Europe Turns to Africa to Meet Energy Needs Amid Russia-Ukraine Crisis
By Kester Kenn Klomegah
With the never-ending Russia-Ukraine crisis, Europe now turns to Africa for its energy needs. Notwithstanding the distance, European Union members have set their eyes on African oil and gas producing countries that could be potential alternative suppliers.
In the latest research developments, Italy becomes one more EU member closely coordinating with Algeria, Angola, Equatorial Guinea, Egypt, Nigeria and Mozambique.
During the first Russia-Africa summit, a number of African countries were soliciting Russia’s assistance in exploring their oil and gas reserves in Africa. Some agreements were signed with Russian companies such as Bashneft, Gazprom Neft, Lukoil, Rosneft et cetera.
Long before the start of the February 24 “special military operations” in Ukraine, many African leaders illogically failed to understand that Russia has always wanted to claim a global leading position in oil and gas supply. Experts have said that Africa’s supply would affect the aggregate global supply and consequently its prices.
According to official reports, the Russian Ministry of Natural Recourses and Environmental says that Bashneft and Gazprom Neft have expressed intention of joint development projects with Angola.
“The sides welcome Rosneft’s intention to develop cooperation with Angolan national oil company Sonangol in the area of studying potential joint development of oil and gas fields in Angola and Russia,” the protocol says.
As a direct result of the “special military operation” launched on February 24, Russia has come under a raft of unprecedented stringent sanctions imposed by the United States and Canada, the European Union, Japan, Australia, New Zealand and a host of other countries.
This has to be analysed and its geopolitical and business implications. The fact is that bilateral business relations and geopolitical impact are changing, to some degree. The crisis has absolutely posed challenges, but at the same time opened possibilities and prospects for establishing new partnership cooperation between state institutions as well as between foreign countries and Africa.
Eurasia Review research shows that Angola is Africa’s second-biggest oil producer after Nigeria. It has 1.7 billion tonnes of proven oil reserves and a resource portfolio of up to 3.5 billion tonnes, with liquid hydrocarbons predominating. Angola mainly develops fields under production-sharing agreements; Sonangol has a stake in the majority of them.
Media reports have said that Italy and a number of other EU members scramble to break away from Russian gas over the Ukraine war. This April, many of them turned to Africa. Angola and Italy have already signed a declaration of intent to develop new natural gas ventures and to increase exports to Italy, said a statement from the Italian Foreign Ministry.
“We have reached another important agreement with Angola to increase gas supplies. Italy’s commitment to differentiate energy supply sources is confirmed,” Foreign Minister Luigi Di Maio said in the statement at the end of a two-and-half-hour long visit to Luanda.
Prime Minister Mario Draghi wants to add Angola and the Congo Republic to a portfolio of suppliers to substitute Russia, which provides about 45 per cent of Italian gas.
“We do not want to depend on Russian gas any longer, because economic dependence must not become political subjection. Diversification is possible and can be implemented in a relatively short amount of time — quicker than we imagined just a month ago,” he said in an interview with the Corriere Della Sera daily published this April.
The deal was described as “an important agreement that gives impetus to the partnership between Italy and Angola in the fields of renewables, biofuels, LNG and training in technology and environment.”
The Italy delegation headed to neighbouring Brazzaville, the Republic of Congo, to meet President Denis Sassou Nguesso. A similar declaration is to be signed in the Republic of Congo.
The foray follows the signing of agreements with Algeria and Egypt in recent weeks. Algeria is currently Italy’s second-largest supplier, providing around 30 per cent of its consumption. ENI said the deal with Algeria’s Sonatrach would boost deliveries of gas through the Transmed undersea pipeline by “up to nine billion cubic meters per year” by 2023-24.
Transmed only had a spare pipeline capacity of 7.8 billion cubic meters per year in 2021 — though it has said it is ready to expand. Italy has also been in talks with Azerbaijan over the expansion of the Trans-Adriatic Pipeline (TAP).
