Russia strengthens African ties in energy and raw materials


IN recent years Russia has moved to expand its role in African commodities industries, aiming to build on a legacy of Soviet influence to gain greater access to the continent’s natural resources.

Traditionally, Russian companies have operated in both sub-Saharan and North Africa, working in gold, gem, manganese and bauxite mining, as well as on oil, gas and nuclear projects.

The Soviet Union built influence in Africa by supporting independence movements, education programmes for African students, and military and economic co-operation. The collapse of the Soviet Union and Russia’s subsequent economic decline saw these links diminish in the 1990s.

Russia is now seeking to revive its relationships on the continent, hoping to capitalise on disillusionment with existing Western and Chinese partners. Russian officials have committed to provide turnkey commodities projects, and offered co-operation in other sectors, including arms and medical supplies to African countries.

It is also looking for ways to leverage earlier drives to boost cooperation with Western majors and Middle Eastern partners to minimise risks and amplify the impact of its involvement in new projects.

Russian President Vladimir Putin signalled Africa was becoming more important for Russia’s global ambitions during the tenth BRICS Summit in Johannesburg in July 2018. Addressing the summit he said that Russia was planning to increase its role in African energy projects, particularly promising new oil, gas and nuclear projects.

This was followed by the Russia-Africa Summit last October, when 45 African heads of state travelled to the resort city of Sochi in Southern Russia to discuss co-operation. Delegates were able to inspect military hardware at first hand, and signed 92 agreements worth more than  $14.5bn, according to organizers Roscongress.

Russian state-owned explorer Rosgeo signed exploration agreements with Nigeria, Equatorial Guinea, Rwanda and South Sudan, and called for a fund to be set up to finance geological exploration in Africa. Russian state development bank VEB agreed to consider financing a refinery in Morocco and an oil products pipeline in the Republic of Congo. Meanwhile Lukoil agreed a preliminary refining sector deal with Nigeria.

A declaration signed at the end of the event included commitments to increase political, security, trade, legal, scientific and environmental cooperation between Russia and African countries. It also outlined plans to host a similar summit every three years and hold annual political consultations between Russian and African foreign ministries and the African Union.

The momentum has continued beyond the event. In November Lukoil won a bid for block EG-27, a gas-rich block offshore Equatorial Guinea that contains the stalled Fortuna LNG project. Earlier this year Rosgeo signed its first contracts for hydrocarbons exploration work in Equatorial Guinea.

Rosgeo is a key element in Russia’s drive to increase its presence in Africa, and has said that its priorities in the region are Algeria, Egypt, Tanzania, Mauritania, Sudan, Angola, Namibia, Guinea and South Africa.

Tracing its history back to its nineteenth-century predecessor, the Russian Geological Committee, Rosgeo has previously explored for diamonds and bauxite in Guinea, gold, rare metals and gas condensate in Ethiopia, cobalt in Morocco, gold in Mali, mercury in Algeria, and rare metals, coal, precious stones and gas in Mozambique.

Dr Nataliya Zaiser, an international public policy expert and chair of the board of the Africa Business Initiative Union, said Russia is looking to export its technical expertise to Africa.

‘Russia, being one of the great energy powers, has significant long-term experience in modern energy solutions, in building energy infrastructure, in power system development. So, we have a lot to suggest to our Africa partners,’ Zaiser said.

Russian companies face significant challenges, however, including red tape and political instability.

‘The main barriers to doing business are extremely common for the sector: changes to mining law or the need to improve it, tax issues, a lack of qualified local personnel, high risks and turbulence of a number of African jurisdictions, including terrorist threats, internal conflicts and deadly diseases,’ she said.

Leveraging existing co-operation

Zaiser added that Russia is open to joint projects in the region with partners from Europe, Asia and the Middle East. In this way, Russia could spread its risk and leverage previous attempts to increase energy cooperation with Western and Middle Eastern partners to boost its impact in Africa.

A good example of this is Russian crude producer Rosneft’s involvement in the Zohr project in Egypt. Rosneft joined European partners Eni and BP in the gas field in 2017. Rosneft also won three licenses offshore Mozambique in partnership with ExxonMobil in 2015. These deals came after the introduction of Western sanctions against Russia in 2014 complicated Western companies’ plans to increase cooperation with Russian oil and gas producers in Russia.

Last October, Lukoil CEO Vagit Alekperov said the company was studying opportunities to work with Saudi Aramco in Africa. Putin also said during a meeting with his Egyptian counterpart, Abdel Fatteh el-Sisi, that the UAE is interested in joining Russian projects in Egypt. Regular meetings within the OPEC+ group and the Gas Exporting Countries Forum are likely to further facilitate multiparty co-operation.


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