Bill of Imported Refined Products Rises to $2.5 billion in Strikingly Oil-rich Algeria
Algerian authorities are alarmed by the rising bill of refined products, which hit $2.5 billion in 2017 up from 800 million in 2016 due to a surge in domestic demand and lack of national refining industry.
As Algeria feels the heat of an economic and financial crisis propelled by the oil price plunge, the country seeks to reduce its import bill through time-buying measures, including tax hikes, money printing and recently trading crude oil for refined products.
In this respect, an agreement was signed between Algeria’s state oil firm Sonatrach and the world’s largest oil trader Vitol to trade crude for refined products in a bid to curb the import bill.
Vitol would receive up to 2 million barrels a month of the North African OPEC member’s light, sweet crude and would deliver gasoline and gasoil in return until the end of the year.
International Think Tanks have been worrying in recent years over Algeria’s declining gas production coupled with a surge in domestic consumption.
Since 2007, Algeria’s consumption of oil and natural gas has risen by more than 50 percent while its oil production has fallen by 25 percent. With less oil available for export, the government’s revenues have been hit hard, Stratfor consultancy said in a report on Algeria’s economic prospects.
Algeria’s gas production and export capacity is facing dim prospects. According to estimates, the North African country will be a net gas importer of LNG in two decades, warned the former Algerian energy minister Nourdine Ait-Laoussine.
In May 2017, the Oxford Institute for Energy Studies issued a report entitled Algerian Gas: Troubling Trends, Troubled Policies. The document points out to the depletion of Algerian gas and the declining export capacity. “Algeria would be left with only 15 bcm/year to export by 2030. In a lower production or high demand scenarios, it will cease exporting all together, therefore importing gas beyond any such a point,” said the report.”