Because Algeria wants to collect more from gas supplies to Europe

Because Algeria wants to collect more from gas supplies to Europe

Algeria has announced that it intends to review contracts for the sale of natural gas with major European customers. The analysis by Lorenzo Marinone, head of the Middle East and North Africa Desk of the Center for International Studies (Cesi)

The announcement came like a lightning bolt: Algeria, the third largest gas supplier for Europe, intends to revise the contracts for the sale of natural gas with the main European customers.

This is what Energy Minister Mohamed Arkab explained to the Algerian public radio broadcaster, speaking of the difficulties of his country in maintaining its market share, as well as the primacy as supplier of Spain, mainly due to the entry into the market of the LNG from the USA.

"In order to maintain Algeria's position on the gas market, considering the emergence of new shale gas producers, Algeria has initiated a review of long-term contracts and negotiations to maintain its position on the market" Arkab said .

In commenting on these statements, Lorenzo Marinone, head of the Middle East and North Africa Desk of the Center for International Studies (Cesi), suggests looking in two directions.

"The first", explains the analyst, "concerns the position of Algeria in the energy panorama not only in the Mediterranean. Here we talk about gas, and the gas market is becoming increasingly competitive, in part because some of the top global producers are very flexible than Algeria is, in part because there is the question of shale and new ones. manufacturers entering the market. In such a landscape, which reveals changes, the more you are in plaster and less resilient with your production system, the more problems you will have to adapt to this situation and react to changes. Algeria's position is therefore explained – Marinone concludes – with its evident difficulties in navigating the energy market as soon as the waters stir a little. "

The second order of explanations suggested by Marinone has to do with matters that are all internal to Algeria and in particular with the unsolved travail of the resignation of former President Bouteflika and the subsequent transition that led to the election of a new president last December. in a climate that has not seen popular discontent waning completely.

In this regard, Marinone connects the announcement of the energy minister “with the economic reform plan that has just been announced by the Algerian presidency. This is a very complex plan but one that has a cardinal point: the promise not to cut the subsidies enjoyed by the Algerian population. And we are talking about a variety of subsidies: from the one on fuels to the one on electricity. The new president has promised that none of this will be touched, but he will face an enormous expense for the Algerian budget which necessarily requires a continuous cash flow. So I imagine that trying to maintain your market share as a gas exporter means guaranteeing this continuous cash flow in the short and medium term ".

Yesterday's move must therefore also be interpreted in light of the attempt by the new Algerian leadership to secure social peace. But it is an attempt that according to Marinone is not necessarily destined to be successful.

"The problem with the Algerian political class," explains the analyst, "is that the post-Bouteflika transition is far from over. The protest movement that took to the streets last year before and after Bouteflika's resignation has not melted at all, is continuing its activities even if only online right now because of Covid-19 and trying to transform itself from movement spontaneistic to a more structured entity capable of incisive political action ".

It therefore seems obvious, in this context, that the Algerian leadership tries to do everything possible to soften, continues Marinone, "the economic and social difficulties that Algeria is about to face in the immediate future", realizing that behind them conceal new social tensions that could bring the country back into chaos.

This is a machine translation from Italian language of a post published on Start Magazine at the URL on Mon, 13 Jul 2020 09:43:12 +0000.