Economic Statecraft
Russia-Africa Energy Cooperation: Challenges and Prospects

Russian companies ready to offer energy projects designed to help friendly African countries reinforce their technological sovereignty along the entire competence chain, from capacity building to setting up enterprises in Africa, as well as enable their African partners to blend into manufacturing and logistics chains in Russia and elsewhere, writes Igbal Guliyev, Deputy Director of the MGIMO International Institutу for Energy Policy and Diplomacy,

Russia-Africa energy cooperation is becoming increasingly important at the current stage of the global energy system’s evolution. Energy cooperation with African nations is conducted both bilaterally and through OPEC+ and other platforms and forums.

Key challenges of the African fuel-and-energy sector

Africa has impressive subsoil reserves and significant potential for producing energy. However, African countries are facing a number of problems.

First, there is unequal access to energy sources. About 600 million Africans have no access to electricity. Energy crises are frequent even in countries with high (for the continent) access to electricity, such as South Africa. Their authorities have to declare national disasters and emergencies due to rolling blackouts.

Second, they are short of qualified fuel-and-energy experts.

Third, the infrastructure of the fuel-and-energy sector is underdeveloped (insufficient energy processing capacities, networks and hydropower stations).

Energy security issues are acquiring special importance for African nations due to the complicated international situation. Technological advancement and boosting investment in energy projects also remain important challenges.

Status of Russia-Africa energy cooperation

Russian oil and gas companies are operating in many African countries. For instance, Lukoil, Gazprom and Rosneft are implementing projects in Algeria, Angola, Ghana, Egypt, Cameroon, Cote d’Ivoire, Nigeria, the Republic of the Congo, Sierra Leone and Libya (its projects are suspended). Lukoil began to increase its presence on the African market in the middle 1990s. Rosatom is building Egypt’s first nuclear power plant – El Dabaa. It will consist off our units with a capacity of 1,200 megawatts each and will have VVER-1200 reactors (water-water power reactors) of the3+ generation. Under the contract, Rosatom will supply Russian nuclear fuel for the entire life cycle of the plant. It will also educate the personnel and support its Egyptian partners in the plant’s maintenance and servicing in the first decade of its operation.

RusHydro is carrying out 33 projects in 12 African countries worth a total of over three billion rubles.

In the last few years, Russian energy companies have stepped up their competition with representatives of the EU, the US and China in African energy markets. They are bidding to participate in large-scale geological prospecting and alternative energy projects.

The role of African markets as importers of oil and oil products from Russia has been growing substantially after the eastward turn of Russian energy policy and diplomacy, and the introduction of measures to reduce the impact of Western sanctions on the Russian fuel-and-energy sector. For instance, North African countries (Morocco, Tunisia, Libya, Egypt and Algeria) have increased their imports of Russian oil products multiple times over. South Africa has also enhanced its appeal for Russian exporters of oil and oil products.

Time to act: energy cooperation prospects

Now that global energy security has become front and centre, Russia must deliver on the geostrategic objective of consolidating its leadership within the global energy community. In addition, Russia stands ready to assist African countries in strengthening their energy security, including by diversifying their energy mix, which includes constructing NPPs, developing the petrochemical sector, and building up renewable energy infrastructure, to name a few. Sub-Saharan African countries will need some $93 billion over the next ten years in infrastructure investment.

Africa retains its status as an arena where transnational corporations compete against each other, with the world’s most powerful countries in terms of geoeconomics dividing the continent into spheres of influence. In this context, the commitment by transnational corporations to tap new investment opportunities and promote long-term contracts in the oil and gas sector has become a major factor affecting the strategic development of the African countries.

The current state of the global energy sector and policy may well offer the Russian fuel and energy sector new opportunities for technological advancement and building investment and international partnerships with the African countries.

Major Russian oil and gas companies are ready to increase their deliveries to Africa in terms of both volume and geographical reach. In fact, Russian companies can well use Africa’s existing energy hubs or create new ones. Gazprom’s unique knowhow and technological solutions for natural gas could help our African partners overcome several challenges. Countries like Morocco have been calling on Russia to establish a joint coal hub, considering that Morocco imports 80 percent of its coal from Russia.

Apart from the oil and gas sector, joint projects in the low-carbon and renewable energy sector are expected to take on special importance in the coming years. Here, Russian companies can offer solutions for building and operating solar and wind power plants. Rosatom, a Russian state-owned company, has been focusing on promoting cooperation with Africa on nuclear energy by offering various solutions to its African partners. These include not only building major NPPs, but also smaller plants for countries with an underdeveloped energy system, without forgetting the floating NPPs for coastal countries. Rosatom will have an opportunity to take part in tenders for building nuclear power plants in several African countries, including South Africa, which currently operates the only active NPP on the continent. There is still interest in Africa in building NPPs with several countries eager to join the nuclear energy club. For example, Uganda has plans to launch its first nuclear energy unit in 2031.

The financial framework for Russia-Africa energy cooperation deserves special attention as Western countries seek to tighten their restrictions. It is a fact that Russia intends to gradually move away from USD-denominated transactions with certain consumers of its energy resources. Some African countries such as Zimbabwe will be there to support Russia in this effort.

There are about thirty projects on the energy cooperation agenda with Africa at this moment. Safeguards guaranteeing that the interests of Russian investors are respected are critical when devising major energy projects.

China, the United States and the European Union have been quite active on the African energy markets. For example, China carries out megaprojects worth billions of dollars and the Americans push their LNG to the continent as part of the Prosper Africa project. Infrastructure development megaprojects include the construction of Bagamoyo Port in Tanzania with the involvement of China and Oman. It will be Southeast Africa’s biggest port. There is also the project to build a 1,500-kilometre railway line in Lagos, Nigeria, also with China’s involvement, as well as a 40 GW hydropower plant in the Congo, etc.

But the Russian Federation can build on its advantages, with Russian companies ready to offer projects designed to help friendly African countries reinforce their technological sovereignty along the entire competence chain, from capacity building to setting up enterprises in Africa, as well as enable their African partners to blend into manufacturing and logistics chains in Russia and elsewhere.

To sum up the calls and statements issued by our African colleagues, we can say that it is time to act.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.