In Geopolitics Today - Friday, July 1st
US Assumes Dominant Position in European Natural Gas Markets, Algeria to Maintain Gas Supplies to Spain, and other stories.
US Assumes Dominant Position in European Natural Gas Markets
Liquefied Natural Gas (LNG) imported from the United States into Europe has for the first time overtaken imports of Russian natural gas travelling via pipeline. In April this year, five European countries — France, the Netherlands, Poland, Spain, the UK, and Poland — accounted for roughly 54 percent of all LNG exports made by the US.
Russia’s cuts in natural gas deliveries to the EU mean this is the first month in European history in which the EU has imported more gas from the US than from Russia. Lower supplies from Russia and upcoming maintenance works on the Nord Stream pipeline has left EU member states scrambling to fill gas storage sites. As the war in Ukraine continues and neither side appears willing to come to a negotiated settlement at this time, the trend is likely to continue. For now then, it appears, Washington has secured a favourable outcome in its long-running battle with Moscow over European energy markets.
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Algeria to Maintain Gas Supplies to Spain
A dispute between Algeria and Spain has led to a breakdown in political and economic ties, yet energy contracts between the two are upheld while new contracts are like to be renegotiated at a time of increased energy prices. The ongoing political crisis between Algeria and Spain over Madrid’s support for Morocco’s sovereign right to rule over Western Sahara has presented an opportunity for Algeria to secure more lucrative energy deals from Spain.
Algeria’s decision to suspend its treaty of friendship and good neighbourliness has not impeded energy flows between the two countries. Algerian President Abdelmadjid Tebboune claimed his government is determined to fulfil Algeria’s contractual obligations in natural gas deliveries. Currently, the natural gas that Spain imports from Algeria is cheaper than the spot market price, and this compels the Spanish government to maintain favourable terms with Algiers. With energy prices rising, any alternative sources of natural gas for Spain are more expensive. Making matters worse for Spain is an upcoming renegotiation period for energy deals with Algeria, and a high price for natural gas favours Algiers. As such, Algeria is set to maintain gas supplies to Spain, and is certain to seek avenues of maximizing the benefits that increased Spanish dependency on Algerian energy supplies provides.
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US Establishes Command Post in Zambia
The United States has worked to establish a new military outpost in Southern Africa. In November last year, US military official Maj. Gen. Rohling met with the Zambian Minister of Defence to discuss ways to strengthen security cooperation between the Us and Zambia. Now, the United States Africa Command (AFRICOM) announced that they have set up an office inside the US Embassy complex in Lusaka, Zambia.
A military base in Zambia would allow Washington to project military power across much of the Copperbelt — a natural region in Central Africa which encompasses a region between Zambia and Democratic Republic of Congo. The region has substantial gold, cobalt and high-grade copper reserves, all of which are minerals that are needed in the production of many modern electronics. While neither Zambia nor the US military has made public the agreement the two signed in April, the presence of AFRICOM signals a US intent to secure key minerals crucial to both its commercial and military industries.
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Russia Nationalizes Sakhalin-2 Project
The Russian government has passed a decree transferring control of the Sakhalin-2 gas and oil project in Russia's far east to the Russian state. The new decree is justified by Russia as a response to the "unfriendly actions" of the United States and other governments. Under the terms of the decree, foreign investors involved in the Sakhalin-2 Project have one month to ask for a stake in the new entity. Yet for the moment there are no signs that supplies to Japan will be cut.
Japanese Prime Minister Fumio Kishida said on Friday that Russia's decision would not immediately stop LNG imports from the development. The same message was echoed by the Kremlin that Russia sees no grounds for LNG supplies to stop. Japan is likely to be most affected by the move to nationalize Russia's state-owned Gazprom owns about 50% of Sakhalin Energy, with 27.5%, 12.5% and 10% owned by Shell, Mitsui and Mitsubishi, respectively. Sakhalin-2 produces about 10 million tons of liquefied natural gas per year, which accounts for roughly 10% of Japan's LNG imports.
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