Germany’s push for a hydrogen pipeline from Algeria to Europe via Italy marks a shift in energy diplomacy that could reshape Algeria’s role in the global energy transition. Friedrich Merz, leader of Germany’s Christian Democratic Union (CDU), recently visited Algiers to advocate for the project, framing it as a cornerstone of Europe’s decarbonization strategy. The proposed pipeline, dubbed “SoutH2Corridor,” would stretch 3,300 kilometers from Hassi R’Mel to southern Germany, carrying up to 4 million tons of green hydrogen annually by 2030. According to Türkiye Today, Merz’s visit included meetings with Algerian Prime Minister Nadir Larbaoui and executives from SONATRACH, Algeria’s state-owned energy giant, signaling Berlin’s readiness to invest in infrastructure and technology.
The project aligns with Algeria’s long-term energy diversification plans. President Abdelmadjid Tebboune’s government has pledged to produce 10 gigawatts of renewable energy by 2030, with hydrogen as a key export. SONATRACH, which already supplies 11% of Europe’s natural gas, is positioning itself as a hydrogen supplier, leveraging existing pipelines like the TransMed, which connects Algeria to Italy. The company’s CEO, Rachid Hachichi, told Al Jazeera that Algeria could produce green hydrogen at $1.50 per kilogram by 2030, competitive with North African peers like Morocco and Egypt. The German government has earmarked €2 billion for hydrogen infrastructure in Algeria, including electrolysis plants and solar farms in the Sahara.
For entrepreneurs, the pipeline offers two immediate opportunities. First, the construction phase will require local subcontractors for engineering, logistics, and security. German firms like Siemens Energy and Thyssenkrupp are already in talks with Algerian partners to supply electrolysis technology, creating demand for joint ventures. Second, the project could accelerate Algeria’s renewable energy sector, where private investment remains limited. The government’s 2023 hydrocarbons law allows foreign companies to own up to 49% of renewable energy projects, a rare opening in Algeria’s state-dominated economy. Startups like Algerian Solar Solutions, which provides off-grid solar systems, could scale up to supply hydrogen plants.
The diaspora may also play a role. Algerian engineers and energy consultants in Europe, particularly in Germany and France, are well-positioned to bridge the gap between Algerian and European firms. The Algerian Ministry of Energy has launched a program to repatriate diaspora expertise, offering tax breaks for returning professionals. According to Reuters, the program has already attracted 200 engineers since 2024, many with experience in hydrogen and renewables.
Risks remain. Algeria’s regulatory environment is unpredictable, with bureaucratic delays common in large infrastructure projects. The 2022 gas crisis, when Algeria cut supplies to Spain over a diplomatic dispute, underscored the geopolitical volatility of energy exports. However, Germany’s red-carpet diplomacy—including a €500 million loan guarantee announced during Merz’s visit—suggests Berlin is willing to absorb some of the risk. The loan will fund feasibility studies and pilot projects, reducing upfront costs for Algerian firms.
The pipeline’s success hinges on Algeria’s ability to produce green hydrogen at scale. The country’s solar potential is vast—Algeria receives 2,000 kilowatt-hours of sunlight per square meter annually, among the highest in the world—but grid infrastructure is outdated. The government plans to build 15 gigawatts of solar capacity by 2035, but progress has been slow. Private investors, including UAE-based Masdar and France’s TotalEnergies, have signed memorandums of understanding, but few projects have reached financial close. The hydrogen pipeline could change that by creating a guaranteed market for Algerian hydrogen.
Key takeaway for entrepreneurs
Algeria’s hydrogen pipeline to Europe is a $10 billion opportunity for local subcontractors, renewable energy startups, and diaspora professionals. The German government’s €2 billion commitment reduces investment risk, while SONATRACH’s partnerships with European firms create joint-venture potential. Entrepreneurs should focus on supply chain niches—electrolysis components, solar farm development, and logistics—where Algeria’s state-dominated market is opening to private players. The diaspora can leverage expertise in European energy markets to secure contracts, particularly in engineering and project management.
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