Energy ambitions in Algeria go beyond oil and gas

• $42bn energy plan
• 15GW renewable target
• Seeking international investment

Algeria has ambitious plans to revitalise its bread-and-butter energy industry.

The country is Africa’s largest gas exporter and third-largest oil producer. World Bank figures show hydrocarbons make up 93 percent of its total exports. 

The International Monetary Fund said Algeria’s economy grew by 4.2 percent to $244.75 billion in 2023, in part because of renewed hydrocarbon production. It expects 3.8 percent growth in 2024, supported by large fiscal spending.

It is aiming to modernise its economy and is planning significant diversification initiatives. Nonetheless, energy remains central to its plans.

Energy minister Mohamed Arkab announced a $42 billion plan late last year to increase Algeria’s role in the global energy market. 

The country has benefited significantly from the Ukraine war and is sending more gas to Europe after sanctions stopped Russian supplies. Algeria is now Italy’s largest supplier of gas and has increased its exports to Spain, France and the UK.

There are plans for new fields and further expansions are in the offing, although Algeria also owns many ageing oil and gas assets. Nourredine Yazid, the Algerian ambassador to the UK, says the state-owned Sonatrach is investing in modernising and maintaining these.

“There are already many American and British companies working in Algeria in oil field maintenance and modernisation, mainly in the Hassi Messaoud oil field and the Hassi R’Mel gas field,” Yazid said at a roundtable discussion in London last week organised by the Arab British Chamber of Commerce.

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Sonatrach’s upcoming investments over a five-year period to 2027 include more than $14 billion for gas projects, $3.5 billion for petrochemical projects and almost half a billion dollars for environmental initiatives. These span gas recovery, solar energy development and hydrogen project advancements. 

Algeria aims to reach 15 gigawatts of electricity generation capacity from renewable resources by 2035, with a growth rate of 1GW a year. 

It is also seeking international investment and partnerships to expand the production of renewable resources, such as solar, wind, biomass, geothermal and hydropower.

“The potential for renewable energy, particularly solar power, is huge, especially in the island regions,” Yazid said, pointing out that Algeria gets 2,000 to 3,000 hours of sun a year.