While Algeria is increasingly moving towards ensuring its economic sovereignty, Nigeria is sinking deeper into debt peonage mires that threatens its economic sovereignty and national security.
Following the start of Russia-Ukraine conflict, and EU’s demarche on Russian energy supplies, Algeria has moved swiftly and has successfully taken advantage of the situation to the benefits of its national economy . Within two years since Europe’s embargo of Russian pipeline gas, Algeria has move deftly to become the largest pipeline gas supplier to the EU. And it continues to occupy the position of the number one country in Africa in natural gas production and exports.
Captures Europe’s pipeline gas market.
With Spain serving as the main gas transit hub for the transport of gas across southern Europe, by early June, according to Spanish energy company, Enagas, Algeria, had become its largest gas supplier, for six months in a row, ahead of the former leader, the United States. Apart from Spain, Algeria is also the largest gas supplier to Italy. And it has moved to maintain that position, going forward. An agreement concluded in 2022 between the Italian Eni and Algeria’s state oil and gas company, Sonatrach, is planned to deliver up to 9 billion cubic meters of pipeline gas to Italy by 2026
.According to Enagas, Algeria exported a total of 10,267 gigawatt hours (about 973 million cubic meters) to Spain last May, which is 36.3% of the total gas imports into the country. Russia and the United States come next at 22.7% and 13.8%, respectively. This proportion has generally remained stable since the beginning of this year
In 2023, Algeria overtook Russia to become the second-largest supplier of pipeline gas to the EU after Norway. And by early 2024, Algeria has become the most important gas supplier for the whole of Europe, especially the Mediterranean part. This has greatly strengthened its economic sovereignty and its role as a major guarantor of European energy security.
Even as 85% of its gas exports goes to Europe, Algeria is working to reinforce its role as the foremost pipeline exporter, by investing $50 billion, for the expansion of its gas industry by 2028. For 2024, the Algerian government has allocated up to $8.8 billion, most of which is directed to gas exploration and production.
Algeria currently supplies Europe with gas through two pipelines. The first, TransMed, connects to Italy via the Mediterranean Sea. This route passes through the territory of Tunisia and has a capacity of 32 billion cubic meters per year. The second line, Medgaz, connects the port of Beni Saf on Algeria’s west coast with the city of Almeria in southern Spain. It is capable of transporting up to 10 billion cubic meters annually.
In 2009, an agreement was also signed between Algeria, Niger, and Nigeria on the construction of an ambitious Trans-Saharan gas pipeline, NIGAL, which will allow gas to be supplied from south of Nigeria to Spain and Portugal through Niger and Algeria. However, this plan remains extremely fragile. In early 2024, it emerged that the project had been put on hold due to the political situation in Niger, where a military coup took place in the summer of 2023. Nevertheless, in March, Energy Minister Muhammad Arkab said an agreement had been reached struck between Algeria and Nigeria to resume construction.
LNG: It is number one in Africa
The report of the Organization of Arab Petroleum Exporting Countries (OAPEC) for 2023 says Algeria has taken first place for LNG exports from Africa for the first time since 2010, overtaking Nigeria, which had held this position for more than a decade. Also, the volume of LNG supplies from Algeria abroad is the highest in the entire Arab world.
The report indicates that Algeria achieved its highest figures in 2023, when its total volume of LNG exports amounted to approximately 13 million tons, which is 26.1% more than in 2022.
The Algerian Energy Minister Mohamed Arkab stated that Algeria’s strategy is to increase annual production to 200 billion cubic meters of gas within five years. The current volume of extraction has reached 137 billion cubic meters. According to Arkab, “Algeria is a reliable country in terms of contracts, as well as large volumes of supplies to the European market,” .
Sonatrach, the wholly Algerian state owned national oil company is a well run, scandals free, and sharply focused organization, which is fine-tuned to meet national growth targets and expectations. Between January and May 2024 it has been able to discover another eight important oil and gas fields in the country. All are new undeveloped sites, and most are located in Bechar Province in southwestern Algeria, Salah Province in the central part of the country, and Illizi, Djanet, and Ouargla provinces in the southeast. Without disclosing the figures, energy Minister, Arkab, noted that these deposits “will be a significant addition to proven national hydrocarbons reserves, especially natural gas.”