Many experts have scholarly written about the implications of the Russia-Ukraine crisis, and what that means especially for Africa. For example, Research Fellow Danielle Resnick from the Brookings wrote that the crisis casts a long shadow across Africa. Despite the geographical distance, there are implications for pan-African solidarity and adherence to multilateralism is increasingly uncertain.
She further stressed that a few countries are sensing long-term growth opportunities from the crisis. Specifically, Africa’s natural gas could reduce Europe’s dependence on Russian energy. The African countries mentioned earlier in this article with dreams of re-outlining serious business on the global landscape, Tanzania has revamped negotiations with energy companies in the hopes of attracting $30 billion in foreign investment to revive construction of offshore liquefied natural gas projects in 2023.
From Nigeria to Niger to Algeria, the Trans-Saharan Gas Pipeline has specific importance as it can help to increase exports of natural gas to European markets. On February 16, the three countries signed an agreement to develop the pipeline, estimated to cost $13 billion. Europe is likely to be a key financer, bolstered by the EU’s controversial decision in early February to label investments in natural gas as green energy.
Now there are a few key questions: Can Africa really become the preferred gas and oil supplier to Europe? Will Russia invest in exploring and producing Africa’s oil and gas? Do African leaders understand that Russia wants to be the global leader and helping them explore oil and gas is illogical?
As European Union has already indicated during the last EU-AU summit, it looks at Africa from different perspectives and more importantly pushes for its economic footprints on the continent. Fresh from that EU-AU summit, there are agreements on several investment projects.
EU is committing approx. €300 billion ($340 billion) for financing new investment initiatives — similar to China’s Belt and Road initiative — an investment program the bloc claims would create links, not dependencies. EU and SADC, for instance, have been worrying about facilitating and coordinating the implementation of the regional agenda in Southern Africa.
As Research Fellow Danielle Resnick from the Brookings explicitly pointed out there would be tensions between the United States together Europe on one side and Russia, on the other, over Ukraine. Nevertheless, African leaders have to analyze this within the geopolitical context and take into account various scenarios for the near future.
The proximity of the European market gives the especially Maghreb, the North African country strategic significance to become a potential gas supplier. She cited Algeria, as the world’s sixth-largest gas exporter and the continent’s largest gas producer. It has already stated its intention to double exploration and production in the next five years, according to the International Energy Agency.
Algeria increased its export volumes to Europe from €40 billion in 2020 to 53 billion euros in 2021, and it is expected to export €46 billion or more in 2022, as demand in Europe is expected to continue to rise.
African countries can capitalize on current trends to attract much-needed investment in order to develop the infrastructure necessary to accelerate production for regional consumption and exportation while also reducing costs. According to Abdur-Rasheed Tunde Omidiya, President of the African Economic Commission, “the time to act on the Trans-African Gas plan is NOW.”
Global Food Price Index Trends Downward in May
By Adedapo Adesanya
Global food prices dropped in May 2023, the United Nations Food and Agriculture Organisation (FAO) said on Friday.
The FAO Food Price Index (FFPI) averaged 124.3 points in the month under review, down 3.4 points (2.6 per cent) from April and as much as 35.4 points (22.1 per cent) from the all-time high it reached in March 2022.
The decline in May was underpinned by significant drops in the price indices for vegetable oils, cereals and dairy, which were partly counterbalanced by increases in the sugar and meat indices.
The FAO Cereal Price Index averaged 129.7 points in May, down 6.5 points (4.8 per cent) from April and as much as 43.9 points (25.3 per cent) below its record-high value one year ago. International wheat prices declined by 3.5 per cent month-on-month, reflecting prospects for ample global supplies in the upcoming 2023/24 season and the extension of the Black Sea Grain Initiative.
World maize prices fell by 9.8 per cent in May. A favourable outlook for 2023/24 points to a rebound in global supplies, with higher production expected in Brazil and the US, two major exporters, weighed on prices.
