Energy production in Algeria

Official Name: People’s Democratic Republic of Algeria.

Summary: Algeria is one of the leading African producers of crude oil, the largest producer of oil liquids on the continent, and the sixth-largest natural gas producer in the world. Efforts are under way to explore the country’s potential in the exploitation of renewable energy sources.

Throughout the 20th century, the production and the consumption of energy have considerably increased in Algeria, the majority of whose almost 36 million inhabitants live along the narrow strip of coastal land that constitutes only 3 percent of the country’s area. Because of the large oil and natural gas reserves, the fossil fuels sector represents the most developed of the country’s energy resources and has traditionally played a key role in the Algerian economy.

Since the discovery in the mid-1950s of sulfur-free light crude oil deposits in the Sahara and of natural gas reserves, the Algerian energy industry has heavily relied on hydrocarbons. These account for more than half of Algerian budgetary revenues and for almost its total export earnings. Because the discoveries of oil and gas occurred at the time of French colonial rule, the main beneficiaries were the French corporations Compagnie Française des Pétroles-Algérie and Entreprise de Recherches et d’Activités Pétrolières. However, when Algeria became independent in 1962, its Socialist-inspired one-party rule began to revise the structure of its national economy, which French rulers had organized to maximize their profits. In 1971, all the foreign oil-extraction companies were nationalized and put under the control of the Algerian Société Nationale de Transport et de Commercialisation des Hydrocarbures (Sonatrach).

Close cooperation with the Soviet Union allowed Sonatrach to continue operation in the three main oil fields: Hassi Messaoud, in the northeastern part of the Sahara; Zarzaïtine-Edjeleh, on the border with Libya; and El-Borma, along the border with Tunisia. Most of the country’s natural gas reserves are also found in these areas. During the oil crisis of the 1980s, the country’s overdependence on hydrocarbons led to a harsh economic crisis. This situation was worsened by the civil war that devastated the country between 1992 and 1998, which pitted the military and the political establishment against the Islamic Salvation Front.

After the war, the government, led by Abdelaziz Bouteflika, took decisive measures to liberalize the economy, which had an important impact on the energy sector. Until then, firmly in the hands of Sonatrach, the sector was opened to joint ventures with foreign corporations, such as Anadarko and Eni. It is estimated that Algeria produced 1.41 million barrels of crude oil per day in 2023. The country was also a major producer of condensate and liquefied natural gas products.

Algerian Saharan blend is one of the highest-quality oils in the world. Its extremely low sulfur content, around 0.1 percent, complies with increasingly strict European Union guidelines on sulfur content in gasoline and diesel fuel. This has led to intense trade relations with European countries, and there are four pipelines that transport hydrocarbons from the Algerian fields to Europe. The first to be established, in 1981, was the Trans-Mediterranean Pipeline, which transports natural gas through Tunisia to Sicily and on to Naples. In the 1990s, Algeria also established direct contact with the Iberian Peninsula through the Maghreb-Europe Pipeline. Since the beginning of the 21st century, Algeria has been working to modernize and expand its pipeline structure in order to increase exports.

In 2009, Algerian energy minister Chakib Khelil, the politician largely responsible for opening up the oil sector to foreign investment, declared that the country’s aim was to keep crude oil production at its current level, also by finding new fields to replace the declining older ones. However, the newly discovered oil reserves in the southwest of the country, near Salah, do not seem to be as large as the old ones and are not supported by adequate pipelines to enable exports. It is therefore logical to predict that the exports of natural gas will become progressively more important than those of oil. Algerian gas is also of the first quality, with more than 80 percent methane and other important components, such as helium, ethane, and propane.

The government of Algeria stated that it intends to reach 15,000 megawatts (MW) of electricity generation using renewable resources by 2035. Additionally, the country intends to develop roughly 1,000 MW of off-grid renewable energy installations by 2030. As its first step towards reaching these goals, Algeria intends to create roughly 1,000 MW of solar photovoltaic power plants, divided into lots of 50 to 200 MW each.

Bibliography

"Algeria Powers Ahead with Huge Renewable Energy Plans." International Energy Forum, 21 June 2021, www.ief.org/news/algeria-powers-ahead-with-huge-renewable-energy-plans. Accessed 29 July 2024.

"Oil Production in Algeria from 1998 to 2023." Statista, 9 July 2024, www.statista.com/statistics/265192/oil-production-in-algeria-in-barrels-per-day/#. Accessed 29 July 2024.

Parra, Francisco. Oil Politics: A Modern History of Petroleum. London: I. B. Tauris, 2004.