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Investing Ideas North Africa vs. Russia: Could Gazprom’s hold on Europe be broken by North African reserves?
Investing Ideas North Africa vs. Russia: Could Gazprom’s hold on Europe be broken by North African reserves? 
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| North Africa vs. Russia: Could Gazprom’s hold on Europe be broken by North African reserves? |
| Sunday, 23 December 2007 | ||||||||
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As we’re heading into winter, we’re reminded of the natural gas crisis that many Eastern European countries experienced last year. Some areas suffered the coldest temperatures on record in the past 50 years. People were dying, and Russia was cutting off natural gas supplies. It doesn’t matter now that some Eastern European countries weren’t paying a fair price for Russia’s gas and refused to negotiate. What does matter -- at least in the global arena -- is that European countries are looking for a way around Russia. Turns out, they don’t have to “go around” Russia; they just have to cross the Mediterranean. And the European Union is doing just that. Andris Piebalgs, the EU’s energy commissioner, told EuroMed ministers at a high-level conference, “If we combine the potential gas production of Algeria, Libya and Egypt, by 2020 gas exports from the Maghreb to Europe could reach the level of Russian gas exports.” (EuroMed is a partnership between European and Mediterranean information and communications programs, and the Maghreb refers to North African countries bordering the Mediterranean Sea.) This is not a pipedream, folks. It’s happening. At the conference held in Cyprus on December 18, a 2008-2013 Euro-Mediterranean energy action plan was signed. This consortium includes Algeria, Egypt, Israel, Jordan, Lebanon, Mauritania, Morocco, the Palestinian Authority, Syria and Tunisia, along with the EU. Libya will also be integrated into the consortium. The energy action plan will focus on three main objectives. First, the group will need to integrate energy markets so that sectors will be tracked and reformed as needed. Second, there will be a strong focus on sustainable energy. That includes introducing a number of renewable energy technologies along with cutting gas flaring (which is cost-prohibitive and wasteful). Third, the group will develop infrastructure. There are two main pipeline projects that will be a priority for the group: the Nabucco gas pipeline linking the Caspian seed to the EU and the trans-Saharan gas pipeline connecting Nigeria to Italy. Of course, other projects would link the EU to gas-rich countries like Algeria, Morocco and Tunisia.
The EU is no stranger to investing in North African business and infrastructure, but projects of this size are going to demand a lot of cooperation. It’s a good thing that major energy companies, like Gaz de France (GAZ:Paris), already have ties to Algeria, Libya and Egypt. In fact, I think Gaz de France will be a major player in this whole cooperative energy plan. Material Profits members are already in Gaz de France by holding shares of Suez, which was acquired by GAZ and whose shares will be traded for GAZ shares. Additionally, I’ll be traveling to Morocco in the new year to see what’s happening on the ground. Morocco wants to be considered for membership into the EU, and that could offer a surprising number of new investment opportunities in the coming year. For now, though, keep your eye on GAZ as we head into 2008. Sara Source : Market Report This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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