A slow pace of US exports and China’s cancelled purchases also exerted downward pressure on world maize prices.
Among other coarse grains, world prices of barley and sorghum also declined, by 9.5 per cent and 9.7 per cent, respectively, influenced by declines in international maize and wheat prices.
By contrast, international prices of rice continued to increase in May, as previous deals with Asian buyers were executed, and supplies tightened in some exporters, such as Viet Nam and Pakistan.
The FAO Vegetable Oil Price Index averaged 118.7 points in May, down 11.3 points (8.7 per cent) month-on-month and standing as much as 48.2 per cent below its year-earlier level. The continued decline in the index reflected lower world prices across palm, soy, rapeseed and sunflower oils.
International palm oil prices fell markedly from April, as protracted weak global import purchases coincided with expectations of rising outputs in major producing countries.
In the meantime, world soyoil prices dropped for the sixth consecutive month, largely underpinned by the persistent pressure from a bumper soybean crop in Brazil and higher-than-expected stocks in the US, where higher supplies of alternative feedstock partially replaced the uptake from the biodiesel industry. As for rapeseed and sunflower oils, international prices continued to decline on ample global supplies.
The FAO Dairy Price Index averaged 118.7 points in May, down 3.9 points (3.2 per cent) from April and standing 25.5 points (17.7 per cent) below its corresponding value in 2022.
The decline in May was led by a steep drop in international cheese prices, principally due to ample export availabilities, including from inventories, amid seasonally high milk production in the northern hemisphere.
Following 10 consecutive monthly declines, international price quotations for milk powders rebounded, reflecting an upturn in purchases by North Asian buyers and seasonally falling milk supplies in Oceania.
Meanwhile, butter prices rose slightly, as increased price quotations for supplies from Oceania, due to high purchases by Southeast Asian buyers and seasonally falling milk supplies, were almost offset by a decline in European prices on high export availabilities.
The FAO Meat Price Index averaged 117.9 points in May, up 1.1 points (1.0 per cent) from April, marking the fourth consecutive monthly increase, but still 5.0 points (4.1 per cent) below its value in the corresponding month last year.
International poultry meat prices increased further in May, driven by the continued high import demand, especially from Asia, and some concerns over potential short-term supply challenges due to widespread avian flu outbreaks.
World bovine meat prices increased slightly, underpinned by higher global demand for Brazilian supplies and persistent supply tightness in the US despite the continued high cattle slaughter in Australia. Pig meat prices rose for the fourth successive month, although only marginally, as supply limitations stemming from high production costs and animal diseases elsewhere boosted demand for Brazilian supplies. Meanwhile, world ovine meat prices fell on high export availabilities from Oceania.
The FAO Sugar Price Index averaged 157.6 points in May, up 8.2 points (5.5 per cent) from April, marking the fourth consecutive monthly increase, and as much as 37.3 points (30.9 per cent) above its value a year ago.
Rising concerns over how the development of the El Niño phenomenon may affect the 2023/24 crops, together with lower-than-earlier-expected global availabilities in the 2022/23 season, triggered the increase in international sugar prices in May. Shipping delays amid strong competition from soybean and maize in Brazil also supported the increase in world sugar prices.
However, the positive outlook for the 2023 sugarcane crops in Brazil, along with improved weather conditions benefiting the progress of the harvest, prevented larger monthly price gains. Lower international crude oil prices and a cut in fuel prices in Brazil further contributed to limiting the month-on-month increase in world sugar prices.
Kenyan Entrepreneurs to Access Funds with Hustler Group Loan
By Adedapo Adesanya
Kenyan entrepreneurs will access more loans with the launch of Hustler Group Loan, the second product of the Financial Inclusion Fund, an initiative of the President William Ruto administration.
President Ruto said this would boost the hustler spirit and deepen financial inclusion in the country since the Fund has witnessed 42.5 million transactions through which 20.2 million Kenyans have accessed about Sh30 billion.
