Algeria’s new opportunities for closer ties with Europe

Despite global warming, the cold season is approaching again, autumn and winter are arriving in Europe sooner than later!

Due to the Russian invasion of Ukraine and Putin’s attempts to blackmail European importers of Russian raw materials, Brussels, Berlin, Rome and other EU capitals are now urgently looking for alternatives to supply industry and households with natural gas. Germany, as a country with a particular dependence on Russian gas, has already taken action, with new collaborations in Qatar, Egypt, the US, Norway and the Netherlands.

However, other EU countries are also hungry for alternative gas exporters, especially since it has not yet been fully clarified in Brussels whether all member countries will really show solidarity with their partners in the event of a massive shortage of the raw material.

Italy has now turned its focus to Algeria: The country is already Europe’s third-biggest supplier of natural gas with around eleven percent and now wants to increase its volumes – and is soon to replace Russia as the main supplier. Italian Prime Minister Mario Draghi visited Algiers at the end of July, and talks between the two countries on increasing gas supply volumes began as early as May.

Both heads of government agreed to increase gas supplies. The North African country will deliver four billion cubic meters more gas to Italy in the coming months – in addition to the already agreed 21 billion cubic meters per year.

Algeria’s gas reserves exceed 2 trillion cubic meters and the country is the largest gas exporter in Africa and the seventh largest in the world. 83 percent of Algerian gas exports go to Europe, mainly to Spain and Italy, with which long-term contracts exist.

But regional conflicts in North Africa also play a not inconsiderable role in the negotiations between Algiers and Rome. Spain, a hitherto important buyer of Algerian natural gas, would suffer here: In spring, the Spanish Prime Minister Sánchez described the autonomy initiative presented by Morocco for the disputed region of Western Sahara as worthy of support and thus de facto recognized Moroccan claims to the area. In response to Madrid’s change of course, Algeria’s head of state, Tebboune, canceled the 40-year-old friendship treaty with Spain. The announcement from Madrid that future gas imported from Algeria would also be delivered to Morocco caused even more trouble in Algiers. Threats from Algiers to cut gas exports to the Iberian Peninsula remained. Instead, Algeria will increase the currently low gas prices for Spain.

Italy is now presenting itself to Algeria as a new sales market and to the EU as an intermediate supplier for the gas supply in Central Europe – especially since the Spanish gas storage facilities with Algerian gas are still not connected to France. Nevertheless, experts doubt whether Algeria can actually close the supply gap – this would require significant investments in expanding production capacities.

It is questionable whether the additional gas deliveries to Italy will be sufficient to supply other European countries. Because although the delivery volumes to Italy are being increased, Algeria will only be able to compensate for around a fifth of what Russia had previously delivered.

The new cooperation is not intended to remain a temporary solution, but rather to diversify Italy’s and Europe’s natural gas supply in the long term. In addition, Algeria has so far hardly tapped its shale gas reserves – experts suspect that the country could use the fracking method to obtain large amounts of natural gas reserves – and then sell even more gas to Europe.

Also, Algeria has again brought up the idea of ​​building a gas pipeline through the Sahara. With the transport of natural gas from Nigeria via Algeria to Europe, the North African country would become a hub between the two continents in the long term – and Algeria would become even more important for Europe’s energy security.

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