ENERGY
Oil Prices: Everything you Need to Know about EU $60 a Barrel Price Cap
Published
2 years agoon
By
EditorAfter months of planning and negotiations, the biggest tranche of sanctions on Russian oil to date are about to take effect – how big their impact will be remains uncertain. On Friday afternoon, EU officials clinched a deal to cap the price of Russian crude at $60 per barrel. Anyone wanting to access key services that the bloc provides, especially insurance, will have to pay that price or less. The same goes for European tankers, especially the giant Greek fleet. The EU cap is part of a global process, with other G7 industrialised countries set to follow suit.
Who is sanctioning what?
As of Monday, the EU will ban the import of crude oil produced in Russia and transported by sea. There is an exemption for Bulgaria, which can continue to import Russian crude by sea until the end of 2024, under contracts that were concluded before June 4, 2022. Pipeline flows are unaffected, although Germany and Poland both said they would cease such imports by the end of 2022.
The UK and EU will also introduce a ban on maritime services that allow the transport of Russian oil, including to so-called third countries – those that are neither Russia nor the sanctioning country. The list of banned services includes insurance, brokerage and crucially the EU-based tanker fleet including ships owned in Greece and Cyprus. These restrictions won’t apply if oil is bought at or below the capped price.
How will the global oil cap work?
If crude oil is traded below at or below $60, then countries participating in the cap, which include the G7 nations, the EU and Australia, will allow access to key services including insurance. There is one price cap for all of Russia. The $60 level will be about $10 above the key Urals grade, shipped from the country’s western ports, but below ESPO, which is loaded onto tankers at Kozmino in Asia. That grade is above $70, according to data provided by Argus Media. That traded price that’s capped is the value when the crude is loaded onto a vessel. It doesn’t include the cost of transportation and legal fees. It will apply from the receipt of a cargo onto a ship until it is passed through customs in a new country. Once the oil has been refined, it will no longer be subject to the cap, but if it is blended with another type of crude then it still is. The EU is looking at a mechanism that would allow for regular evaluations and revisions of the price cap from mid-January 2023.
How will insurance work?
Traditionally, ships obtain cover for issues like oil spills through a London-based organisation called the International Group of P&I Clubs. The IG, as it’s known, uses a reinsurance program that is heavily dependent on the EU, meaning that its services will only be allowed if oil is shipped under the cap. But there are some alternatives. Russia’s Ingosstrakh Insurance was the top Russian underwriter of P&I cover in October, and could be an option.
However, the company offered no indications when asked in November if it was rushing to fill the void. And the depth of Russia’s insurance market is small in comparison to traditional ones. Chinese authorities are yet to recognise Russian insurance, Russia’s deputy transport minister said last week, however India and Turkey do. An Indian refiner has previously said Russia is insuring its crude shipments.
Russia’s response
Russia has consistently said it won’t sell oil to countries that participate in the price cap. Deputy Prime Minister Alexander Novak said last week that the plan may result in significant risks for commodity markets, including market deficits.
Foreign Minister Sergei Lavrov said Thursday that Russia would continue to negotiate with its partners “directly” over the pricing of crude sales, noting that “there is always an element of balance of interests,” including on prices. This leaves Russia room to conclude sales at prices below the cap while claiming they are not dictated by the cap itself.
The countries that Russia currently sells to aren’t participating in the cap, but could try to use it as leverage. A host of countries continue to import oil from Russia along the Druzhba pipeline, Europe’s largest, while up to 1.5 million barrels a day of oil from Kazakhstan is shipped from a terminal close to Russia’s Novorossiysk port. Those aren’t banned. It’s not clear what Russia can or will to do to punish companies that participate in the cap. Doing so could hurt its interests.
Who is shipping?
A burgeoning shadow fleet of oil tankers has emerged to ship Russian crude oil. Whether that fleet will be large enough to maintain a full rate of exports in the long term only time wiil tell. The move has seen a growing number of vessels registered to unknown owners, while the scrapping of old tankers has all but halted. Still, the growing risk of carrying Russian oil has seen tanker earnings spike for cargoes loading after December 5. That’s fed all the way into Urals crude oil prices already. Since the war broke out, a raft of new traders have been marketing Russian oil to buyers in Asia, as traditional entities stepped away. Those include companies like Coral Energy, Wellbred and Montfort. Businesses trading out of Dubai without links to the EU aren’t subject to the bloc’s sanctions, but would still need key services like insurance and finance.
