Angola to Boost Gas Production for Europe & Asia Amidst Energy Crisis | Germany Seeks New Supplier

Germany is actively seeking new natural gas suppliers, with Angola emerging as a potential key partner. This move comes as Berlin aims to diversify its energy sources following the disruption of Russian gas supplies after the invasion of Ukraine and amid ongoing instability in the Middle East, particularly with tensions involving Iran. The pursuit of Angolan gas is part of a broader strategy that likewise includes exploring options in Canada, and Mexico.

The impetus for this shift stems from a recognition of the vulnerability created by reliance on single energy sources. As German Economy Minister Robert Habeck told Bloomberg, the lessons from Ukraine and now the situation with Iran are clear: “the western hemisphere cannot depend on bottlenecks.” The closure of the Strait of Hormuz, a critical waterway for global oil and gas transport, through which 20% of the world’s supply passes, has further underscored this point. Analysts anticipate sustained higher energy prices, even if infrastructure in the Gulf region is restored, due to a persistent “risk premium.”

Angola’s Expanding Gas Production

Angola is planning a 20% increase in its gas production by 2030, with a focus on expanding exports to both Europe and Asia. This expansion is supported by anticipated investments of $60 billion in the oil and gas sector over the coming decade. The country’s national oil, gas, and biofuels agency, the ANPG, reports that 23 exploration wells are slated for drilling, with 11 located in offshore areas. Recent developments include the commencement of gas production at the Quiluma field, operated by Azule Energy (a joint venture between BP and Eni), with participation from Cabinda Gulf Oil Company, Sonangol, and TotalEnergies. More details on the Quiluma field’s production start can be found here.

Germany’s Energy Transition and Diversification

Germany was heavily reliant on relatively inexpensive Russian gas delivered via pipeline, which supported the competitiveness of its export-oriented economy. The abrupt halt of these supplies following the invasion of Ukraine forced a rapid reassessment of energy policy. The country pivoted towards importing liquefied natural gas (LNG), with the United States becoming a major supplier, accounting for over 90% of Germany’s LNG imports and representing 13% of total imports. Though, Berlin is keen to avoid over-dependence on any single source, hence the exploration of alternative suppliers like Angola.

German companies, including RWE, Uniper, and SEFE, have already secured long-term contracts with US suppliers. Chancellor Friedrich Merz visited the Gulf region in February to negotiate new gas deals, but the escalating conflict in the Middle East has complicated those efforts. The German government initially projected economic growth of 1% for 2024, but prolonged conflict and rising energy prices are now expected to dampen that outlook.

Broader Regional and Global Implications

The situation highlights a broader trend of energy security concerns impacting economies worldwide. The conflicts in the Middle East, particularly involving Iran, the US, and Israel, are driving up oil prices and creating uncertainty in global energy markets. According to reports from Angola’s O País newspaper, these conflicts are already negatively impacting economies, particularly in Europe and countries reliant on imported energy.

The closure of the Strait of Ormuz, even temporarily, demonstrates the fragility of global energy supply chains. This has prompted countries across Europe to accelerate efforts to diversify their energy sources and reduce their dependence on politically unstable regions. Angola, with its growing gas production capacity, is well-positioned to benefit from this shift.

The Franco-German-UK Response to Iran

Adding to the geopolitical complexity, Germany, France, and the United Kingdom have signaled their willingness to intervene militarily in the conflict involving Iran, should Tehran continue to launch attacks on other countries in the region. As reported by Angola24Horas, the three nations issued a joint statement committing to “seize the necessary measures” to defend their interests and those of their regional partners, potentially including military action to destroy Iran’s missile and drone capabilities. This escalation of tensions further underscores the need for energy security and diversification.

What’s Next: Investment and Infrastructure

The next steps involve securing long-term supply agreements between Angola and Germany, as well as significant investment in infrastructure to facilitate the transport of Angolan gas to Europe. This will likely require collaboration between governments and private sector companies. Angola’s planned $60 billion investment in oil and gas through 2030 is crucial, and the success of projects like the Quiluma field will be closely watched. Further negotiations and potential agreements with Canada and Mexico are also anticipated as Germany continues to build a more resilient and diversified energy portfolio.