Russia flexes muscles in Africa

2008-09-03 07:15

Rabat - Russia is reviving an interest in Africa that collapsed with the Cold War and its growing appetite for deals in African oil and gas is an added cause of unease in energy-hungry Western Europe.

Russian firms say the goal is to diversify energy interests and secure raw materials for a fast-growing economy, but the companies are also seen as tools of an increasingly assertive Kremlin foreign policy.

Africa is already an important alternative energy source for European countries reliant on Russia.

The fact that Russian firms have made little dramatic progress in Africa has not assuaged Western concerns, particularly since Russia's intervention in Georgia raised new questions over energy supplies from the east.

"Quietly, but with rising amounts of panic, we're hearing officials from major European governments complain about what the Russians are doing," said Jon Marks, editorial director of industry newsletter Africa Energy.

Russia's African push goes beyond traditional allies that it supplied with weapons and money during the Cold War.

One of its biggest trading partners in Africa is staunch US ally Morocco, which supplies it with mineral phosphates consumed in large quantities by Russian farms.

Big spending

But Russia showed it wanted to keep strong ties with former ally and Moroccan rival Algeria in 2006 when it agreed to write off $4.7bn on Cold War era debt in exchange for a deal to sell Algeria combat jets, submarines, warships and missiles.

Russian firms, like counterparts from Asia and other Asian countries, are spending billions of dollars for better access to the mineral wealth of countries across the continent.

Such interest in Africa is particularly welcome to those governments that baulk at conditions on democracy, human rights and reform that can be attached to dealings with Americans or Europeans.

Russia's recent willingness to stand up to the West using raw military power also makes it a more attractive partner for African leaders tired of being bossed around by the world's only superpower, analysts say.

"Given Africa's increasingly recognised geopolitical significance ... American policymakers and analysts would do well to be wary of the Russian bear's return" to Africa, said J. Peter Pham, an Africa and Middle East expert at James Madison University in Virginia.

The big concern in Western Europe is that Russia's tentative deals with African OPEC members are an attempt to get a stranglehold on Europe's natural gas supplies. Russia's Gazprom, which already provides a quarter of Europe's gas, agreed with Algeria's oil company Sonatrach to seek out and commercialize natural gas together after a visit to Algiers by former Russian President Vladimir Putin last year.

Sonatrach is the European Union's third-biggest supplier of gas.

A deadline for a Russian gas exploration deal with Nigeria passed in May, but Gazprom said in April it was in talks to take part in a multi-billion dollar project to pipe Nigerian gas to Europe across the Sahara.

Gazprom said in July it could build a pipeline to pump Libyan gas to Europe. Libya has also agreed to sell some of its oil and gas to Russia.

Distinct strategy

"There is a distinct strategy here. Gazprom doesn't necessarily get a controlling stake but the Russians are getting a place at the table," said Marks of Africa Energy.

Elsewhere in Africa, Russian oil major Lukoil plans to explore for hydrocarbons in Ghana and Ivory Coast while Sintezneftegaz has acquired oil exploration rights off Namibia.

Interest in Africa goes well beyond the energy sector.

Aluminium firm RUSAL acquired a majority stake in Aluminium Smelter Company (ALSCON) of Nigeria last year.

Russian oligarchs have taken big stakes in mines in South Africa, whose governing ANC relied on Soviet support during the apartheid era.

Russian oil officials have said their push into Africa makes economic sense as it means money earned in Russia can be used to earn them even more abroad.

But analysts say it could be long before Russia's energy deals in Africa begin to pay off.

"They have signed bits of paper with everyone ... but I don't expect anything very quick to happen here," said Jonathan Stern, director of gas research at the Oxford Institute of Energy Studies.

"Obviously what the Russians would love to do is buy up loads of oil and gas and only use it for their own purposes, but they are not going to be allowed to do that," Stern said.

- Reuters

- Reuters