What has been exempted?
The price cap should only apply to seaborne deliveries of Russian oil – flows via the key Druzhba pipeline to Europe are still allowed. There’s also a carve out for Kazakhstan’s CPC crude oil blend which is exported from a Russian port. However, there will be further talks next week that could see some tweaks to the rules. Bulgaria has an exception that allows it to continue importing crude oil due to its “specific geographical exposure,” according to the EU’s sixth sanctions package.
Alongside that, Japan received an exemption for oil produced from the Sakhalin-2 project that’s destined for Japan. The UK, which had been waiting on the EU, has an exceptions in place for environmental emergencies, which would allow the clean up of spills. The EU is likely to follow suit. That came after Turkey said it was planning more stringent insurance checks due to the risk of environmental damage.
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ENERGY
Ghana is Planning its First Nuclear Energy Plant: what’s Behind the Decision
Published
3 months agoon
August 5, 2024By
EditorGhana is struggling to provide affordable and consistent electricity to its citizens. The country produces excess electricity but the supply isn’t reliable. This conundrum has led to the country’s decision to build a nuclear power plant. Nuclear scientist Seth Kofi Debrah discusses the risks – and opportunities – for Ghana.
The country’s industrialisation ambitions, fuel constraints, limited resources, climate conditions and international commitments to climate change mitigation are among the factors driving Ghana to include nuclear power in the energy mix.
Nuclear power is available all year round, making it reliable. The nuclear power plant is expected to operate as a baseload plant (the production facility used to meet some or all of an area’s continuous energy demand), with a capacity factor of about 92%. A conventional nuclear power plant typically operates for 92% of a calendar year as compared to 54% for natural gas power plants, 24% for solar and 34% for wind power plants.
Demand for electricity is growing across the nation. Currently, 84% of the population have access to electricity but may not be connected to the electrical grid. This means the power is available in their area but they may be unconnected due to personal circumstances. Electricity demand is expected to grow rapidly on the back of electrification projects planned by successive governments, like the rural electrification project (which aims at supplying electricity to all communities with a population of 500 or greater) and industrialisation initiatives (such as developing the manufacturing, alumina and iron industries). Another reason for choosing nuclear power is that Ghana sees it as a way of supporting its industrial ambitions in the sub-region.
For example, Ghana aims to become a net exporter of electricity in the region through the West African Power Pool, a specialised agency of the Economic Community of West African States. It covers 14 of the 15 Ecowas countries and is intended to supply them with reliable energy at a competitive cost.
According to the World Bank, the average electrification rate in west Africa is about 42%, which means that almost half of the region’s population has no access to electricity. Ghana has an 84% electrification rate. Ghana believes nuclear power can help it achieve its industrial ambitions while fighting climate change. As a signatory to the Paris Agreement, Ghana has an international obligation to reduce greenhouse gas. Nuclear power does not produce any of the greenhouse gases.
Ghana’s electricity sector is dominated by thermal plants that use natural gas – a fossil fuel. Fossil thermal plants make up 64% of the current energy mix. This is an over-dependence on a single fuel source. Natural gas has competing uses in different sectors, so there are frequent fuel shortages. And the price of natural gas is set by international markets, which leads to price volatility. Ghana has its own source of natural gas. But these reserves are expected to start declining by 2028.
How dependable is the country’s current energy mix?
Ghana’s current energy mix is made up of 1,584MW installed capacity of hydro, 3,758MW of thermal power plants (mostly powered by natural gas) and 112MW of solar generation. But the dependable capacity (the total amount of electricity that the facility can produce and deliver to the power grid) of renewables is non-existent since the source of their power generation is variable.
The dependable capacity of the energy mix of a country matters a great deal. The energy mix must have strong baseload capacity (the minimum amount of electric power needed to be supplied to the electrical grid at any given time) before renewables are considered, to ensure reliability.
