Boosting Gas Supplies to Europe: Algeria Seeks EU Investment in Its Energy Sector

Written by | Tuesday, April 11th, 2017

Algeria is seeking more investment from the European Union and a renewal of long-term gas supply contracts with EU members. Most of the country’s long-term gas deals with EU countries are due to expire between end 2018 and 2019. To support these efforts, Algeria’s Energy Minister Nourredine Bouterfa will be visiting Brussels this week just as his country is struggling to deal with a slide in crude oil prices, which are currently hovering at around $55, down from $100 a barrel in mid-2014.

Mr. Bouterfa is going to meet EU Energy Commissioner Miguel Arias Canete this week to “facilitate and promote European investments in the sectors including natural gas, renewables and energy efficiency”, the Algerian ministry said. The state-run company Sonatrach said that Algeria would adopt a new approach to its long-term gas contracts. It will no longer demand contracts lasting 20 or 25 years and instead seek 10 or 15-year deals. The North African country, which is a major gas supplier to Europe, is currently trying to attract more EU investment in its energy sector.

The EU has previously called on Algerian government to cut bureaucracy and offer more flexibility and adaptability to boost the country’s competitiveness in global energy markets. Both the EU and energy companies thus seek to boost the amount of gas Algeria pumps to Europe after years of falling exports. Algeria has nevertheless managed to lift its output despite cuts in energy subsidies and austerity measures as well as falling state revenues down to $27.5 billion in 2016 from $60 billion in 2014.

This year, Algeria’s gas exports are poised to exceed 57 billion cubic meters, up from 54 billion cubic meters last year. In 2016, Algeria lived up to its role as a reliable gas supplier despite the general turmoil in the region, meeting 55% of Spain’s gas needs, 16% of Italy’s and 15% of Portugal’s.

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