Where is the cash for Europe’s dash for gas?

The European Commission may have focused only on €4 billion worth of coal in the latest sanctions package proposed on Tuesday but a total EU energy embargo covering Russian oil and gas has become inevitable. Germany and Austria are among the last remaining holdouts, but the reports of war crimes and other atrocities committed by the Russian army against civilians only serves to speed up the journey toward a full embargo.

EU governments certainly know it, otherwise, they would not have spent the last month hawking for alternative gas supplies from the Middle East and North Africa. By most accounts, Europe has sufficient reserves to make it through to November, but urgency is still the order of the day.

Along with Qatar and Azerbaijan, African states are the most likely sources of alternative supplies.

The situation in North Africa would be more straightforward had the bloc, or rather individual countries, not contributed to Libya’s plight as a failed state by picking sides in the civil war that dominated most of the last four years. The EastMed pipeline, which Greece, and others, now want to expand to transport gas from Algeria into Europe, goes through Libya. Had it not fallen, Libya itself could have been an alternative oil and gas provider for Europe.

In particular, African states know that they have a huge commercial and geopolitical opportunity, just months after the Commission focused on encouraging the phase-out of fossil fuels on the continent. One question is whether Europe will be able to provide the financial investment needed and quickly, to expand productive capacity and the pipelines to deliver it from North African states, Nigeria and elsewhere. The private sector will not do it alone, and nor are oil and gas majors likely to have the volume of funding needed or quickly enough.

Europe’s desperation for gas appears likely to mean that a blind eye will be turned to autocratic regimes in North Africa and elsewhere. The pipeline which transports Algerian gas to Spain and Portugal goes through Tunisia, where President Kais Saied last week dissolved parliament six months after suspending it and sacking the government. That cold logic, perhaps, explains why the Commission is going to continue providing €450 million in financial support to Tunisia this year.

Algeria, Niger, and Nigeria recently agreed to construct the multi-billion, 4,128 km Trans-Saharan Gas Pipeline, which will run through the three countries into Europe and seek commercial investment in the project. Once completed, the pipeline will transport 30 billion cubic meters of gas per year. But getting the project to that stage will cost the thick end of €10 billion.

Europe will find a way to replace Russian gas, but it will have to pay and, for the moment, it is not clear where the cash will come from.