Figures released this week by the national center for information and statistics show that Algeria registered a record trade surplus of $31.82 billion in 2006, an increase of some 24% over 2005.
This impressive back-to-back performance is mainly due to the strong increase in the value of hydrocarbon exports, alongside a very slight increase in imports.
This growth has been accompanied by ever-increasing demand from the global market, and Algeria is reaping the benefit. In fact, hydrocarbon exports increased in value by 14.77%, reaching a total of $51.75 billion. Hydrocarbons once again accounted for 97.98% of the country’s total exports. Non-hydrocarbon exports made up the remaining 2.02% of the total export volume, with a value of $1.07 billion, despite significant public spending and state efforts to boost its share.
Algeria’s principal exports markets were the US ($14.04 billion), Italy ($8.98 billion), Spain ($5.52 billion), and France ($4.33 billion), while its principal suppliers were France ($4.32 billion), Italy ($1.85 billion), China ($1.7 billion), Germany ($1.46 billion) and the US ($1.41 billion).
Despite its rapidly growing economy, Russia has not yet evolved as a major purchaser or supplier of Algerian goods, although the country has taken some important steps of late to enter the local market. Indeed, after Gazprom, Russia’s biggest company, and Lukoil, who signed a memorandum of understanding during the summer with Sonatrach, it is now the turn of Rosneft and Stroytransgaz to join the fray. Lukoil has even declared that Algeria is to become one of its “priority countries” in its plans for international business development and expansion.
Civilian nuclear program in the works
In fact, last week, Russian Minister for Energy Viktor Khristenko, accompanied by top-level staff from Gazprom, Lukoil and Rosneft, met with his Algerian counterpart Chakib Khelil in Algiers to sign a memorandum of cooperation and understanding in the energy sector. This agreement will extend to the fields of nuclear energy and electricity.
Last November, during the annual Energy Week, Khelil took the opportunity to announce Algeria’s intention to develop a civilian nuclear energy program to generate electricity. He confirmed that Algeria possessed considerable uranium deposits which the country plans to make use of to increase electricity production in the long term. To dispel any fears over Algeria’s proposed nuclear plans, he added that foreign firms would be directly involved in the process through strategic partnerships.
However, the EU is concerned by the Algerian-Russian relationship getting closer and has pledged to monitor the situation closely. The two countries are the EU’s biggest suppliers of natural gas.
No new OPEC alliance
The Algerian and Russian ministers of energy were quick to comment on concerns over a possible Organization of Petroleum Exporting Countries (OPEC)-like alliance developing between the two countries. As Khelil explained, “There cannot be an OPEC of gas, because there is no global gas market but a segmented market divided between Asia, Europe and America.” Finally, he said, “There is no daily trading open to speculation, like the oil market, because gas is sold on long term contracts, of at least 25 years.” Khristenko added, “This agreement will contribute greatly to the stability of the international energy market and reinforce global energy security.”
Russian energy companies Rosneft and Stroytransgaz plan to invest significant amounts in Algeria, said Rosneft’s Vice President Nikolai Borisenko. Khelil confirmed the companies’ plans, referring to a current field of operations, the Block 245 South exploration project in Illizi, a natural gas field in eastern Algeria, which could cost as much as $4 billion to develop.
Algeria, Russia and Norway are the main suppliers of natural gas for the EU. Algeria and Russia supply 62 billion cubic meters (to be increased to 85 billion cubic meters by 2010) and 160 billion cubic meters per annum, respectively. Last year, Algeria backtracked on plans to allow foreign firms to produce oil independent of Sonatrach. Algeria seems intent on maintaining its influence in global natural gas markets for years to come and is willing to forge strategic agreements with major global players to do so. Conversely, as these new deals move ahead, Russia looks set to swiftly advance up the list of Algeria’s major trading partners.
