EUROPE’S BUMPY ROAD TO ENERGY SECURITY: HEADING TO THE MENA?

Agosto 25, 2022

EUROPE’S BUMPY ROAD TO ENERGY SECURITY: HEADING TO THE MENA?

The MED This Week newsletter provides expert analysis and informed comments on the MENA region’s most significant issues and trends. Today we explore the potential emerging levels of energy interaction between European markets in search for non-Russian resources and countries of the Southern neighbourhood.

Once again, recent looming energy shocks are threatening Europe.On August the 22^nd, following Gazprom’s announcement of a temporary shutdown of the North Stream 1 pipeline to Germany, the benchmark Dutch TTF gas price hit an intraday record of €295 per megawatt hour, a dramatic spike in natural gas prices. Two days later, Brent crude oil exceeded $100 per barrel after OPEC announced plans to reduce its production. A reflection of market volatility due to Russia’s invasion of Ukraine, the current energy situation complicates European efforts to bolster gas reserves for the incoming winter, crippling the EU’s industrial production and potentially pushing the region into recession. Europe’s urgent need to diversify its energy suppliers away from Russia could provide a golden opportunity for Middle Eastern and North African oil and gas producers to step in. Since the outbreak of the war, the region has become a natural destination for Europe in its growing quest for non-Russian energy resources, with leaders of the EU’s economic powers (Germany, France, Italy) repeatedly visiting producers such as Algeria, Saudi Arabia, the UAE and Qatar. In addition to energy cooperation, this search for diversification offers a valuable tool for enhancing bilateral partnerships and expanding EU-MENA relations in the long term. In return, these will be key preconditions for potential new levels of involvement, such as enhancing investment in renewables and hydrogen, creating low-carbon supply chains, and new infrastructure partnerships. At the same time, stronger ties tend to have consequences on many fronts beyond the economic field, including a greater European involvement in the complex geopolitics of the MENA region.

Experts from the ISPI MED network react to Europe’s latest energy challenges and the potential levels of cooperation with oil and gas producers in the MENA region.