Algeria’s weakening gas and oil export capacity cast shadow on fragile social peace
Algeria’s dim reality is that it has an endemic reliance on gas and oil for over 95% of its exports as well as for generous subsidies to maintain social peace. But will Algeria be able to continue to export gas and oil amid a rise in domestic consumption? This is the scenario that the military regime in Algiers has not prepared for.
Let’s first start with gas. Since 2019, Algeria’s gas consumption volumes are nearly two-fold its exports. That same year, Algeria exported 25.2 Toe of gas and consumed locally 43.6 Toe, accrding to an internal Sonatrach report cited by Algeriepartplus, a dissident news outlet in exile said.
The report was not released and Algerian officials turn a blind eye to the inevitable scenario of Algerian running out of gas for exports.
Algeria’s energy minister Abdelmedjid Attar has however warned that the country will have to give priority starting from 2025 to supplying the local gas market, hinting without saying to the demise of Algeria’s gas export capabilities.
Starting from 2025, Algeria will no longer be a major gas exporting country. This in part explains the counter-intuitive decision taken by the military junta in Algiers to put an end to the Maghreb Europe gas pipeline.
On the surface, Algerian officials said the non-renewal of the pipeline deal was directed to hurt Moroccan interest after Algiers unilaterally cut diplomatic ties with its Western neighbour. But in fact, Algerian officials are aware of the inability of their country to meet gas demand in Europe.
Algeria has maintained a pipeline that runs through the mediterranean to Spain but failed to give guarantees that it will be a reliable gas supplier to its Spanish client.
Algeria is also losing its status as a major oil exporting country on par with Libya or Gulf countries due to a rise in domestic consumption.
The country is burning more of the fuel in local power plants as its population rises, leaving less room for exports.
Even with oil prices improving to edge above $60, Algeria is still in crisis as it needs $135 a barrel to balance its budget.
With 95% of exports composed of oil and gas, Algeria’s finances will be hit hard and its foreign exchange reserves are almost depleted leaving the country with the only choice of resorting for foreign debt which comes with conditions on top of which cutting subsidies on which Algiers fragile social peace hinges.