Unrest hits Europe gas strategy

Civil war in Libya and uncertainty over available gas from Egypt and Algeria means major additions to supply from the three major North African markets is unlikely

For several years, one of the key aims of Europe’s energy strategy has been to secure a diverse and reliable gas supply. The continent’s own gas production is declining, and there is a presently an over-reliance on Russia to make up the shortfall. Europe has increasingly looked to North Africa as a potential means of diversifying its sources of gas. But civil war in Libya and uncertainty over available gas from Egypt and Algeria may mean it has to rethink its plans.

In a report published in early June, the Paris-based International Energy Agency (IEA) forecast that annual gas demand among European members of the Organisation for Economic Co-operation and Development (OECD) could rise to 667 billion cubic metres by 2035, a 20 per cent increase on the 555 billion cubic metres consumed in 2008.

Even under an alternative scenario, in which greater emphasis is placed on the development of substitutes for fossil fuels, the IEA predicts energy demand among these countries will rise to at least 628 billion cubic metres, a 14 per cent increase.

Gas production falls

Meanwhile, indigenous supply is expected to fall dramatically. Gas production in the UK, historically the region’s largest producer, has dropped every year since 2000, from 108.4 billion cubic metres to just 57.1 billion cubic metres in 2010. At the current rate of production, it has just 4.5 years of reserves remaining, according to UK oil major BP’s latest statistical review of world energy, published in June.

Today, the two largest gas producers in western Europe are the Netherlands and Norway, both of which increased supply in 2010. But at the current rate of depletion, the reserves of both will be exhausted in the next 30 years. Gas production in OECD Europe is expected to fall from 307 billion cubic metres in 2008 to 213 billion cubic metres in 2035, a drop of more than 30 per cent, according to the IEA report. By this rationale, by 2035 the shortfall in production will be 415-454 billion cubic metres.

A quarter of the EU’s gas demand is currently met by Russia, but European officials have long been keen to develop new sources of supply. The urgency of the search was heightened in 2006-07 when interruptions to Russian gas supply, first through Ukraine and then Belarus, highlighted the precarious nature of the continent’s energy supply.

The abundance of gas in North Africa and its proximity to Europe make it an obvious choice for Brussels to look there for additional supplies. Algeria has proven gas reserves of 4.5 trillion cubic metres, Egypt 2.2 trillion cubic metres and Libya 1.5 trillion cubic metres, according to BP. Between them, they account for 5 per cent of the world’s proven gas reserves.

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Richard Nield is a freelance journalist, photographer and filmmaker covering the Middle East and Africa. In 10 years covering the region, he has been published and broadcast by clients including the BBC, Reuters, Al Jazeera, The Economist, The Financial Times, The Independent and Foreign Policy magazine. He has reported from throughout the region, including Algeria, Egypt, Libya, Morocco, Tunisia, South Sudan, Jordan, Lebanon, Syria, Kuwait and Saudi Arabia.