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Algeria to drop its gas exports by 2% in 2024

Algeria is preparing to lower its natural gas exports by nearly 2% in 2024 due to growing internal demand, said Sonatrach CEO Rachid Hachichi on Tuesday, October 2023 during a conference in Ravenna, Italy in a statement reported by the Montel agency.

Algeria currently produces 130 billion cubic meters of natural gas every year, an estimation that is higher than previous forecasts by analysts. However, Rachid Hachichi underlined that a considerable share of this production, 45 billion cubic meters that is, is meant for domestic consumption. That leaves only 85 billion cubic meters available for exports each year. Internal demand grows at a 3% rate every year.

According to Hachichi, this constant growth in energy demand is the result of demographic expansion and economic growth, both of which put a significant pressure on the existing energy resources. This situation represents a major challenge for the security and the sustainable development of the region.

Rachid Hachichi pointed that the Mediterranean and global energy context is going through a transformation, with ongoing important economic, technological and geopolitical changes. The fact is that Europe is looking to reduce its dependence on Russian gas, a direct consequence of last year’s Ukraine invasion.

In order to increase its exports, Algeria also agreed last year to increase the gas supplies through the pipeline toward Italy, in collaboration with the oil and gas company Eni.

Sonatrach’s CEO reiterated Algeria’s commitment to guarantee the concluded supply agreements, while also expressing general concerns about the financial feasibility of projects and the necessary financing. He underlined the importance of investing in transportation, storage and equipment infrastructure, as well as in developing technical expertise to promote the regional gas industry.

Algeria currently has two entry points of its gas into Europe: the Medgaz pipeline, which has a capacity of 10.5 billion cubic meters per year toward Spain, and the TransMed pipeline, which links Algeria to Italy via Tunisia. Algeria aims to reach a total capacity of 30.2 billion cubic meters per year for the TransMed pipeline in 2023, an increase from the previous 21 billion cubic meters per year.

In addition to pipeline gas exports, Algeria also send LNG (liquefied natural gas) to European destinations.

Furthermore, Algeria has the ambition of becoming one of the main producers of electricity and hopes to establish electrical interconnections with Europe. Sonatrach’s boss pointed that these goals will not only accelerate the energy transition, they will also free up additional gas volumes for exports.

He however admitted that important challenges need to be met, and insisted on the necessity to pursue efficient investments to support energy production. As an objective, Algeria aims to reach a solar capacity of 15 GW by 2030, thus contributing to the national goal of having 30% of its energy mix in renewable by 2035.