Algeria’s energy minister will seek more investment from European Union states and discuss the renewal of long-term gas supply contracts with EU members during talks starting today in Brussels.
Algeria released details of its “new model of growth” on Monday to cope with a sharp fall in oil prices, recognising that its vast system of government subsidies is unsustainable and must be overhauled. The document outlining the new model frankly admitted the country’s reliance on energy, which accounts for 60 percent of its budget, and put forward an ambitious programme for developing its non-oil sector through 2030.
Most of Algeria’s long-term gas accords with EU nations are due to end between 2018 and 2019, just as the North African oil and gas producer grapples with a slide in crude prices, which have tumbled from above $100 a barrel in mid-2014 to $55 now.
Energy Minister Nourredine Bouterfa was to meet EU Energy commissioner Miguel Arias Canete this week to “facilitate and promote European investments in the sectors including natural gas, renewables and energy efficiency,” the ministry said.
Long-term gas contracts would also be on the agenda, the source familiar with the matter told Reuters.
State energy firm Sonatrach officials said this year Algeria would adopt a new approach to its gas contracts, no longer demanding deals lasting 20 or 25 years and instead seeking 10-year to 15-year contracts.
Algeria, a major gas supplier to Europe, wants more European investment in its industry but has faced EU calls to cut bureaucracy and offer more flexibility to investors.
Last year, EU officials and energy firms urged Algeria to adapt to more competitive energy markets to lift the amount of gas it pumps north to Europe after years of sliding exports.
With cuts to public spending and energy subsidies, Algeria managed to lift energy output even as lower oil prices drove state revenues down to $27.5 billion in 2016 from $60 billion in 2014.
Gas exports are expected to exceed 57 billion cubic metres in 2017, up from 54 billion cubic metres in 2016, Sonatrach figures show. In 2016, Algeria met 55 percent of Spain’s gas needs, 16 percent of Italy’s and 15 percent of Portugal’s.
Algeria, which has escaped the turmoil plaguing Libya and other states in the region, is seen as a reliable gas supplier for the EU amid tensions with Russia, a major supplier to Europe.