He also noted that enterprises will now have access to affordable and accessible financing to spur their growth.
The birth of the Hustler Group Loan follows the launch of the Hustler Fund early in the year; out of the Sh30 billion, Sh19.7 billion has been repaid.
“Not a single shilling has been stolen through corruption,“ President Ruto insisted.
He said he was keen on ensuring that businesses access affordable credit.
“That is the route to ensuring that enterprises grow, generate more earnings and create more jobs for millions of underprivileged Kenyans,” the President said on Thursday, June 1, in Moi Stadium Embu during the Madaraka Day celebrations.
Comoros President Azali Assoumani, Deputy President Rigathi Gachagua, Prime Cabinet Secretary Musalia Mudavadi, Cabinet Secretaries, Embu Governor Cecily Mbarire, MPs, Former President of Niger Issoufou Mahamadou, among others, were present.
The Kenyan President also said he was keen on enhancing food production through subsidising production.
He said five million farmers have registered and benefited from the government’s subsidised fertilisers.
“As a result of these interventions, farmers have been able to plant 200,000 additional acres of food this year,” he said.
On health, the president explained that the government would reform the National Health Insurance Fund to meet the needs of Kenyans.
He noted that he was committed to delivering Universal Health Coverage.
He said the government has collaborated with counties to recruit community health promoters to deepen this goal.
“These promoters will facilitate early detection of conditions for referral to further attention.”
On his part, the Deputy President said the government had initiated practical measures that would put more money in the people’s pockets.
Mr Gachagua said he would lead town hall meetings with farmers to develop sustainable plans to uplift them.
Imagine the Strategic Partnership between Asmara and Moscow
By Kestér Kenn Klomegâh
In this extremely poor Eritrea nation located in the Horn of Africa, with a population of 3.6 million, what factors could attract to strengthen cooperation in the spheres highlighted by Russian President Vladimir Putin during a meeting with President of the State of Eritrea Isaias Afwerki at the Kremlin.
According to reports from the Kremlin on May 31, Putin referred to the fact that Eritrea has recently marked 30 years of independence. This was when the two countries established diplomatic relations too.
Russia is attracted due to its highly strategic location. Eritrea is bordered to the northeast and east by the Red Sea, Sudan to the west, Ethiopia to the south, and Djibouti to the southeast. The undemarcated border with Ethiopia is the primary external issue currently facing Eritrea. Geopolitical history informed us that Eritrea’s relations with Ethiopia turned from that of cautious mutual tolerance, following the 30-year war for Eritrean independence, to a deadly rivalry that led to the outbreak of hostilities from May 1998 to June 2000 that claimed approximately 70,000 lives from both sides.
Despite the differences between Ethiopia and Eritrea, Russia maintains good relations with the two. But the main significance, as stressed during the meeting, was trade and economic relations which deserve primary attention. There could only be a few, of course not a lot, of potential in many areas. From our studies, agriculture makes up 11 per cent of the wider economy’s value and is the main economic activity in Eritrea.
In 2013, the pickup in growth had been attributed to the commencement of full operations in the gold and silver Bisha mined by Canadian Nevsun Resources, the production of cement from the cement factory in Massawa and investment in Eritrea’s copper and zinc. Chinese are very active in the mining sector, and the Australians operate Colluli potash mining. In 2020, the IMF estimated Eritrea’s GDP at $2.1 billion.
With that economic background, however, Russia sees an opportunity to develop trade and economic ties between the two countries. “Of course, we must, first of all, pay attention to the development of trade and economic ties, here we have good prospects in many areas,” Putin said.
As expected, there was a display of passion for packing official documents. After a series of substantive consultations on partnership and intensive preparations between Asmara and Moscow, the delegation signed several intergovernmental agreements. “I am sure that our talks today will be successful and will benefit the development of relations between the Russian Federation and Eritrea,” Putin stressed.
