Money and Markets

Europe is looking to Africa for alternatives to Russian gas

Business Insider US
Europe is under pressure to cut off Russian energy sources amid the the Ukraine war.
Andrea Ronchini/NurPhoto/Getty Images
  • EU countries are under pressure to ban Russian energy sources due to the war in Ukraine.
  • Italy has signed gas deals with Algeria and Egypt and is eyeing deals with the Republic of Congo and Angola.
  • European ambassadors have met the Nigerian National Petroleum Corporation recently.
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Europe is looking to Africa for its energy needs as countries seek to cut their reliance on Russian imports amid the war in Ukraine. 

Italy — the third-largest European Union (EU) economy — has pushed ahead in pursuing deals, with energy supermajor Eni signing an agreement last Wednesday with state-owned Egyptian Natural Gas Holding Company to promote gas exports to Europe.

Earlier in the same week, Italian Prime Minister Mario Draghi visited Algeria, where Eni signed an agreement to buy more natural gas from Algerian state energy firm Sonatrach through 2024, the Italian company said in a press release. That's equivalent to 12% of Italy's gas consumption in 2021, per Bloomberg.

Algeria already supplies gas to Europe via three pipelines, one of which goes to Italy. Two other pipelines are linked to Spain.

Italy's deals came on the back of a meeting among European ambassadors and the Nigerian National Petroleum Company last Monday that sought to "strengthen partnership" in the energy sector, the company tweeted last Monday.

Draghi  is slated to travel to central and southern Africa this week with potential deals in the Republic of Congo and Angola, Bloomberg reported, citing people familiar with the matter. These potential deals, together with the extra natural-gas volumes Italy has already secured from Algeria, would be able to replace over half the supply it gets from Russia as early as 2023, according to Bloomberg.

The EU is a major customer of Russian energy. Earlier in April, the trade bloc approved a ban on Russian coal. It's also considering an oil embargo, but has not mentioned cutting off natural gas as Europe remains highly reliant on piped gas from the country.

However, in an interview published Sunday, Draghi told Corriere della Sera that Europe can wean itself off Russian energy imports through diversification in a time frame that was "shorter than what we imagined just a month ago."

"We no longer want to depend on Russian gas, because economic dependence must not become political subjugation," he told the outlet. "To do this, we need to diversify energy sources and find new suppliers."

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