Overview

Algeria is an important producer and exporter of gas. The country produces more than 80 billion cubic metres per year, of which more than half is exported via pipeline to Europe or to the rest of the world as LNG.

However, production is declining – falling from a high of 88 bcm in 2005 to 81.5 bcm in 2012. This is a major concern, given that hydrocarbon exports account for around two thirds of government revenue.

Domestic gas consumption has grown by 4.3% per year over the past decade and is threatening to impinge on the availability of gas for export. Domestic gas prices are artificially low as a result of government subsidies.

The country is looking to Asian LNG markets to boost exports. The recently completed replacement train at Skikda and the GNL 3Z train at Arzew will increase Algeria’s LNG export capacity to nearly 30 mtpa.

The country’s efforts to attract investment were damaged by an attack by militants on the In Amenas facility in January 2013. The incident highlighted the vulnerability of isolated installations to insurgents and demonstrated that instability in Libya and Mali could spill over into Algeria.

In Amenas followed a corruption scandal that had already diminished investor confidence.

The country’s hydrocarbon legislation has been reformed to attract investment; the unpopular exceptional profits tax has been abolished and terms set out for unconventional gas licences.

Page updated: 17/07/2014