The trade turnover between Russia and Eritrea in 2022 amounted to $13.5 mln, including $11.5 mln from wheat exports, according to materials for the talks between Putin and Isaias Afwerki in the Kremlin.
“The trade turnover between Russia and Eritrea in 2022 amounted to $13.521 mln (exports: $12.745 mln, including $11.5 mln – wheat (27,500 tons); imports: $776,000),” the statement said.
In 2021, the trade turnover between the two countries amounted to $9.314 mln. Exports of wheat amounted to $8.125 mln, oil products – $175,000, and sulfates – $888,000. At the same time, imports of ready-made clothes reached $126,000.
According to the statement, Eritrea is highly interested in strengthening ties with Ural Automobile Plant and Kamaz. In 2018, Kamaz delivered 56 cars and 5 buses valued at around $5 million to Eritrea.
“In my view, the global order, which is on the cusp of a radical transformation, requires an objective appraisal and mutual consultations on the timeless subject matter and phenomena of paramount importance and significance. The common assessment that we undertake will, in turn, revitalise the formulation of programmes and partnerships that we chart on,” Isaias Afwerki said during the meeting.
Isaias Afwerki believes that Russia was the primary competitor and rival of the policy of encirclement and containment by the forces of domination from the early 1990s, and its global impact in the past 30 years was considerable indeed. Russia did not undertake, at the outset, all the necessary preparations for effective resistance.
An integrated and comprehensive strategy of resistance was not accordingly set in motion. But with time, as the latent policy of containment against China becomes more transparent, international awareness of the free people has increased.
“It is imperative to expand and deepen this awareness, chart out a comprehensive strategy and concrete plans that encompass all fields, create dynamic mechanisms, marshal the necessary resources to ascertain the advent of and transit to a civilised international order of mutual respect, cooperation, complementarity and prosperity, where justice and the rule of law prevail. This is not an option but an obligation,” he explicitly pointed out to Putin.
It is important to remember that Russian Foreign Minister Sergey Lavrov visited Eritrea in January 2023. He said the agenda for Russia-Eritrea cooperation focuses on implementing potential joint projects, including the logistics hub in Asmara. At a meeting at that time, Afwerki and Lavrov also discussed the radical changes in the international situation and key directions for the development of Russian-Eritrean relations. Lavrov reported to Putin about the results of his African tour at a Security Council meeting.
Afwerki has been president since 1993, when Eritrea gained independence from Ethiopia. He is the first and the only person to hold the post. Sergey Lavrov visited Eritrea in January as he toured Africa. The commercial activities revolve around this strategic location as a transit point, and the strategic location also makes the country prime for an increased military presence. This is the strategic importance for Russia.
Lavrov spoke extensively about economic cooperation. According to him, Russia’s truck maker KAMAZ was already working in Eritrea, supplying its products to that country, as was Gazprombank Global Resources, which was building cooperation in the banking sector. In the same year, 2018, concrete talks were held to build a logistics centre at the port of Eritrea, which makes the world’s class logistics and services hub for maritime transportation through the Suez Canal and is definitely set to promote bilateral trade.
Still that same year, Eritrea was interested in opening a Russian language department at one of the universities in the capital of the country, Asmara. Lavrov further indicated: “We agreed to take extra measures to promote promising projects in the sphere of mining and infrastructure development and to supply specialized transport and agricultural equipment to Eritrea.”
In April 2022, Eritrea’s top diplomat, Osman Saleh, made a quick reciprocal visit to Moscow to receive honour and congratulations for opposing the resolution in New York. That was in March 2022; Eritrea was one of the countries who voted against the resolution condemning Russia over the situation in Ukraine at the United Nations.
Eritrea is now a member of the African Union. The Eritrean government previously withdrew its representative to the African Union to protest the AU’s alleged lack of leadership in facilitating the implementation of a binding border decision demarcating the border between Eritrea and Ethiopia. Eritrea is also a member of the United Nations.
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