No industralised nation developed its economy based on variable generation of electricity. They needed a reliable backbone that could be depended on at all times. European countries used natural gas, coal, hydro or nuclear as their baseload capacity and added on variable renewables. If Ghana wants to exploit its natural resources and become an industrial giant, it needs sustainable, reliable and affordable baseload electricity. That can be found in a source like nuclear.
What’s the government’s case for nuclear?
Ghana doesn’t have many other energy options. It has good sources of hydro but most have already been exploited. Potential small dams are being affected by climate change or variability and illegal mining. And the economic justification for more small hydro plants is in doubt.
Ghana started its nuclear power journey as far back as the early 1960s but the idea was never realised. The nuclear power programme was restarted in 2007 under former president John Agyekum Kufuor. The programme has followed the International Atomic Energy Agency’s three-phase approach. Ghana is now at phase 2: vendor selection and site preparation. The plant, which is expected to be constructed along the coast of the country, is planned to come online in early 2030.
Given Ghana’s financial constraints, is nuclear power a good idea?
Nuclear power plants have proven to be among the cheapest sources of electricity around the world. Even though nuclear has a huge upfront financial burden, its long lifespan (over 60 years) and low running cost makes it one of the cheapest baseload sources of electricity. Around the world, advanced countries seek financial support for their nuclear projects. There are various models to finance nuclear power plant procurement, including the option of a public private partnership.
How about nuclear waste and the cost of dealing with it?
Ghana already operates one of the few radioactive waste storage facilities in Africa. This means that when Ghana builds a nuclear power plant it will already have capacity in nuclear waste management.
Radioactive waste management, which deals with nuclear waste, is an issue that needs to be addressed in the early stages of planning a nuclear plant. This is evident in the International Atomic Energy Agency milestone approach which most countries follow to develop a nuclear programme. It shows all the 19 infrastructure issues that need to be addressed throughout the three-phased approach.
It is the only power plant that is responsible in dealing with its waste after its lifetime. In effect, it is the only power plan that plans and pays for its waste management during operation and post operation with dedicated funds for waste management.
The costs of managing nuclear waste and the nuclear power plant’s decommissioning at the end of its operating life are included in the nuclear power plant tariff. This is a safety requirement as enshrined in the International Atomic Energy Agency safety standards. Furthermore, the country of origin has strict regulations about decommissioning which have to be adhered to by nuclear power plant owners.
One of the major concerns by the public is the treatment or storage of the high level spent fuel that is sometimes referred to as “waste”. High level spent fuel is the fuel that has been used up through irradiation. These used fuels usually have over 90% usable fuel that can be re-used through reprocessing.
Seth Kofi Debrah is a Professor at the School of Nuclear and Allied Sciences, University of Ghana.
Courtesy: The Conversation
ENERGY
Egypt, Greece, and Israel Take the Lead on Europe’s Energy Supply
Published
1 year agoon
August 8, 2023By
EditorBy Antonia Dimou
The East Mediterranean can enhance Europe’s energy security and reduce its dependence on Russian gas. Regional countries are strongly positioned to face oncoming challenges in the global energy markets and efficiently deliver on the European continent’s gas demands.
Egypt is well-situated to increase its gas exports to Europe, but one major constraint is that European countries either lack LNG terminals or existing terminals have a limited capacity to receive supplies. It is thus imperative for European countries to upgrade existing terminals or construct new ones to expand their capacity to receive LNG.
Egypt Dominates the Region’s Energy Successes
New gas findings in Egypt can turn into commercial discoveries that will be transported to Europe. The discovery of Nargis-1 exploration well, co-owned by American Chevron and Italian ENI in the Nargis Offshore Area Concession, is estimated to contain almost 200 net feet (61 m) of Miocene and Oligocene gas. Also important, German Wintershall Dea made a new gas discovery within the Disouq concession in the onshore Nile Delta region that has been tested at a peak production of 15 million cubic feet of gas per day.
Egypt has almost 2.21 trillion cubic meters of proven gas reserves, and it produced more than 95 billion cubic meters in 2021, with exports exceeding 12 billion cubic meters annually.
With an eye to regional energy cooperation that will benefit Europe, Egypt prioritized the demarcation of maritime boundaries with countries like Greece and Cyprus, aiming to extract greater volumes of regional gas through joint exploration and to link national pipelines. This is evidenced in the letter and spirit of the partial delimitation agreement that was signed between Egypt and Greece in August 2020.
