Algeria is trying to position itself as an alternative to Russia

Meetings with officials from Italy – of which it is one of the main suppliers –, publications by Tewfik Hakkar, head of Sonatrach (national hydrocarbon company) in the press… The Algerian authorities have been showing activism at international level for a few weeks gas market. It has to be said that the context lends itself to it.

The prospect of an international embargo on Russian gas due to the war in Ukraine, coupled with the rising price of said energy resource, opens a breach for other strongholds of this fossil fuel.

Europe in particular, and to a lesser extent the United States, are currently urgently looking for an alternative to Russia, the second largest producer in the world.

positioning required

It is therefore an opportunity for Algeria, whose export earnings depend on oil and gas revenues for 90%. Especially since many producers are now ready to more or less compensate for the supply gap caused by the sanctions against Russia, which sees its sales opportunities severely impaired.

In Africa alone, Nigeria, Egypt and even Libya are competing with Algiers, the tenth largest producer in the world, in this announced international reorganization of the gas market.

The fight is timely given the North African country’s recent efforts to better exploit its gas potential.

In fact, in early January 2022, Sonatrach forecast $40 billion in investments in the sector through 2026, including $8 billion planned for this year. An initiative fueled by the country’s hydrocarbon sector boom in 2021 with a 75% increase in export earnings.

Limited Funds

Algeria will need more to truly establish itself as Europe’s preferred supplier, Sonatrach’s CEO hinted in the local press on February 27th.

The 11% of the country’s gas production destined for the old continent will struggle to grow significantly as things stand, according to many observers in the hydrocarbon sector. Incidentally, recent on-site exploration by the United States in its search for reserves has proved unsuccessful.

Algiers has more than 4,504 billion m3 of proven natural gas reserves, ranks second behind Nigeria in Africa, but this potential remains essentially untapped. Local consumption is also increasing by 7% annually and accounts for almost half of total production.

Shale gas could help revitalize the sector, but authorities have been reluctant to do so since social outrage over the project in 2015.

Algeria’s gas ambitions are legitimate given its strong potential, but to achieve them it needs significant investments in infrastructure, but also in research to expand its production capacity and distribution channels.

Leave a Comment