Can Algeria, which has rich natural gas reserves, be an alternative for the European Union in the field of energy? The Mediterranean region stands out in terms of energy security of the European Union, which is looking for an alternative to Russian natural gas. There are abundant natural gas and oil reserves in the south of the Mediterranean. The EU currently imports 10 percent of its energy needs from Algeria.
Last month, the Italian oil and gas company ENI signed an agreement to import liquefied natural gas (LNG) from Egypt and an additional 9 billion cubic meters of natural gas per year from Algeria, using its connections. Egypt and Algeria are two countries in North Africa that have more natural gas reserves than Libya.
Realizing that it is not possible to depend on only a few suppliers in energy, the EU admits that these two countries are of great importance, although they cannot offer a magic formula for energy security.
Timing is critical
It takes more than a year to develop hydrocarbon fields and infrastructure, with the most critical phase for Europe coming next winter.
Nedim Abillama, program manager for the International Energy Agency (IEA) Middle East and North Africa (MENA), told DW, “At least when it comes to natural gas and oil, the region is not currently fully substitutable for the amount imported from Russia, but producers are Algeria and It can make significant contributions if it takes full advantage of existing infrastructures such as LNG terminals in Egypt and pipelines in Algeria and Libya.”
Regional features
“Europe’s energy needs can give Algeria a trump card to set European countries against each other on the basis of its political and economic concessions and positions in the Western Sahara issue, which has recently flared up,” Marco Giuli, a researcher from the Brussels School of Management, told DW.
Renewing and strengthening old ties with Italy, as it was before Algeria’s independence, can create tensions. Transmed, the world’s first deep water pipeline, connected Algeria and Italy in 1983, and solid relations were established between the two countries, except for the Berlusconi period.
However, Algeria’s decision to sign an agreement with Italy in the last period led to the reaction of Spain. Experts are of the opinion that Spain’s revision of Western Sahara policies was effective in Algeria’s decision. Due to tensions with Morocco, Algeria closed one of the two pipelines that brought gas to the Iberian Peninsula in November. In this case, there are those who think that the Italian side is opportunistic.
Despite differing interpretations, it cannot be denied that exporting countries can choose their partners and offer additional gas as part of broader cooperation, which will include political and technological aspects.
“Spanish companies cannot offer the level of technical know-how that their Italian counterparts can offer in exploration, construction of LNG facilities and laying of underwater pipelines,” said Francis Ghiles, a senior research fellow at the Barcelona Center for International Affairs, assessing the issue at DW.
Ghiles, a former North Africa correspondent for the Financial Times, said that France, Japan and the United States also play a role in the country’s oil and gas industry and will continue to do so in the future.
Stating that Germany is another potential key player, Ghiles said, “Germany is known for being reliable in Algeria. This reputation is based on the tractor and engine factories it built in the 1970s,” and added: “While tectonic plates move in energy, Germany and Algeria It may be the right time for India to restart the conversation on gas and renewable energy.”
Change is on the way
But Algeria isn’t the only country with a focus. The Eastern Mediterranean region has been changing in recent months, with Turkey’s reintegration into the regional energy system with US support and significant discoveries made in the last decade off the coast of Israel, Cyprus and Egypt.
“Egypt has re-emerged as a natural gas exporter,” said IEA’s Abillama, adding that exporting countries in the Eastern Mediterranean need LNG terminals, while exporting countries in the Western Mediterranean need existing pipelines.
Fragmentation in the Mediterranean remains a problem in the regional energy sector. However, cultural closeness, deep-rooted ties and mutual understanding that will help the Mediterranean to maximize its contribution to EU energy security stand out as important diplomatic values.
Algeria’s fossil fuel and renewable energy potential
Algeria is among the top 11 countries in terms of discovered gas reserves. According to data from the US Energy Information Administration, Algeria has the third largest recoverable shale gas resources after China and Argentina.
While US companies see cooperation opportunities in the country in the field of shale gas, Germany is interested in renewable projects. As part of the German-Algerian Energy Partnership, the German Institute for International Cooperation (GIZ) has been tasked with investigating the country’s green hydrogen potential.
“In 2021, GIZ presented a study on the potential of Power to X technologies in Algeria by 2050. According to the study, the country can generate a lot of electricity from solar energy, which is necessary for green hydrogen production,” a spokesperson for GIZ told DW. A method that uses excess electrical power from renewable energy sources such as solar and wind for energy conversion and storage is called Power to X.
GIZ states that Algeria is in a good position in terms of oil and gas expertise and natural gas pipes required to transport hydrogen after some technical adjustments.
It is stated that EU investments in green projects in the region can increase electrification at the local level, which can mean lower gas consumption in the region and higher profits from exports.
The International Energy Agency states that the development of renewable energy sources requires significant private sector investment, which will put pressure on Algeria to provide an attractive investment environment. There are some regulations in the country, including reforms to encourage foreign ownership of Algerian companies.