This text belongs to 'Penínsulas', the newsletter that Enric Juliana sends to the readers of 'La Vanguardia' every Tuesday. If you want to receive it, sign up here.
Look carefully at the map with which this week's 'Peninsulas' begins:
It is a map of Africa in which two gas pipelines appear that would originate in Nigeria, a large oil and gas producer. The straightest of both routes crosses the Sahara Desert until reaching Algeria, another major gas producer, and then branches off to Spain and Italy through the connections that exist today. Fuel could be reshipped to the rest of Europe from both countries. The second pipeline, which would be underwater, would start from Nigeria along the entire western African coast to the Strait of Gibraltar, a point from which it could reach Spain via the Maghreb-Europe gas pipeline that is currently partially closed. This second gas pipeline, which would run off the coast of Western Sahara, is promoted by Morocco.
The trans-Saharan gas pipeline would have to pay a toll to Niger, a country currently controlled by a military junta supported by Russian mercenaries, and would consolidate Algeria as a major supplier of gas to Europe. With the second route, Nigeria and Morocco would strengthen their political and economic connection with the countries located on the western African coast, in the face of the new configuration of forces that is taking place in the large region of the Sahel, with the departure of France, a post-colonial power. exhausted, and the entry of Russia as a support force to various countries that have recently changed governments (Mali, Burkina Faso, Niger, Central African Republic...). Spain has just given support to the coastal route proposed by Morocco, without attracting much attention. Gas continues to draw maps and it is a good time to remember it.
Two years have passed since the start of the war in Ukraine and the supply of gas to Europe is no longer in the foreground. Yes, it was on February 24, 2022 when Russian troops invaded the territory of the former Ukrainian Soviet Socialist Republic with the aim of quickly taking kyiv and establishing a government loyal to Moscow. Vladimir Putin ordered the invasion believing that the military operation would obtain brilliant results, thanks to the superiority of his forces and the forced containment of a European Union strongly conditioned by Russian gas supplies.
That dependence was strong, certainly. Germany and Italy, two economies with great industrial weight, became 60% dependent on Russian gas. Germany was so confident in an 'eternal peace' with Russia that it had decided to close its nuclear power plants, with gas as the main vector of the transition to a decarbonized economy. The two gigantic Nord Stream gas pipelines across the Baltic Sea were the guarantee of this link. That decision, very risky if we evaluate it today, was not made by a Green chancellor. That bet was made by Chancellor Angela Merkel, until two years ago revered as a great example of conservative temperance. Germany had a big shock the day Russia invaded Ukraine. The history of Europe took a new turn.
Russia had a patiently worked out plan. Russia had also offered Italy the construction of a Sud Stream gas pipeline that was blocked by the United States in Romania. Thanks to the excellent friendship between Putin and the late Silvio Berlusconi, more than five hundred Italian companies had deployed their interests in the Russian market. Dependence on Russian gas was even stronger in the Czech Republic (100%), Latvia (100%), Hungary (95%), Slovakia (85%) and Bulgaria (75%). To accentuate the costs of this dependence, the Russian regime had maneuvered with reserves, causing a significant increase in prices during the eight months prior to the invasion. The notice was given. As we know well, the Russian lightning operation failed, the Ukrainian army resisted the first attack and the European Union took its side, despite the costs that this would have.
Given the uncertainty caused by a long war, gas prices skyrocketed to the maximum at the end of August 2022, reaching 340 euros per Megawatt/hour. The inflationary wave was already underway and advancing at high speed. The following month, a mysterious underwater explosion disabled the Nord Stream gas pipelines in the Baltic, near the coast of Sweden. There was no shortage of immediate accusations against Russia, but ongoing investigations currently point to the special services of the Ukrainian army with possible support from Poland, a country that has placed obstacles in the way of the German investigation. (Denmark closed the investigation into the Nord Stream sabotage yesterday, claiming that there is no sufficient basis to open a criminal case in the Copenhagen courts. A similar decision was adopted a week ago by the Swedish prosecutor's office. The investigation continues in Germany.) Someone wanted to make sure that Germany would not back down. If this authorship were confirmed, we would be facing a serious matter for NATO. It would be difficult evidence for German public opinion to digest, since the renunciation of Russian gas is having real and truly adverse economic effects. Historians will have a lot of work to do when it comes to unraveling the keys to the Ukrainian war.