Bye-Bye IMF – your loans no longer needed.
In early May, the country’s president, Abdelmadjid Tebboune, said Algeria, which is practically free of foreign debt, is not going to borrow from international organizations. He noted that the Algerian economy’s growth rate had ranged from 4.1% to 4.2% last year, with Algeria’s GDP reaching $260 billion at the end of 2023. The government aims to increase this to $400 billion by 2026 and 2027.
Tebboune also said the Algerian currency, the dinar, had grown by 4.5% compared to hard foreign currency, and “this is just the beginning.” The country’s foreign exchange reserves have increased to $70 billion, which frees the country from the need to obtain new foreign loans.
It is worth noting that, when Tebboune came to power in 2019, foreign exchange reserves amounted to $42 billion, and import costs exceeded $60 billion. Moreover, the president noted that Algeria is determined to diversify its sources of income, moving away from a ‘rentier economy’ based on oil and gas exports.
“In 2022, for the first time in 40 years, Algeria saw a record volume of non-primary exports in the amount of $7 billion, whereas previously this figure did not exceed $1.5 billion,” Tebboune added.
In April 2024, the International Monetary Fund (IMF) put Algeria in third place on a list of the most important African economies, after South Africa and Egypt. Algeria overtook Nigeria, which took fourth place in the IBF rankings this time. According to the report, Algeria’s GDP this year amounted to approximately $266.78 billion, and the IMF expects growth rates of about 3.8% in the coming months.
Contrasting Nigeria
Optimally developing Nigeria’s impressive gas endowment presents an opportunity to boost the country’s economy and raise the standard of living for its population. Gas can be exported in two forms; either as pipeline gas or as super cooled Liquefied Natural Gas (LNG). However, despite its abundance, Nigeria , throughout its long oil and gas industry history, has only successfully completed one significant gas export pipeline, the Chevron operated 678 kilometres , 5 billion cubic meter (bcm) per year, West African Gas Pipeline (WAGP) , a regional (ECOWAS) natural gas pipeline that supplies gas from Nigeria’s Escravos region of the Niger Delta area to Benin, Togo and Ghana. Two other long planned pipeline projects through which Nigeria hinges hopes of supplying its gas to the lucrative European market have continue to flounder from lack of funds, political and managerial ineptitudes and similar uninspiring factors . The $13 billion – $15 billion, 4,128km Nigeria-Algeria Trans-Saharan gas pipeline has seemingly stalled. And, the 5,660km underwater Nigeria Morocco Gas Pipeline (NMGP), which will be laid along the coast of West Africa on the bottom of the Atlantic ocean, and which, when/if completed, is expected to be the world’s longest underwater pipe line, remains under development since 2016, with no early completion date in sight. Making any hope of the country mounting a credible challenge to Algeria’s dominance of the European market in the foreseeable future to remain a remote and forlorn prospect.
Insecurity, policy flip-flops, and debilitating corruption, which makes the unit cost of oil/gas field development in the country to be, probably, the highest in the world, curtails investments and forces international Oil companies (IOC’s) to divest and flee the country. Meanwhile, gas flaring, in the country’s gas fields, goes on unabated. Even, as domestic utilization, for petrochemical development, power generation, industry and households consumption remains pitiable low, with little prospects for growth – in the absence of any meaningful development strategies by successive myopic, short-sighted national governments, and with the national oil company, the NNPC, remaining an endemically incompetent, and an utterly RICCO (Racketeer Influenced and Corrupt Corporate Organization) set-up.
Hence, while the country undoubtedly sits atop a treasure trove of optimally unharnessed wealth, corruption, incompetence, mismanagement, and bad governance, has ran the country aground. Completely drained of investible funds, the government, bowl in hand, scurries around, from pillar to post, begging for loans, and more loans. Loans, whose debt interest repayment has sank the Naira to its all times low, bludgeoned inflation to all time high, and created a cost of living crisis that has earned the country the unenviable appellation of “poverty capital of the world”.
Algeria and Nigeria, two oil rich countries. Algeria flourishes and prosper, Nigeria flounders and whither. So sad.
Parts of this story were adopted from this report.
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