African gas to replace Russian gas supplies to Europe?

Investment Memo: IVZ 2022

Macro Theme: Natural Gas

The following news piece by the BBC asks the question “Can Africa replace Russian gas supplies to Europe?”.

Read the full article here.

Key takeaways from the BBC article is as follows:

• Russia has the largest natural gas reserves in the world and is the largest exporter, accounting for around 40% of Europe's imports.
  
• The EU wants to cut supplies by two-thirds by the end of the year and become independent of all its fossil fuels by 2030.
  
• Africa’s biggest exporters (Algeria, Egypt and Nigeria) amount to less than half of what Russia supplies to Europe.
  
• The good news is that there is great potential in Africa and the continent is well positioned with vast natural gas resources that could be developed to replace Russian supplies.
  
• The EU has already started looking south with the Italian Prime Minister Mario Draghi only last month signing a gas supply deal with Algeria to increase gas imports by ~40%.
  
• Energy economist Carole Nakhle says that in the medium and long term we “will see greater investment to increase the capacity to bring more gas out of the ground and bring them to Europe".

We have been invested in Invictus Energy (ASX: IVZ) which we made our 2020 Energy Pick Of The Year because of its elephant scale prospect, which has the potential to open up an entirely new oil and gas basin in Zimbabwe, should the drilling program in July make a successful discovery.

IVZ is currently fielding farm-in offers from several interested parties as it prepares for the two well drilling program in July, where the first well will be targeting a 8.2 trillion cubic feet (Tcf) + 247 million barrels of conventional gas condensate (gross un risked basis) prospective resource at Mukuyu-1.