According to Article 2 of the agreement “in case there are natural resources, including hydrocarbons reservoirs, extending from the Exclusive Economic Zone of one Party to the Exclusive Economic Zone of the other, the two Parties shall cooperate in order to reach an agreement on the modalities of the exploitation of such resources”. Overall, the Egypt-Greece demarcation agreement has created a positive precedent for other regional countries to emulate.
The Euro-Africa Interconnector, labeled as Project of Common Interest by the EU, supports Egyptian and Greek aspirations to become major energy hubs for Southeast Europe. The project aims to transport by a subsea cable renewable electricity generated in Egypt and other African countries through Greece to Europe. Already, Egypt has completed interconnection projects with Libya, Sudan, and Saudi Arabia.
Greece: An Active Player in Europe’s Energy Transformation
Greece is exploring ways to bring regional gas to Europe, as the proposed East Mediterranean Gas Pipeline may prove technically challenging and thus less likely to materialize. Athens accelerated efforts to execute projects of regional and European interest like the Euro Asia Interconnector, a key infrastructure project that links the grids of Israel, Cyprus and Greece with the European power grid delivering up to 2000 megawatts of energy and thus enhancing European energy security. Nexans, a global player in energy transition, has been recently awarded a contract valued at 1,6 billion dollars for the section of the Euro Asia Interconnector that will connect Cyprus to Greece via a subsea cable that will cross ultra-deep waters of over 3,000 meters.
Greece also pays high importance to other infrastructure projects, including an onshore 28-kilometer gas transmission pipeline that connects the National Gas Transmission System to the Alexandroupolis Floating Storage and Regasification Unit in northern Greece, through which 5.5 bcm of gas per year will be funneled to the Balkans and to Southeast Europe. Deliveries of 28 kilometres of pipes were completed in May 2023 by Corinth Pipeworks that was awarded a contract by Saipem S.p.A for the development of the offshore and onshore gas pipeline by Gastrade. An additional infrastructure project, with Greece at its epicenter, that will form the European Hydrogen backbone is the construction of a 160-kilometer gas pipeline in western Macedonia that can transport up to 100 percent hydrogen.
Regarding hydrocarbon exploration, the Greek government has compiled an action plan that centers on the completion of seismic surveys and drilling at the offshore blocks in the Ionian Sea and south of Crete, already conceded to oil majors. The Hellenic Hydrocarbon Resources Management Authority has identified more than 30 maritime blocks with a total estimated quantity of recoverable gas ranging between 2 and 2.55 trillion cubic meters. Significant volumes of gas, once extracted from Greek maritime blocks, will be funneled to Europe.
Israel’s Energy Independence Creates Opportunities
Israel, for its part, can export to Europe surplus gas of approximately 500 billion cubic meters (bcm) over the next two decades. Notably, Israel has achieved energy independence over the last years that created a shield against the energy crisis which was triggered by the war on Ukraine. Israel therefore accelerates efforts to identify new gas discoveries by offering 20 new exploration blocks in the context of its 4th International Offshore Licensing Round. As announced recently by Israel’s ministry of Energy, four consortia of companies submitted bids to obtain licenses for gas exploration within Israeli waters.
The Israeli aim lies in increasing gas volumes for export to third markets. According to the Israeli perspective, the war on Ukraine provides a golden opportunity for regional countries that are not aligned with radical Islam to produce and jointly funnel gas to Europe. The latter can also help regional countries come together and draft long-term energy cooperation agreements that will benefit the economies of all involved.
The Turkish dimension cannot be ignored in Israel’s regional calculations. The construction of a pipeline to transport Israeli gas to Turkey could help the latter diversify energy resources, especially considering that contracts with Russia and Iran will expire within the next four years. Even though the Turkey-Israel pipeline is technically, and financially feasible, political considerations have so far impeded its execution, namely Ankara’s regional revisionism and unpredictability towards Israel. Noteworthy, Turkey seeks to import East Mediterranean gas to meet its increasing domestic needs rather than export it to Europe.
