Bangkok, Mexico City, Cape Town Europe is struggling to find alternatives to Russian gas – and the lights are going out in emerging countries. In Bangladesh, in the middle of the summer heat, daily power cuts, often lasting for hours, dominate everyday life. By order of the authorities, shopping centers and markets have to close a few hours after dark in order to save energy. For weeks, the power plants have not had enough fuel to produce enough electricity for the country’s almost 170 million inhabitants.
The crisis is a direct consequence of the turbulence on the European energy markets: Russia’s reduced gas supplies have caused European demand for LNG delivered by ship to rise sharply. In emerging markets of the Global South, who are readys rely on LNG – liquefied natural gas – the gas tankers, on the other hand, have become rare. The local energy suppliers can no longer afford to bid in view of the price increase on the world market.
Steve Hill, who is responsible for the liquefied gas business at the Shell energy company, sounded the alarm last month: “Europe is sucking LNG out of the world.” As a result, developing countries are receiving less.
Outrage is growing in the affected countries. This is also the case with Khondaker Golam Moazzem, economist at the Center for Policy Dialogue in Bangladesh’s capital Dhaka. “Suppliers prefer to supply the high-price markets in Europe,” he complains. “We are being pushed out of the market, leaving millions of people in the dark.”
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Bangladesh covers a fifth of its gas needs from LNG imports. According to the British Institute for Energy Economics and Financial Analysis (IEEFA), the prices that the country has had to pay for this in recent months have quintupled compared to May 2021. Compared to May 2020, the costs are even ten times higher. Experts fear that the costs could rise further once Germany has its planned liquid gas terminals in operation.
Bangladesh is not the only Asian country that is feeling the effects of the bottlenecks: Kaushal Ramesh, analyst at the energy consultant Rystad Energy, believes that the liquid gas price of more than $30 per MMBtU (million British thermal units) on the spot market also applies to India and Pakistan no longer affordable. Where there are no alternatives to LNG, power outages are the result.
The air conditioners are going out in Pakistan
For Pakistan, which is currently in a severe economic crisis and is on the brink of insolvency, this is already a reality: parts of the country were recently without electricity for more than twelve hours a day – and thus at temperatures of more than 40 degrees without air conditioning and fans . In order to save energy, the government reduced the working hours of agency employees.
Years ago, Pakistan had concluded long-term contracts on favorable terms for its LNG imports. But the deliveries have not materialized in the past few months – allegedly because the contractual partners themselves were affected by bottlenecks.
>>Read here: The next fuel price surge: India makes petrol exports to Europe more expensive
Pakistan and Bangladesh are currently negotiating financial aid with the International Monetary Fund to deal with rising import costs. Economist Moazzem also sees Europe as responsible. “EU politicians must face the reality of their role in rising costs in other countries,” he said.
Moazzem would like the EU to focus better on renewable energies instead of LNG.
Europe wants to make itself less dependent on Russian energy supplies with the help of liquid gas.
(Photo: Reuters)
However, the signals that emerging and developing countries are receiving from Europe go in the other direction. The European Commission was recently urging African countries like Nigeria to stop mining fossil fuels and go all-out on green energy.
But since the Russian invasion of Ukraine, this attitude has changed fundamentally. Nigeria is suddenly seen in Brussels as a beacon of hope for supplying Europe with energy.
The background is the Trans-Sahara pipeline that has been planned for years. Should the more than 4,000-kilometer-long pipeline become a reality, gas could flow from the Niger Delta to Algeria and from there through the Mediterranean Sea to Europe.
In February, Algeria, Niger and Nigeria signed a declaration that they want to advance the $21 billion project together. Once completed, the pipeline will transport 36 billion cubic meters of natural gas per year.
Nigeria is already Africa’s second largest gas exporter after Algeria. However, the country currently still supplies 90 percent of its energy to China, which is also related to Europe’s lack of interest to date. Only recently, Nigeria’s government curbed European hopes that the country would help the continent out of the energy crisis in the short term, which is also due to a lack of gas infrastructure in the country.
>>Read here: Substitute for Russian gas: Europe relies on the Trans-Sahara pipeline
In Colombia, the reorganization of the European energy supply is meanwhile disrupting the planned energy transition. The country is one of the ten largest exporters of hard coal in the world and is also an important supplier for Germany. President-elect Gustavo Petro wants to significantly reduce the economy’s dependence on fossil fuels and eventually lead the country out of coal production.
But Germany in particular would like the country to expand its coal deliveries: while German imports from Colombia amounted to 1.78 million tons over the past year, coal imports in the first quarter of 2022 alone were 687,842 tons, according to the Federal Statistical Office.
Scholz asked Colombia for more coal deliveries
The Bundestag member Kathrin Henneberger (Greens) considers this development to be a direct consequence of the Ukraine war. Immediately after the invasion began, the energy companies EnBW, Steag, RWE and Uniper looked around for alternatives to Russian coal and came up with Colombia, says the politician, who sits on the Bundestag committee for climate protection and energy.
Their efforts were supported by Chancellor Olaf Scholz (SPD), who asked the outgoing government of President Iván Duque in April to deliver even more coal. “There is pressure being built up that should open the door for German companies,” Henneberger criticized the chancellor’s call and spoke of “new colonial behavior.” “But we don’t need an expansion of coal imports, but a joint exit strategy with Colombia,” she demands.
More: “Humble Request” for Oil: How Asia’s Crisis States Are Becoming Vassals of Russia