Europe taps Algeria’s rich energy resources

By Andrew Beatty

Date: 12/05/05

Although the Europe-Mediterranean region may not take in the energy giants of the Persian Gulf or Eurasia, the EU is increasingly keen to develop its energy ties to the southern Mediterranean.

Nowhere is this more evident than in Algeria.

With the eighth-largest natural gas reserves in the world, Algeria is already a major player in European energy markets.

As well as being about as close as is physically possible to Western Europe, reducing transportation costs, the country possesses reserves of 4.5 trillion cubic metres, or 2.6% of the world's total gas reserves and is becoming potentially more and more stable.

As Algeria emerges from a bloody civil war, which began in 1992 and which killed 100,000 people, European investors are increasingly being drawn to the country.

In the energy sector, through the Barcelona Process, the EU hopes to create a unified energy and gas market and seeks further liberalisation of the Algerian energy sector, to reduce costs further and ensure security of supply.

Already, according to European Commission figures, mineral fuels and related products amount to almost 72% of EU imports from the Algeria, and 6% of the EU's total fuel imports.

The recent spike in oil prices, continued instability in the Middle East, the Yukos crisis and dwindling own resources have only increased the EU's desire to reassess its energy security. 'Variety' is very much the watchword.

By 2020 EU gas imports are expected to double while fellow Euromed partners Egypt and Libya are expected to increase their market share from less than 1% today to 7% and 5% respectively.

While Central and Eastern European countries remain heavily dependent on Russian exports (in 2003 an estimated 38% of Germany's natural gas imports came from Russia), in southern Europe the story is very different.

In Italy the Transmed gasline which transports natural gas from Algeria to Sicily accounts for around a third of Italy's gas, making Algeria Italy's biggest source of gas and outstripping Russian imports by 1.3 million cubic metres.

In Spain the Maghreb-Europe gasline linking Algerian fields with Cordoba supplies Spain with a third of its gas imports.

In Portugal and France the situation is similar.

But as the world's second largest exporter of liquefied natural gas, Algeria is also hoping to increase its exports to northern Europe ahead of competition from Egypt and Libya.

Article reports on the European Union's plans to develop its energy ties to the southern Mediterranean, especially Algeria, but also Libya and Egypt.

European Commission: DG Energy and Transport: Enlargement and International Relations: International relations http://ec.europa.eu/comm/dgs/energy_transport/international/relations_en.htm

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