A seismic shift in the geopolitics of energy has been triggered by the Russian invasion of Ukraine last February, and Algeria has become a particularly attractive option to several Western European nations seeking alternatives to Russian natural gas. The North African nation provides approximately 11 percent of imported European gas compared to the 45 percent that was channeled in from Russia in 2021. Its geographical proximity and multiple pipelines strategically scattered across its coastline make it particularly important to Spain and Italy in such an uncertain geopolitical context.
In the last few months, American leaders have made successive visits to Algiers, hinting at the country’s increased importance in the wake of the war in Ukraine. On March 30, Secretary of State Anthony Blinken was in Algiers to speak with the Algerian president Abdelmadjid Tebboune. Reports stated at the time that Blinken wanted to use this meeting to convince his Algerian counterpart to increase its export capacity to its European partners by reactivating the Maghreb-Europe pipeline which pumped Algerian gas to Spain via Morocco. The pipeline was closed on November 1, 2021, after the transit contract between Algeria and Morocco was not renewed, weeks following the rupturing of diplomatic relations between the two countries in August 2021.
Speaking to the state press agency, an Algerian diplomatic source denied what he considered were rumors. “Just like the American Under-Secretary of State, Wendy Sherman [who visited Algeria on March 10], Mr. Blinken never mentioned the reopening of the Maghreb-Europe gas pipeline, contrary to the wild speculation relayed by some Moroccan media.”
The two neighboring countries have experienced several months of growing tensions with a focal point being the Western Sahara conflict. The former Spanish colony is situated on the Atlantic coast between Morocco and Mauritania, and is officially classified as a non-self-governing territory by the United Nations, meaning that its people “have not yet attained a full measure of self-government.” However, Morocco lays claim to the region as does the Polisario Front, a Saharawi nationalist liberation movement supported by Algeria.
After a long period of tense Spanish-Moroccan relations due to the willingness of Spanish authorities to medically treat the leader of the Polisario Front Brahim Ghali who was struck with a severe bout of COVID-19, and subsequent migratory incidents, Spain decided to reverse its long-standing position of neutrality in the Western Sahara conflict in March 2022. Prime Minister Pedro Sanchez’s government publicly supported Morocco’s “Autonomy Plan” for the Western Sahara, which was initially unveiled in 2007 and described it as “serious, credible and realistic.” This action further surprised its Algerian partners and exacerbated tensions in the Western Mediterranean.
Despite the reversal in position, Algeria continues to provide gas to Spain via LNG carriers and the Medgaz pipeline which links Beni Saf in Western Algeria to Almeria in Southern Spain. However, Algeria unilaterally rescinded the treaty of friendship, good neighborliness and co-operation with Spain and recalled its ambassador from Madrid without naming a replacement.
Furthermore, according to reports in the Spanish press, the share of Algerian gas in Spain has fallen from 45 percent to 22 percent in one year. Algerian authorities also intend to adjust its long-term contracts with Spain to benefit from the rise in energy prices on the global market.
Meanwhile, Algiers has clearly been growing closer to Italy. Since April, Italian Prime Minister Mario Draghi has twice led a delegation to Algeria, while President Tebboune also visited Rome at the end of May for an official visit that lasted two days.
The Italians, who desperately needed to reduce their reliance on Russian gas, proactively sought out a bolstered relationship with Algeria just four days after the start of the war in Ukraine. On February 28, 2022, Luigi Di Maio, the Italian foreign minister, traveled to Algiers to meet his Algerian counterpart Ramtane Lamamra and Energy Minister Mohamed Arkab. Di Maio’s delegation included Claudio Descalzi, CEO of the Italian energy company ENI. The Italian hydrocarbon giant has conducted business in Algeria since 1981 and has already made long-term investments alongside Algeria’s national hydrocarbon enterprise, Sonatrach.
One sign of the increased scope of Algerian-Italian relations is that Algeria has supplied Italy with 13.9 billion cubic meters of gas since the beginning of 2022, a 113 percent rise over forecasts, according to Algerian authorities. Gas deliveries are expected to increase by another 6 billion cubic meters by the end of the year, which would make Algeria Italy’s foremost supplier of natural gas. As a result, Draghi announced that his country has been able to reduce its Russian gas imports from 40 percent to 25 percent.
Throughout its recalibration of relationships in the Mediterranean basin, Algeria has attempted to profit from the global markets while trying not to offend its historical ally: Russia. In April, Algeria voted against the exclusion of Russia from the United Nations human rights council, a support welcomed by Russian Foreign Minister Sergei Lavrov during his visit to Algiers on May 10.
Although Algeria is willing to supply more gas to Europe, it does not have sufficient reserves to satisfy a drastic increase in short-term demand. The country’s exporting capacities have fallen from 65 billion cubic meters in 2007 to 42 billion cubic meters in 2021. The decrease in exports can be explained by an increase in internal consumption and less investment in infrastructure in recent years.
The Algerian hydrocarbons sector is undergoing a renaissance. In 2019, parliament approved new legislation which redefines the legal framework governing the sector, by providing more flexibility to attract foreign investments. Last July, a major oil and gas contract was signed between Sonatrach, the ENI, French company Total and the United States’ Occidental Petroleum. The investment totals $4 billion over the next 25 years. On July 3, Algeria also announced the discovery of a large gas field in Hassi R’Mel, in the middle of the country. Production is set to begin next September, according to Toufik Hakkar, CEO of Sonatrach.
Furthermore, Algeria is pushing ahead with the decades-old NIGAL pipeline project, a Trans-Saharan gas pipeline from Nigeria, the third gas producer on the continent, to Algeria. If it goes through, this project could provide up to 30 billion cubic meters a year of gas to Europe.
Economically, the financial windfall from the rise in oil and gas prices—the country’s main sources of income in foreign currency—will help replenish foreign exchange reserves which had dwindled in recent years. The financial cushion will also allow the government to pursue short-term policies to mitigate the effects of economic inflation and the effects of the COVID-19 pandemic that rocked the entire world.
Algeria seemingly intends to use its gas resources as influence in support of its foreign policy which had been dormant in the final years of former president Abdelaziz Bouteflika’s presidency, due to his ill health following a debilitating stroke in 2013. Europe divesting from Russian gas and investing in Algerian energy gives the country a leading role in the region and allows president Tebboune, who came to power in a contested manner after several months of anti-government protest, to attempt to regain legitimacy with his foreign partners and buy social peace at home.
Zahra Rahmouni is an independent journalist whose interests include climate change as well as socio-political and economic affairs in Algeria and the Maghreb.