Iberian gas link has strategic implications for Maghreb, EU

An Iberian solution could help close the supply gap and reinforce the EU's and Spain’s relations with North Africa and Algeria
Sunday 14/10/2018
Workers walk past the In Amenas gas plant  south-east of Algiers. (AFP)
Huge potential. Workers walk past the In Amenas gas plant south-east of Algiers. (AFP)

The debate about Europe’s supply of gas usually focuses on how dependent Europe should be on Russian gas. Ever since gas flow from Russia to the European Union was interrupted because of the dispute more than a decade ago between Moscow and Ukraine, the country through which the gas passed, critics of Europe’s heavy dependence on Russia have argued that true security of supply, as promoted by the EU Commission, means diversification. Norway has been Europe’s second supplier of gas for decades, Algeria following as the third.

The Dutch government recently decided to progressively close the giant offshore field of Groningen, which was producing as much as 54 billion cubic metres (bcm) a year in 2013, because of evidence of seismic activity emanating from the field. Groningen will be shut down by 2030. That decision ends the golden age of natural gas production in north-western Europe, which led to the development of fields in Danish, Norwegian and British waters.

An Iberian solution could help close the supply gap and reinforce the European Union’s and Spain’s relations with North Africa and Algeria, which has proven a reliable supplier of gas since 1964.

It would also encourage a broader strategic dialogue with Africa’s largest country, whose stability is key to European stability but whose leaders, particularly after the NATO-backed military intervention in Libya in 2011, remain suspicious of European — and more particularly French — intentions in its Sahel backyard.

Such a solution would mean increasing gas capacity of 7 bcm over the French border and connect the Iberian gas market to the rest of Europe. The main blocking factor has been the political power of Electricite de France, which protects the interests of the French nuclear lobby.

To import gas from Algeria via the Maghreb-Europe Gas Pipeline underwater system, Spain has a capacity of 20 bcm, of which 14.5 bcm was used in 2017.

Algerian state-owned Sonatrach is looking to expand the capacity of the pipeline from 8 bcm to 11 bcm — and perhaps even 18 bcm — by 2020. Algeria is sitting on at least 3 trillion cubic metres of natural gas resources. Lack of investment and rising domestic consumption have eroded export potential over the last decade but in 2017 Sonatrach exported some 55 bcm, most of which went to EU countries.

Algeria’s potential is further underpinned by plunging costs of solar power. Technological developments have sharply dropped the cost of solar panels. The International Energy Agency predicts that from 2017-22, 1,000 gigawatts of solar power would be rolled out worldwide. This is equivalent to half the global capacity of coal-fired power stations, which took 80 years to install.

The possibility that Algeria could cut its domestic natural gas consumption of 40 bcm and replace a substantial proportion with solar power is a real prospect. The supply potential of the Iberian Peninsula is strengthened by the fact that Spain has 61 bcm of regasification capacity, of which only one-quarter is being used.

Connecting the Iberian gas market to the rest of the European Union would have positive benefits for all members, France included. It would enhance Spain’s strategic position as a gateway to North African gas to Europe.

It could also encourage Algeria to kick-start a domestic renewables revolution. This would lead not only to a switch in consumption from gas to solar but increase export revenues. It would lay the foundation for the development of a second export industry involving solar-generated power.

When calm returns to Libya, that country could increase its gas sales to Europe via Italy. This would enhance energy links between the two shores of the Mediterranean and make North Africa a more interesting strategic partner for Europe.

The instability that stretches across the Sahel belt of Africa — be it al-Qaeda-linked groups, smugglers or gunrunners — worries all Maghreb countries and many of their European partners. Technical, market and political circumstances may be aligning to create a winning situation for France, Spain and Algeria, more broadly for the two rims of the Western Mediterranean.

At a time when EU relations with Russia remain very fraught and the continent depends heavily on Russian gas, buying more gas in North Africa would seem to make sense. This would lessen Algerian suspicion of EU policy in the Sahel and underpin a stronger European strategical dialogue, not only with Africa’s largest country but with all countries in the region.

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