Challenges and Policy Recommendations
Overall, there are several solutions to upgrading the supply of energy from the East Mediterranean to Europe, thus enhancing the latter’s energy security. Skepticism, however, prevails in European political circles regarding the likelihood of Libya as a feasible energy supply option for Europe, despite the low extraction cost of Libyan gas and oil compared to other East Mediterranean countries. The highly unstable situation in Libya is the prime factor impeding European energy operators from engaging with Libyan authorities.
It is with no doubt that East Mediterranean countries must be locked into a broader European strategy that provides a win-win situation by which cooperation profits every party. To this end, Egypt should expand its capacity for processing and exporting LNG to Europe, not only to offset a sharp decrease in gas imports from Russia, but also to increase revenues of the Egyptian state budget.
Hydrogen and renewables can prove to be game changers in the next two decades for Europe. It is in this context that Greece should swiftly proceed with cementing its energy partnership with Saudi Arabia so that Athens can facilitate massive imports of hydrogen from the Saudi Neom region to Europe.
Israel should explore the possibility of a floating LNG terminal in Israeli waters, as this option is feasible now that, due to the Israel-Lebanon demarcation agreement, the threat of naval escalation between the two countries has passed.
Evidently, East Mediterranean countries namely Egypt, Greece and Israel played an early role in reducing European dependence on Russian energy and can potentially play a larger role through coordinated efforts to becoming credible gas suppliers to Europe. It is in the hands of the three East Mediterranean countries to establish a rock-solid energy partnership that will benefit all.
Antonia Dimou is Head of the Middle East Unit at the Institute for Security and Defense Analyses, Greece; and, an Associate at the Center for Middle East Development, University of California, Los Angeles
Courtesy: Modern Diplomacy
ENERGY
Russia’s Nuclear Diplomacy Falls Behind Expectations in Africa
Published
1 year agoon
July 11, 2023By
EditorBy Kester Kenn Klomega
Endowed with huge natural resources, Africa is comparatively the least developed region in this world. In the current context of global crisis, at least Russia struggling to maintain its image on the stage. Some African leaders are more concerned to be at the receiving end, while others are prioritizing development and improving welfare for their impoverished population.
Sometimes, it is difficult to understand the level of development despite the colossal resources in Africa. That development can only be raised with foreign participation. With that presumption, African leaders seemingly have that sentimental edge attitude for symbolism and the desire for group photos at international conferences and summits even if such gatherings offer little or nothing tangible for their national economic development. Russian President Vladimir Putin attended a meeting of BRICS leaders with delegation heads from invited African states and chairs of international associations on 27 July, 2018, in Johannesburg, South Africa.
Those invited included the leaders of African countries, namely, Angola, Botswana, Ethiopia, Gabon, Lesotho, Madagascar, Mauritius, Malawi, Mozambique, Namibia, Rwanda, Senegal, the Seychelles, Tanzania, Togo, Uganda, Zambia and Zimbabwe. The meeting was also attended by the heads of Argentina (then chair of the G20), Turkey (then chair of the Organisation of Islamic Cooperation) and Jamaica (then chair of the Caribbean Community).
Before the meeting, there was a joint photo session. Speaking at that grand high-level meeting, Putin told the African leaders, with confidence, that “Africa is one of the world’s most rapidly developing regions.”
“Russia has always given priority to the development of relations with African countries, based on long-standing traditions of friendship and mutual assistance,” he said, and along the line in the powerful and arousing speech, added that Russia would help to overcome energy shortages and deep-seated deficits across Africa.
Without much doubts, Russia is noted for an excellent diplomacy. As always, African leaders gave an ear-deafening applause. Russia is ready to do everything in various sectors in Africa has been the policy chorus down these years since the collapse of the Soviet era in 1991, and African leaders respectfully show high excitement at such phrases.
Putin underscored the fact in the nuclear power industry, where Russia is a technological leader, offers several African partners the creation of an entire industry on a turnkey basis. Agreements on cooperation in the field of atoms for peace have been signed with a number of countries in the region, while in some of them the work has acquired a practical dimension. Joint efforts are being taken to implement the agreements reached in a number of spheres.
“All these projects will be of strategic importance for Africa, where, according to different estimates, as many as 600 million people still live without electricity,” he told African leaders.
