more than 5.5 million out of the country.

The international community condemned the Russian invasion in general, which responded by sending arms to Ukraine and strengthening economic and political sanctions against Moscow.

Source: Lusa