Supply and Demand: President Tebboune Hot as Europe Looks for Gas

  • European countries are looking to Algeria as a viable gas supplier.
  • The increased interest comes as a result of the Russian invasion but is not without limitations.
  • Developments in Mediterranean relations promise a strengthened posture for President Tebboune. 
President Abdelmadjid Tebboune
Source: Atalayar

Why is Tebounne’s Heat level Hot?

Answer: President Abdelmadjid Tebboune is heating up as Europe looks to diversify with Algerian gas. 

As the Russian invasion of Ukraine rages on, President Abdelmadjid Tebbounne is warming up. A key priority of the EU as of late has been to diversify gas supplies and reduce dependence on Russian imports, with Algeria emerging as a strong contender for said diversification. European governments have been vocal in their desire to move closer to the Maghreb nation, with Italy’s Prime Minister Mario Draghi as the latest to visit Algiers.

A memorandum was signed last month between Italian energy company Eni, and Algeria’s state-owned Sonatrach. Witnessed by the two leaders, the agreement in question concerns the importation of natural gas through the Transmed submarine pipeline and equally outlines Italy’s aim to aid in the ecological transition of Algerian energy policy. 

Career politician President Tebboune, who came to power in 2019 amidst a turbulent political climate, has an opportunity to enact some revival in the Algerian economy, securing more stability for the region. As the head of ‘Algeria’s New Republic’, Tebboune’s rising heat level could prove imperative in paving the way for the leader’s goals. 

This deal is the latest move to shore up European gas supplies, and the increased attention is heating up President Tebboune. Ongoing diplomacy with other European countries such as France, Spain, and Portugal will equally prove advantageous to Tebboune. As Europe weans itself off Russian gas, the opportunity for Algeria to further elevate its share of the continent’s energy market-though not without its hindrances-could be lucrative.

What is changing his heat level?

Answer: Increased demand for gas following the Russian invasion is forcing leaders to look to Tebboune for subsidies. 

Algeria has recently become a suitable destination for European interest for a number of reasons. Namely the aforementioned need to diversify in response to the Russian invasion, Algeria’s position as the 3rd largest exporter of gas to the continent, and equally its already established relations with EU countries. With new projects such as the expansion of the Transmed pipeline, capacities on the rise, and output boosted, Abdelmadjid Tebboune is better equipped to further develop Algeria’s international presence. 

These new deals may test relations between Algeria; as ties with the Kremlin are severed across Europe, more may be asked of President Tebboune who has been up until now ambivalent to the Russian invasion. Algeria voted against the expulsion of Russia from the U.N. Human Rights Council, and the two nations have engaged in military cooperation maneuvers close to the Moroccan border. As Tebboune’s heat level rises, he is faced with navigating how strengthening diplomacy with Russia may affect relations with interested European leaders and vice versa. 

Statistically, Algeria’s oil and gas-based economy is seen by Europe as a potential subsidy. In 2021, 12% of EU gas imports came from Algeria and while not enough to make up for the 42% imported from Russia, this amount is evidently enough to generate the interest of leaders like Mario Draghi. The statistics are more significant when viewed through the lens of individual countries; 40% of Spain’s gas in 2021 was Algerian, as was 40% of Italy’s.

The deal signed between Eni and Sonatrach promises an additional 9 billion cubic metres of gas (around 98 cubic metres are needed to power the average home) to Italy through the Transmed pipeline, in a move that places Algeria as the nation’s primary supplier. With Algeria supplying this much of Europe’s natural gas, President Tebboune is undoubtedly in a favourable position. 

What is driving Tebounne? 

Answer: Expanding investment, increasing domestic stability, and bolstering Algeria’s international presence are at the core of Tebboune’s motivations. 

President Tebboune’s rising heat level is not without its caveats: limitations within Algeria as domestic demand increases, shortcomings in infrastructure, and political and economic instability all threaten gas and oil exportation. Tebboune’s main drivers will now be to navigate this series of factors to promote his political posture both domestically and internationally. 

The most immediate of these concerns for Algeria’s export capacity is local market absorption; domestic needs are on the rise, challenging potential exports. Between 2013 and 2018, demand increased by 10% and is predicted to increase by a further 50% by 2028. Equally, while the long-term prospect of increasing Algerian production is feasible, it does not align with the short-term needs of European leaders. This issue is driving President Tebboune to double efforts in extraction and exportation, with a $40billion investment package announced for oil and gas. 

However, with this trend of rising demand and slow expansion, it is unlikely Algeria will be able to fill the void left by the EU’s goal of cutting all Russian gas by 2030. Indeed, Touffik Hakkar, CEO of Sonatrach, the state-owned corporation involved in the latest agreement, has acknowledged that in its current state, Algeria is unable to replace Russian supply. 

Regardless of capacities and meeting European demands, President Tebboune will welcome this increased attention as an opportunity to further his own political goals. In an election that saw record abstention rates, President Tebboune assumed office on a platform of renewing public institutions and legal frameworks, promoting a new constitution, and promising to engage with Algeria’s pro-democracy Hirak movement.

Since then, the president’s government has been racked with criticisms of its punishment of dissent, corruption allegations, and doubts of legitimacy. Throughout his administration, Tebboune has placed restrictions on public protests and tried as he might to curb dissension, driven by the desire to create domestic stability at the cost of civil liberty. (this may be a little too dramatic) 

Equally, the president has been articulate in his views surrounding divisive issues and an increased presence affords him a firmer stance. Recently, the Algerian government threatened to cut off its gas exports to Spain if Madrid transferred it onwards to rival Morocco. The announcement came after an earlier dispute wherein the Algerian ambassador was withdrawn following Spain’s Pedro Sanchez’s concession that Western Sahara could be an autonomous province under Moroccan sovereignty. 

Evidently, President Tebboune is driven by his motivation to stabilise Algeria, whilst simultaneously developing Algerian global status that permits him an emboldened position on longstanding international issues. 

What does this mean for you?

Answer: Long-term investment hints at a change in European perspective, opening doors for African energy production. 

With the European Union scrambling to replace Russian energy supplies, opportunities arise for not only Algeria but other nations that may be viable subsidiaries to the European market. 

Prime Minister Mario Draghi’s government is epitomising this potential shift, not only visiting Algeria but equally Azerbaijan, the Republic of Congo, Angola, and Mozambique, countries that Draghi himself will visit in the near future. France, Spain, and Portugal all have their own agreements with Algeria and the number of European energy deals with African governments is rising

As activity between the two continents ramps up, the feasibility of this dynamic change is yet to be seen; many countries of interest still lack the infrastructure to process and export their natural gas. However, the promise to cut down Russian dependence does imply increased investment in the continent and the development of any potential suppliers. 

The Russian invasion has thrown many aspects of the geopolitical landscape into question, not least of all European energy security. With the increased attention on Algeria, President Abdelmadjid Tebboune is representative of a possible change in the European mindset. Energy insecurity now casts doubt on the European Union’s ban on financing fossil fuel projects, a decision that if reversed, would see a huge boost for aspiring producers in Africa, whose capital is currently locked up.

On top of all of this, President Tebboune will also have to consider how proximity to EU members will affect his position with Russia. For now, there has been no response from Russia in regards to Algerian gas being sent to Europe, but time will tell what effect Tebboune’s rising prominence has on Algerian-Russian relations.

For President Abdelmadjid Tebboune, this need to diversify promises a significant boost, increased status, and investment over time could make Algeria an even more prominent gas giant, not only within Africa but also on a global scale.