Quite recently in March 2023, Putin spoke at the international parliamentary conference Russia – Africa in a Multipolar World, held in Moscow under the auspices of the State Duma of the Russian Federal Assembly. In fact, one key question that featured in the speech that “Rosatom is already building a nuclear power plant in Egypt and plans to expand its involvement in the development of national energy systems in the African continent. I would like to note that significant, in some countries 100-percent funding is provided by Russia.”
The partnership between Russia and African countries has gained additional momentum and is reaching a whole new level. With South Africa, the agreement for the large scale nuclear power plant (NPP) development was initially signed during the International Atomic Energy Agency General (IAEAG) Conference in Vienna between Russia’s Rosatom State Atomic Energy Corporation director general Sergey Kirienko and South Africa’s Energy Minister Tina Joemat-Pettersson.
Accroding to Power Technology media report, Kirienko said: “I am convinced in cooperation with Russia, South Africa will gain all necessary competencies for the implementation of this large-scale national nuclear energy development programme. Rosatom seeks to create in South Africa a full-scale nuclear cluster of a world leader’s level – from the front-end of nuclear fuel cycle up to engineering and power equipment manufacturing.”
For the last twenty years, South Africa has not been able to make investments in new power plants, which has resulted in a severe power crunch. Kirienko observed: “In future this will allow to implement joint nuclear power projects in Africa and other third countries. But from the very start this cooperation will be guided at providing the conditions for creation of thousands of new jobs and placing of a considerable order to local industrial enterprises worth, at least, $10 billion.”
Long before that African leaders’ meeting at BRICS in Johannesburg, South African parliament overturned and blocked nuclear power agreement signed by Jacob Zuma in the Kremlin, after talks with Vladimir Putin. South Africa, until today, has had huge problems with power supply for both domestic and industrial utilization. Generally power outrages still a huge and real constraint to industrial growth in South Africa and across Africa.
Corruption that hollowed out Eskom’s coffers under Jacob Zuma’s presidency, lack of plant maintenance and sabotage were blamed for South Africa’s electricity crisis. South Africans have become hardened to crippling blackouts, this is inflicting a massive hit on the economy. Credible reports said the government spent $1.6 billion from the budget for diesel purchases this year alone. Eskom’s colossal debt, still equivalent to $23 billion.
According to research sources, main reason why the 2015 nuclear power agreement thrown out by the South Africa’s parliament, it was an opaque unilateral deal with Moscow. South African pact with Russia’s Rosatom to build nuclear reactors was deemed unlawful by a High Court in April 2017. The Southern African Faith Communities Environment Institute (SAFCEI) and Earthlife Africa-Johannesburg had jointly filed the court application to stop the nuclear program.
Both the Russian government and the administration of South African president Jacob Zuma put pressure on the South African government to force through the deal by attempting to circumvent South Africa’s procurement laws. The Russian government offered to build and operate up to eight nuclear power plants at a cost of R1 trillion ($66 billion).
South Africa and Russia signed an Intergovernmental Agreement (IGA) in 2014 that sealed a cooperation pact between state-owned nuclear group Rosatom and state-owned utility Eskom. There were external tenders, for example the United States, South Korea, China and France, but Jacob Zuma, without consulting his cabinet and parliament, used his close-friendship to sign the deal with Putin. As a result, Pravin Gordhan then Finance Minister was fired partly because he resisted pressured by a faction allied to Jacob Zuma to back nuclear expansion.
With Arab Republic of Egypt in North Africa, it has been in the works for several years and has a chequered history. Egypt has been considering the use of nuclear energy for decades. The Nuclear Power Plants Authority [NPPA] was established in 1976, and in 1983 the El Dabaa site on the Mediterranean coast was selected.
With over 100 million inhabitants, Egypt is the most populous country in North Africa, popular referred to as Maghreb region and part of the Arab World. Egypt is the third most populous country after Nigeria and Ethiopia in Africa. About half of Egypt’s residents live in urban areas, with most spread across the densely populated centers of greater Cairo, Alexandria and other major cities along the Nile Delta. Therefore, Egypt needs sufficient energy to drive its industries and for domestic utilization.
