x Abu Dhabi, UAESaturday 20 January 2018

Fears that Europe will see supplies cut

Gas, not oil, is vulnerable to North African turmoil according to a global risk consultancy.

Political turmoil across north Africa is threatening gas exports to Europe, according to a global risk consultancy.

The region, which is a bigger supplier of gas to European energy consumers than Russia, could experience problems with its gas transportation and export facilities and the marine services sector based in its Mediterranean ports.

"This the major energy security question now," said Jonathan Wood, the senior global issues analyst with Control Risk, an international consulting firm that yesterday unveiled its 2011 global risk map and forecast. "If Europe isn't worried, it ought to be." The main risk for Europe is that the wave of mass anti-government protests, which has spread to Egypt from Tunisia, could also engulf Algeria, the biggest north African gas exporter.

"Algeria is the one [north African] state that holds the possibility of similar activity," said Julian Barnes-Dacey, Control Risk's Mena desk head. "The sociopolitical similarities with Egypt and Tunisia are quite striking … In Algeria, there's an ongoing struggle with elements of the regime. There's the potential for direct impact on gas production."

If north African gas exports were disrupted, it would not be because of protesters sabotaging gas facilities, Mr Wood said. A more likely scenario would be that regime changes, or bids by entrenched political leaders to retain power, could interfere with the functioning of national oil companies.

Politically driven management changes could be expected, and governments preoccupied with establishing social order would be likely to restrict their national oil companies' budgets.

Strikes at oil and gas installations and port facilities could also be on the cards, Mr Wood suggested. European energy security concerns peaked two years ago, after a contractual dispute between Russia and Ukraine left millions of Europeans without heat and forced hundreds of factories to close.

However, the recession, which sharply depressed gas demand in industrial countries, combined with a global gas glut because of an unforeseen North American production surge, gave Europe breathing space to ease its energy problems.

Gas demand in Europe is now starting to revive just as a new threat to its gas supplies is emerging, Mr Wood said.