Russia’s invasion of Ukraine prompted a shift in energy cooperation with African countries, once considered a priority for future upstream investment.
Western sanctions have increased the importance of alternative energy partners and markets, including Africa, for Russia. Following the visits of several Russian delegations to African countries to discuss increased cooperation since the outbreak of the conflict, Russian officials met their African counterparts at the Russia-Africa Summit in St. Petersburg on July 27-28.
The meeting came on the heels of Russia’s withdrawal from the United Nations-Turkey-brokered Black Sea Grains Initiative, which aimed to support global food security—an issue of great significance to African countries this week.
The summit discussed numerous issues, such as economic, humanitarian, and sports matters, but the Russian attack on Ukraine and food insecurity on the African continent took center stage.
The summit began with Putin promising a free grain supply to six African countries. According to the pledge, 25,000-50,000 tons of grain will be sent to Burkina Faso, Zimbabwe, Mali, Somalia, the Central African Republic, and Eritrea in the coming months.
A Wagner Cameo?
The appearance of the leader of the Russian Wagner group of mercenaries at the summit was the least expected. Yevgeny Prigozhin, believed by many to be in exile in Belarus after a brief uprising in June, surprisingly stole the show on social media when a photo of the Central African Republic representative appeared on accounts linked to Wagner.
Since the inaugural Russia-Africa Summit in 2019, energy relations between Russia and Africa have seen significant growth. The summit witnessed the signing of an agreement focused on upstream oil and gas exploration, refining, and marketing, with the ambitious goal of expanding Russia’s footprint in Africa. However, developments since then have been somewhat mixed.
During this period, the Mercenary group Wagner has increased its involvement in the production, supply, and marketing of African goods. Despite this, progress on new projects involving Russian oil companies has been relatively slow.
Paris-based international financial crimes analyst and Russia expert, George Voloshin, observed that there haven’t been any prominent strides in Russia’s energy influence in Africa following the 2019 summit and the all-out invasion of Ukraine in 2022. Voloshin added that Russia’s current macroeconomic challenges are not conducive to bolstering economic gains across Africa.
In 2019, Russian President Vladimir Putin expressed a desire to double trade between Russia and Africa. But, according to the IMF, the actual increase in trade value from 2018 to 2021 was only a quarter, to $15.6 billion. The economic fallout from the ongoing war in Ukraine is proving to be a significant impediment to Russia’s ability to invest in capital-intensive long-term energy projects in Africa and around the world. The war in Ukraine poses a grave threat to Russian companies. The imposition of sanctions, combined with the need for Russia to prioritize new export infrastructure and domestic manufacturing to serve eastern markets, is likely to limit Russia’s ability to invest abroad.
The Ukraine conflict has far-reaching implications for Russia’s energy landscape and ambitions in Africa. The country’s economic stability and ability to attract international investment are now under scrutiny, requiring a reassessment of strategic priorities. As a growing energy market, Africa continues to have to deal with changes in global energy flows, such as competition from Russian oil impacting trade patterns and regional dynamics.
As the conflict in Ukraine escalates, it casts a shadow over Russia’s financial prospects and international standing, and has an indelible impact on its energy relations with Africa. Africa, on the other hand, faces unique challenges and opportunities. Strengthening energy partnerships with a wide range of countries, including Russia, is crucial to the continent’s energy security and economic growth. Careful consideration of the changing global energy landscape, evolving trade dynamics and Sustainable Development Goals will be critical as African countries map their energy directions.
Russia Africa Ties – Changing trade flows
The conflict has had a significant impact on Russia’s oil export destinations and has also affected African producers and buyers. Shortly after Russia’s invasion of Ukraine, some Western countries began cutting their purchases of Russian oil. This was exacerbated by the EU embargo and price cap on Russian oil imports, which was coordinated by the G7, Australia, and the EU and came into effect from late December 2022 to early February 2023.
The loss of customers in sanctioned countries has led to a significant increase in Russian crude shipments to Asia, with Russian crude trading at deep discounts. Platts valued Russia’s main Ural crude oil at $67.02 a barrel on July 25. Major African crudes such as Dahlia and Bonnie Light are trading at nearly $20 per barrel.
West African oil producers are steadily increasing supplies to Europe and North America, while Russia is increasing its market share in Asia. India and China represent two crucial markets where exporters from Africa, the Middle East, and even the United States have faced substantial challenges due to fierce competition from more affordable Russian oil grades that are comparable, if not superior, in quality (such as Sokol and ESPO).
Refined products exports to Africa
The loss of traditional customers in Europe is also increasing Russian exports of refined products to Africa, which have increased 14 times in just over a year since the conflict began. Before the war, Russia exported 33,000 barrels per day of refined products to Africa, most of which was gasoline. By March 2023, it had risen to 420,000 barrels per day.
Russia also cooperates with African partners within the framework of the OPEC Agreement on Crude Oil Production and the Forum of Gas Exporting Countries. Russian President Vladimir Putin said in a message sent to forum members ahead of the summit that his country aims to promote cooperation in the areas of trade, investment, and climate change, among others. Its ability to do so may depend on the conflict in Ukraine and its impact on Russia’s economic and political capital.