Algeria’s oil and gas: Not so jolly

TIGHT military control and generous spending on social services, thanks to the high price of oil and gas that Algeria has in abundance, have so far prevented President Abdelaziz Bouteflika and his regime from being shaken by the upheavals in other Arab countries. In 2011 oil exports earned Algeria $55 billion. Foreign-currency reserves are strong. GDP is expected to rise by more than 3% this year, says the IMF. The official unemployment rate of around 10% is lower than elsewhere in the region.But all is not well. Of the world’s big oil-producing regions only the North Sea’s output has dipped more steeply in the past five years. And many of Algeria’s usual markets are shrinking. North America, where refineries once paid a premium for Algeria’s high-quality crude, takes the largest dollop of the country’s 1.2m barrels a day. Now they are tapping cheaper supplies from North Dakota. Moreover, Algeria has become too reliant on high prices. To break even, its budget banks on oil at around $120 a barrel, above typical forecasts for this year; today’s price is around $116 for Brent.Algeria’s natural gas, the other pillar of its economy, is also struggling. Sharply rising demand for electricity in the country has caught the government off guard. Last summer the power was periodically switched off to cover shortfalls. Local electricity requirements have been rising by 12% a year.This…

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