Egypt’s nuclear plans, however, were shelved after the Chernobyl accident. But, in 2006, Egypt announced it would revive its civilian nuclear power program, and build a 1,000 MW nuclear power station at El Dabaa. Its estimated cost, at the time, was $12.5 billion, and the plans were to do the construction with the help of foreign investors. In March 2008, Egypt signed an agreement with Russia on the peaceful uses of nuclear energy.
Rosatom has shown interest not only Egypt but many other countries in Africa. Over the past two decades, at least, it has signed agreements that promised construction of nuclear energy plants and training of specialists for these countries. Director General, Alexey Likhachev, emphasized these points at the first Russia-Africa summit that Rosatom has already been cooperating with more than 20 African countries, in particular, building the largest “El-Dabaa” NPP in Egypt with an installed capacity of 4.8 GW. The total cost of construction fixed at $30 billion.
After these several negotiations and re-negotiations since 2015, Russia re-signed the contract for the nuclear construction during the first Russia-Africa summit. Then after that…three years of waiting, Russia finally in 2022 granted a loan $25 billion for the construction of the nuclear power plant which covers 85% of the work. The remaining expenses will be covered by the Egyptian side by attracting private investors. Under the agreement, Egypt is to start payments on the loan, which is provided at 3% per annum, from October 2029.
According to reports, Russia has also signed for such construction of nuclear plants with a number of African countries but yet to begin implementing its side of the agreements. These include agreements with Algeria (2014), Ghana (2015), Ethiopia (2019), Republic of Congo (2019), Nigeria (2012, 2016), Rwanda (2018), South Africa (2004), Sudan (2017), Tunisia (2016), Uganda (2019) and Zambia (2016). Memoranda of Understanding (MoUs) were signed with Kenya in 2016 and Morocco in 2017.
At the last international parliamentary conference ‘Russia – Africa in a Multipolar World’ held in March 2023, under the auspices of the State Duma of the Russian Federal Assembly, Putin indicated in his speech that “Russia is offering new environmentally friendly technologies, primarily in nuclear energy. Rosatom is already building a nuclear power plant in Egypt and plans to expand its involvement in the development of the national energy systems of the African continent. And that Russia, in some countries, would provide 100-percent funding of these nuclear projects.”
Ryan Collyer,the Regional Vice-President of Rosatom for Sub-Saharan Africa, told this author that energy (construction and repair of power generation facilities as well as in peaceful nuclear energy and the use of renewable energy sources) is an important area of the economic cooperation between Russia and Africa.
Collyer further explained that a nuclear power program is a complex undertaking that requires meticulous planning, preparation, and investment in time, institutions, and human resources. The development of such a program does not happen overnight and can take several years to implement.
According to his explanation, another critical question is the cost. Most of the funds are needed to during the construction period. Building a large-scale nuclear reactor takes thousands of workers, massive amounts of steel and concrete, thousands of components, and several systems to provide electricity, cooling, ventilation, information, control and communication.
Way Out – Other Energy Alternatives
Knox Msebenzi, Managing Director of the Nuclear Industry Association of South Africa (NIASA), a body committed to promoting the highest standards in the development and application of nuclear technology, in discussing the impact of challenges on the country’s economy and a way out of the power generation difficulties, recommended that South Africa pursue an energy mix that includes coal, wind, hydro-power, nuclear and renewables going forward.
There are no silver bullets when it comes to energy sources generally across Africa. Criticisms of nuclear relating to costs and project managements (long delays with huge projects) are being addressed with Small Modular Reactors. Nuclear power will not come online today as it takes time to implement, but countries do not plan for now but for the future.
Msebenzi also told me during our discussion that foreign players would invariably be attracted by commercial interests. Manufacturers of renewable energy equipment overseas are already pushing to sell their goods and services. Nuclear vendors are also very keen to participate in the South African nuclear bid and this can be a gateway to the rest of the continent. Not only is it my view that an all-inclusive energy mix is imperative, but African governments must recognise these as well if they wanted durable and sustainable solution to energy crisis.
Most of these post-Soviet years, Russia’s growing opacity, agreement clouded in secrecy which features in its policy is seriously affecting its image inside Africa. That however, it has been pushing nuclear technology to African nations both to turn a profit and to expand its political might on the continent. It has until now several bilateral agreements signed.
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