Putin was wrong in February 2022. The Europeans did not give in to the gas blackmail and Russia was forced into a long war, a war of positions in which it is now beginning to have the advantage, to the extent that it can sacrifice more human lives, according to to the old military tradition of the greatest country on earth. Tens of thousands of Russian and Ukrainian soldiers have lost their lives during those two years. Thousands of civilians have also lost their lives and thousands more have been forced to abandon their homes. Almost all countries in northern and eastern Europe are strengthening their military forces. Sweden and Finland have joined NATO. Germany has announced a budget of one hundred billion euros to have a highly capable army. The German disarmament of 1945 is becoming increasingly distant and all of Europe is currently talking about rearmament. We are entering a new stage and we will see it in the European elections in June.
The passage of time is once again decisive. The war does not seem to take its toll on a Russian regime that physically liquidates its opponents, imprisons pacifists and silences electoral candidates who can be annoying. War tires public opinions in European countries, where people can freely express their opinion without fear of losing their lives. Two years later, gas does not seem to be a cause for concern. At this time, natural gas is trading at 23 euros Mgw/h, a price similar to that of the months before the preparations for war. Nothing to do with the 340 euros of August 2022. In this field it can be said that Putin has failed, although that statement also requires some nuances. Russia sells much less gas to Europe, but the tap has not been completely turned off.
It is worth remembering that Russian gas exports are not subject to embargo. They never have been. Sales of Russian gas by gas pipeline have been drastically reduced, but exports of Russian liquefied natural gas have increased to a lesser extent, especially to those countries that are better equipped to receive it, for example, Spain, which has seven regasification plants on its coastline. The Spanish situation is paradoxical. Spain buys more Russian gas now than before the war started. We are talking about liquefied natural gas that basically enters through the plant located in the port of Bilbao.
Let's look at the figures. In 2021, Spain bought 8.9% of the gas consumed that year from Russia. In 2023, purchases from Russia represented 18.3% of the total, behind the United States (21.1%) and Algeria (29.2%). The days when Algeria was the origin of more than 40% of imports are beginning to go away. What happened? Spanish energy companies, especially Naturgy, import more gas from Russia because it is cheaper and no international regulation prevents them from doing so. The Government does not like it, but the companies argue that these are old contracts that they cannot renounce if they do not want to risk a lawsuit in arbitration courts. These contracts are not public and Spain does not have a public hydrocarbon company subject to the political guidelines of the Government.
After two years of war, the price of gas has dropped a lot because at the moment there seems to be no room for speculation in the futures market. Industrial consumption has decreased, the last two winters have been benevolent in Europe - in this case, the climate factor is favorable -, and the supply of liquefied natural gas (LNG), piloted by the United States and Qatar, covers the demand. This does not mean that the problem posed by the war is perfectly resolved and that a harmful energy bill is not being paid for the large industrial districts. The focus is on Germany, which became 65% dependent on Russian gas. The German trade surplus has helped stop the blow, for now. The German federal government is financing the extra energy costs of its companies while waiting for the war to end. Russian gas cost them $2.72 per thermal unit (Btu) and liquefied gas from the United States is paid at $5.27.
What will be the consequence of this extra cost on the German economy? I believe that the economic, social and political stability of Germany is one of the great issues of the immediate future, as we await the European Parliament elections in June and the United States presidential elections in November. Germany. Let's not lose sight of Germany.
We now return to the African map. That map, as I told you at the beginning, shows us two possible routes to transport gas from Nigeria to Europe. by gas pipeline. A route advances through Niger, towards Algeria, crossing the Sahara desert. The other route runs along the western African coast until reaching the Strait of Gibraltar. These are two very expensive projects to carry out that show us the strategic antagonism between Morocco and Algeria. To date, Nigeria has displayed both cards, as it sees fit, knowing that both projects are not easy to achieve.
Well, in the recent visit of Pedro Sánchez to King Mohamed VI in Rabat, the Government of Spain has given support to the Morocco-Nigeria gas pipeline and the Moroccan policy of attracting the interests of the Sahel countries to the Atlantic coast. In Pedro Sánchez's communication to the Spanish press this issue was barely mentioned last Thursday, but it appeared much more emphasized in the statement from the Moroccan Royal House on the content of the meeting. It is unlikely that this support would have been very popular in Algeria, which fifteen days ago canceled the reconciliation visit to Algiers that the Minister of Foreign Affairs, José Manuel Albares, had planned to carry out.
Maps, maps, maps. Gas continues to draw maps.
