In the context of Europe's quest to compensate for the decline in Russian natural gas imports, which represented a high percentage of its consumption, it seems that its decisions to replace the alternative are not governed by the price factor alone, but it seeks through its new contracts to achieve other strategic interests as well, foremost of which is giving preference to encouraging intra-regional trade to face the high unemployment rates there, especially since some of them suffer from trade deficits, as is the case in Britain.
The figures indicate that Russian gas - which accounted for 39% of Britain's imports in 2021 - contracted during the past year to 19%, and this difference was compensated by alternative sources whose consideration reveals those strategic interests that Europe seeks to achieve on the sidelines of its handling of its energy crisis.
For example, we can note its purchase of large quantities of gas from its American ally, which began to compete to replace Russia in the European and Asian gas market, and even in some Middle Eastern countries such as Kuwait and Turkey, even before the outbreak of the Russian-Ukrainian war, while its efforts to obtain an alternative did not extend to countries such as Iran, in compliance with US sanctions.
We also note that it has ensured the continuation of most of the gas flowing through pipelines from Algeria, Libya and Azerbaijan, as the revenues of this gas represent financial resources for the Algerian and Libyan governments to help them monitor their coasts and prevent illegal migration to Europe, the same motive that prompted the European Union to recently provide aid to Tunisia after the return of irregular migration across its borders.
The EU has also increased its imports of Egyptian gas, with two objectives: first, to integrate the Israeli economy into the Arab economy under the umbrella of the East Mediterranean Gas Organization, where Israel supplies gas to Egypt through a pipeline, to be liquefied and then re-exported to European countries. The second is the reward for the government in Egypt, who succeeded in stopping irregular migration routes to Europe several years ago.
Despite this, European countries have not concluded long-term supply agreements, perhaps because they realize that the crisis will not last long with the Russian economy being affected by the war, and in light of their efforts to attract Russia to the negotiating table to resolve the crisis with Ukraine, as well as their need for "cheaper" Russian energy that used to come through gas and oil pipelines, and all this goes in parallel with European environmental goals to reduce carbon emissions, by expanding renewable energy sources such as the sun and wind and reducing the use of fossil fuels from coal or Oil or natural gas.
Promotion of intra-European trade
Europe aims strategically to build a stock that will ensure the gradual elimination of Russian gas, and to rebuild a new geographical import network, after imposing a (punitive) cap on imports from Russia through the Nord Stream pipeline after its invasion of Ukrainian territory, the same line that was completely stopped after that because it was damaged by explosions last September.
The first alternative to achieve this is the non-EU gas-producing European countries; their imports from those countries increased by about 85.5 billion cubic meters, along with 7 billion cubic meters from Norway, which is the main supplier of gas in Europe, and the second alternative was the United States, from which imports rose to 41 billion cubic meters.
The third alternative was to increase the quantities imported from other countries such as Qatar, from which imports increased to 5.5 billion cubic meters, Egypt to 4 billion cubic meters, Angola to 2.1 billion cubic meters, and then smaller quantities from Trinidad and Tobago, Peru and African countries.
Europe was not prepared for the high-cost Arab (liquefied) gas, nor is it pursuing long-term contracts in anticipation of the cessation of the war and the return of Russian gas.
One of the possible European alternatives is also Algerian gas, which was exported by pipeline through Morocco to Spain, and stopped due to political differences between the two countries under the pretext of the end of the contract, the European Union may seek to overcome the political obstacles that prevent the arrival of this gas, after making sure that there are sufficient stocks for export in Algeria after absorbing domestic consumption, which exhausted 45% of production last year. The same applies to the resolution of disputes between Algeria and Niger, which led the latter to obstruct the delivery of Nigerian gas through pipelines to Algeria and from there to Europe.
Although Arab gas exports to Europe increased last year by a total of 4.7 billion cubic meters from 2021 (82.7 billion cubic meters in 2022), their relative share declined from 16.4% in 2021 to 15% in 2022, due to Europe's increase in gas imports last year.
Of the share of Arab gas exported to Europe last year, Algeria accounted for 44.9 billion cubic meters, Qatar 28 billion, Egypt 6.5 billion, Libya 2.5 billion, and Oman 800 million cubic meters.
Why were Arabs absent?
The question that arises here is: Why did the Arab countries not take advantage of the European need for gas, especially before the winter season, to increase their exports to them?
The nature of the natural gas trade contributes to the answer, as it mostly relies on long-term contracts of up to 10 years and more, linking it to specific markets for long terms (mostly the Asian market).
Indeed, Europe has not been prepared for Arab gas, which is mostly sold in its (liquefied) form, making it more expensive than the one it imports through pipelines to be liquefied in its refineries, and it is not seeking long-term contracts, but temporary and urgent commitments in anticipation of the cessation of the Russian-Ukrainian war and the return of "cheaper" Russian gas to flow through pipelines.
In light of this reality, the Gulf countries maintained their traditional markets, with 60% of Qatar's gas last year going to Asia, compared to 21% to Europe and 19% to the Middle East, and the Qatari government was keen in its negotiations with European countries to sign long-term contracts.
Last year, 92% of Oman's gas exports went to Asia, 5% to Europe, 93% to Asia and 5% to the Middle East, while Saudi Arabia consumes all of its production domestically and Kuwait is an importer of natural gas.
Egypt was the only Arab country to adjust its export policies to direct 73% of its liquefied gas to Europe to take advantage of its high price, while it signed an agreement to import and liquefy Israeli gas, and shifted many power plants to using diesel instead of natural gas.
Egypt aims to seize a dollar earnings that address the severe shortage suffered by its treasury, in addition to appearing supportive of the European friend in times of need, as it needs the support of that friend to reach a solution to the failure of its agreement with the International Monetary Fund and its conditions for lending it, and also in the hope that European countries will reconsider the timing of obtaining the installments of their outstanding loans, and convert some of them into investments, as Germany did recently.