Augusto Santos Silva, foreign affairs minister Photo: MIGUEL A. LOPES/LUSA

Trump card: Portugal could turn Europe “much less dependent on Russian gas”

Just before midnight on December 31, 2021, the European Commission published a proposal that paved the way to investments in gas and nuclear energy being considered ‘environmentally sustainable’. As the European Consumer Organisation said at the time, the timing ensured “nobody was watching” – but it was a sea-change nonetheless that puts a whole slew of potentials back on the table.

For Portugal, it opens untold opportunities (and that is before one goes near the explosive subject of drilling for what have always been tipped as ‘excellent supplies’ of natural gas on national territory).

In interview with Expresso last weekend, minister of foreign affairs Augusto Santos Silva admitted that the crisis in Ukraine; the uncertainty over the sense in perpetuating dependency on the Russian gas that flows into Europe, will ultimately return focus on the long-held American ‘dream’ of shipping endless container loads of liquified natural gas (LNG) into Europe through Sines.

Back in the days of President Trump, US ambassador of the time in Portugal George Glass was intent on forging this deal. A pipeline was envisaged, running from Sines into Spain, over the Pyrenees into France. It was “an opportunity for Portugal to think big and be very audacious”, he told reporters enthusiastically.

But regulators in France (and Spain) dug in their heels – and the plan ostensibly fell apart.

Or perhaps it was just put in a drawer to be reviewed at a later moment? Certainly Santos Silva seems to think so.

He told Expresso that he believes Portugal could become a ‘pivot’ in the distribution of more American LNG in Europe.

“Our capacity in Sines at the gas terminal is now being fully utilised. From the point of view of importation of LNG from the United States to Europe, this very important terminal which is Sines will be even more important. Finally, in Brussels and other capitals, people will realise that the gas interconnections between Portugal, Spain and France – backed in the past by Passos Coelho and António Costa – make sense, because they will open a new supply route into Europe, capable of also serving ‘green gases’ with green hydrogen, which will turn Europe far less dependent on Russia.

“This crisis shows that it is essential that trans-European energy networks incorporate the Iberian Peninsula,” Portugal’s head of diplomacy continued. “It is in Europe’s interest that the Iberian Peninsula doesn’t remain an energetic island. With the green hydrogen we are going to make in Portugal, with the development of solar energy, with the huge potential of hydro and eolic (wind) power, we are on the way to becoming less and less dependent. We have been trying to explain, it won’t just be good for us. It will be good for Europe: 40% of the gas Germany uses comes from Russia – and there are other countries that are even more dependent on Russian gas than Germany”.

To a large extent, while tensions have been building in Ukraine, the writing in terms of collateral benefits for Portugal has been ‘on the wall’.

Observador reported towards the end of January that the United States was already working on a solution “in case Russian gas stops arriving in Europe”. President Biden was talking with suppliers ‘throughout the Middle East, Asia and Africa’ with the idea of getting them to increase production of LNG “so that it could be diverted to Europe”, but “not everything was going as hoped”.

According to Reuters news agency, “energy reserves are low and businesses in the sector doubt (they will have) the capacity to supply the requirements of the European continent in case of rupture with Russia”.

It was Reuters which only a month before announced “U.S. to be world’s biggest LNG exporter in 2022”.

Indeed, the United States “should remain the biggest LNG exporter by capacity until around 2025”, said the agency – joining the dots towards that New Year’s Eve European Commission ‘proposal’ to start incorporating investments in natural gas and nuclear power within its so-called green agenda, and explaining why Portugal potentially has a great deal to look forward to.

Ideas for transforming Sines into an energy ‘hub’; for injecting gas networks with ‘green hydrogen’; mining and refining lithium and exporting solar power have long been bandied about, with little so far actually moving forwards. This is where the next government is expected to act, with the help of billion-euro European recovery funds; with a new minister for energy and climatic transition and a whole new impetus behind it.

By chance (or perhaps not), a report by the Calouste Gulbenkian Foundation (founded on the back of energy/oil exploration) came up with a study earlier this month on ‘how Portugal could be by 2030’. It was more of a cautionary tale than a study, in as much as it gave the country three possible scenarios:

● Continuing as before – which will lead to the country remaining on the periphery, affected by an ageing demographic pyramid and without capacity to sustain the system of pension or SNS (State health system);
● Seeking a new space in a Europe that becomes a global player;
● Portugal 4D “digitalisation, diversity, dynamism and distinction”- the most ambitious path, allowing for the situation in which the EU “may not be successful in its ambition, or its ambition may be realised in a way that doesn’t give Portugal enough space”. Says the report, this third scenario would see Portugal “still in the European Union, but seeking to have relations with the United States, Japan and the CPLP”.

And what better way to start than hitching a ride on the tail of a crisis, and showing Europe a way that reduces energy dependence on a volatile dictatorship, and at the same time boosts national wealth and geostrategic relevance.

By NATASHA DONN
natasha.donn@algarveresident.com