Algeria’s energy pivot, policy shifts and social fissures

Energy and foreign investment: Algeria courts new bids despite export pressure

Algeria opened a new international oil and gas licensing round on 12 June, targeting 10 blocks in the Sahara. The move follows a 4.8% year-on-year decline in hydrocarbon exports in Q1 2024 (USD 7.1 bn vs USD 7.4 bn in Q1 2023), according to Bank of Algeria data. The government attributes the drop to lower global prices and maintenance delays, but foreign investors cite contract rigidity and red tape as deterrents. Sonatrach, the state-owned company, is offering improved fiscal terms: royalty rates cut from 12% to 5% for deep onshore blocks and a 70% cost-recovery ceiling.

At the same time, Algeria broke ground on 13 June for the 4,128 km Trans-Saharan gas pipeline connecting Nigeria to Europe via Niger and Algeria. The project, costed at USD 13 bn, aims to deliver up to 30 bcm/year of Nigerian gas once operational in the 2030s. European buyers have yet to commit volumes, partly because Algeria’s existing long-term contracts with Italy and Spain—totalling 22 bcm/year—are priced below current European hub levels.

France’s TotalEnergies and Italy’s Eni are separately negotiating deals to increase Algerian LNG supply to Europe this summer. TotalEnergies signed a heads of agreement on 11 June to supply 1.2 bcm/year from the Tinrhert field over five years starting 2025.

Government appointments and diplomatic gestures

President Abdelmadjid Tebboune appointed Sifi Ghrieb as Prime Minister on 11 June, replacing Aymen Benabderrahmane. Ghrieb, a former finance minister, takes charge of an economy where public spending rose 6.4% in 2024 to DZD 11.8 trillion (USD 87.5 bn), with 42% allocated to subsidies and social programmes. The new cabinet retains key economic portfolios: Mohamed Arkab remains Energy Minister, Kamel Rezig stays Finance Minister, and Yacine El-Mahdi Oualid is confirmed Industry Minister.

On 10 June, Algeria and Uzbekistan removed visa requirements for diplomatic passport holders, part of a series of reciprocal moves that include visa-free entry for business delegations up to 30 days between Algiers and Ankara since April 2024. These steps aim to facilitate trade corridors for Algerian phosphate and Uzbek agro-equipment.

Army reshuffle and regional signals

On 9 June, Algeria replaced two Polisario Front commanders in Tindouf, replacing Mohamed Salem Ould Salek with Brahim Ghali’s deputy, Khatri Adjou. The move follows US pressure to de-escalate tensions with Morocco ahead of a possible US–Morocco defence agreement. Algeria simultaneously advanced negotiations with Mauritania on a joint military exercise scheduled for July 2024 near the border with Western Sahara.

Gender and labour market signals

The government’s 2024 budget allocates DZD 380 bn (USD 2.8 bn) to programmes targeting women’s economic participation, up 15% from 2023. Key initiatives include DZD 15 bn in micro-loans for female-led startups and DZD 22 bn for vocational training slots reserved for women. Female unemployment remains at 22.7% (vs 12.3% for men), according to the National Office of Statistics (ONS) for Q1 2024. Political parties must field at least 30% women candidates in the upcoming legislative elections, per a 2021 law.

Football: youth development and image management

The Algerian Football Federation named a 16-athlete squad for the U-17 Africa Cup of Nations starting 29 June in Algeria. The team’s draw against Ghana on 14 June highlighted ongoing youth development under the federation’s USD 4.5 m annual budget. Senior side captained by Luca Zidane defeated Somalia 3-0 in an Africa Cup qualifier on 12 June. The federation opened a new DZD 800 m training centre in Oran on 10 June, funded by the National Lottery.

Foreign trade and climate-related disruptions

Algeria’s trade deficit widened to USD 1.2 bn in April 2024 from USD 0.9 bn in March, driven by a 12% month-on-month drop in hydrocarbon exports and a 7% rise in imports of capital goods. Italy remains Algeria’s top customer (22% of exports), while China supplies 18% of imports. The deficit mirrors broader regional shifts: Libyan exports to Algeria rose 8% in Q1 2024 as Libyan oil fields recovered post-blockade.

Water tensions escalated in central Algeria. Riots in Laghouat on 8 June left one dead and 14 injured after protesters blocked the RN1 road demanding water supply repairs. The government released DZD 4 bn in emergency funds on 10 June to repair the 200 km pipeline from the Atlas Mountains. The Hamma desalination plant near Algiers, inaugurated in March 2024 with a capacity of 500,000 m³/day, received the OPIC Impact Award on 11 June for its USD 190 m construction phase.

Libya and Algeria signed a roadmap on 12 June to share data on shared aquifers and coordinate drilling programmes along the 1,000 km border. The agreement follows Libya’s 15% drop in water table levels since 2020, per Libyan Water Resources Ministry data.

Diaspora and consular issues

Algeria repatriated 1,200 students stranded in Morocco on 11 June via four special flights from Casablanca. The students, enrolled in Moroccan universities under Algerian scholarships, faced visa expiry issues after border closures in 2021. Algeria also eased consular access for the Algerian-Canadian community: the Algiers consulate processed 4,500 visa applications in Q2 2024, up 22% year-on-year. A British ultra-runner was denied entry on 9 June, citing “incomplete paperwork” for a continental crossing; his team later secured a one-time transit visa valid for 15 days.

Balance of the week

– Energy: New licensing round launched; Trans-Saharan pipeline groundbreaking; LNG deals with French and Italian firms in negotiation.
– Government: Prime Minister reshuffle; visa waivers with Uzbekistan and expanded business access with Turkey.
– Security: Polisario command changes; military exercises with Mauritania.
– Economy: Trade deficit widens to USD 1.2 bn; female-targeted budget rises 15%.
– Climate: Water riots in Laghouat; Libya–Algeria water cooperation roadmap signed; Hamma desalination plant wins award.
– Diaspora: 1,200 students repatriated from Morocco; Algerian-Canadian visa processing up 22%.

Key takeaway for entrepreneurs
Export-focused firms should prepare for tighter Algerian tender schedules in H2 2024, especially in desalination and pipeline components. Female-led startups can apply for DZD 15 bn in micro-loans via the National Agency for Micro-Credit. Contractors eyeing energy projects should budget for 18–24 month approval timelines despite recent fiscal incentives.