Algeria lacks spare capacity to boost gas exports to Europe

As Europe seeks to wean itself off Russian gas, Algeria has emerged as a potential supplier, but experts say the country lacks spare capacity.

Algeria is the third gas exporter to Europe with an 8% market share. It has seen its domestic gas consumption increase exponentially, leaving it with insignificant additional export capacity.

The country in October shut down a 13m3 oil pipeline that ran through Morocco to Spain, in a unilateral decision revealing Algeria’s dwindling export capacity albeit sugarcoated as a retaliatory measure against its rival the Morocco.

Algiers has promised to increase its exports to Spain through an 8m3 direct pipeline that does not cross Morocco, but so far it has failed to do so, pushing Spain to compensate with American gas. Today, the United States is Spain’s leading supplier, followed by Algeria, whose market share is shrinking to almost that of Nigeria at around 30%.

The opacity of the regime and corruption, an unfavorable legal framework for investment and insecurity have all contributed to a drop in exploration in Algiers, shrouding its export capacities in uncertainty.

“This is due to years of underinvestment by international oil companies due to a history of difficult fiscal conditions and an overall operating environment marked by bureaucracy and slow decision-making,” Anthony said. Skinner, political risk consultant, to the Financial Times.

The same British newspaper quotes Mostefa Ouki, senior researcher at the Oxford Institute for Energy Studies, as saying that “in the short term, Algeria could only supply Europe with a few billion cubic meters of additional gas”.

A surge in hydrocarbon revenues in 2021 has helped Algeria delay painful but necessary reforms to subsidies and taxes, as the regime resorts to the same old social peace-buying measures, including introducing an unemployment benefit. $90 for youth.

Mary I. Bruner