This could have been Algeria’s moment: Europe’s efforts to wean itself off Russian gas should have provided the north African country with a golden opportunity to maximise exports and carve out a bigger share of the continent’s energy market.
In a sign of renewed western interest in the country’s oil and gas resources, senior figures, including Mario Draghi, Italy’s prime minister, and Antony Blinken, US secretary of state, visited Algiers in recent weeks to discuss energy security as Europe seeks to reduce its dependence on Russian gas.
This interest in the hydrocarbons exporter and the rise in oil and gas prices bring some welcome relief to a country that has been burning through its foreign currency reserves since the oil price plummeted in 2014.
But Algeria, which is the third-biggest natural gas supplier to Europe with about 8 per cent market share, does not have enough extra gas to make available quickly, energy experts said.
They blamed a longstanding shortage of foreign investment in the country’s hydrocarbons sector which has left it with limited spare capacity. Some also pointed out that policy over hydrocarbons, Algeria’s biggest foreign exchange earner, has often been a battlefield for factions within the opaque political elite, leading to frequent rule changes.
Eni, Total and others are already invested in Algeria, which supplies gas through pipelines to Italy, Spain and Portugal. “Algeria missed an opportunity to realise its full potential,” said Anthony Skinner, a political risk consultant. “This is due to years of under-investment by international oil companies because of a history of difficult fiscal terms and the overall operating environment marked by bureaucracy and slow decision-making.” In the most recent oil and gas licensing round in 2014, only four out of 31 blocks on offer were awarded.
Mostefa Ouki, senior research fellow at the Oxford Institute for Energy Studies, said that “in the short term, Algeria could only provide Europe with a few additional billion cubic metres of gas”.