Russian-Ukrainian crisis: Algeria’s diplomatic and energy position

By Dr Arslan Chikhaoui,
Chairman, NordSud Ventures

Since the start of the Russian-Ukrainian crisis on February 12, 2022, which quickly turned into a so-called medium-intensity conflict with the incursion of the Russian army into Ukraine, Algeria has opted for a position of neutrality displayed and undeclared which reinforces its posture of mutual diplomatic and economic interests with, on the one hand, Russia considered as an ally and with which it will celebrate this year its 62 years of strategic relationship and, on the other hand, with the Europe considered as a natural partner in its geographical extension. This posture has already been adopted by Algeria, for example, in 2017, during the politico-military crisis between Qatar, the United Arab States and Saudi Arabia.

Indeed, this position of neutrality is in line with the doctrinal principles on which Algeria has built its foreign policy since its independence, opting more and more for a policy of non-dogmatic interests with, as a base, the unwavering support peoples’ aspirations to self-determination and opposition to any foreign interference in any form whatsoever, as well as the resolution of disputes through political and diplomatic dialogue.

This position of neutrality was affirmed by the abstention of Algeria during the vote, on March 2, 2022, of the resolution of the United Nations General Assembly condemning Russia and consequently consolidating its posture of non-aligned that has always displayed in such situation. This abstention by Algeria reinforces its attachment to its fundamental principles of respect for the independence and sovereignty of States and territorial integrity.
However, Algeria, which refuses any violation of its right to neutrality codified by the Hague Conventions of 1907, has endeavored to repatriate its nationals living in Ukraine and called its community to not get involved in this medium-intensity conflict. Moreover, the Algerian authorities protested against a press release published by the Ukrainian Embassy in Algiers, on its Facebook page, in which the diplomatic representation “invited foreigners to go and fight the aggressor (Russia)”. As a result, the press release was withdrawn in extremis from social networks.

Algeria therefore is in a favor of dialogue and diplomacy for the settlement of conflicts and remains faithful to its commitment to develop friendly relations between States, based on coexistence and the peaceful settlement of disputes.
With regard to the question of gas supplies to Europe, Algeria is sovereign in its trade relations and takes into account its available volumes and reserves. Indeed, on the one hand, the latest public statement by the CEO of the state owned oil company ‘Sonatrach’, Mr. Hakkar, distorted by the international press, highlights that “the additions of natural gas and/or LNG to Europe are dependent on the availability of surplus volumes after satisfying the growing domestic market demand and its contractual commitments to its foreign partners”. On the other hand, the words of the Russian Ambassador to Algiers, Igor Beliaev, during an interview he gave on March 7, 2022 to the Algerian newspaper l’Expression highlighted that “The problem does not arise for us, because we consider that it is a purely commercial question far from affecting our relations”.

According to hydrocarbon experts, Algeria could only put additional quantities on the international market up to 2 or 3 billion cubic meters per year in view of its reserves necessary to ensure its domestic consumption as a priority. It can not dethrone Russia from its second rank as gas supplier to the European Union. The Russian Ambassador in Algiers, however, highlighted that the prospect of a drop or even a stoppage of Russian natural gas supplies to Europe “is not on the agenda for the moment” .
For the record, in 2021, European imports from Russia of natural gas represented around 50% and those of oil 25%. These are around 40% of European imports of solid fuels (mainly coal). In the sense that half of Russian energy exports are directed towards Europe, i.e. approximately 125 billion USD and 8.5% of Russian GDP and oil exports to the European Union represent more than 100 billion USD for Russia, or 7% of GDP.

Given the latent threat to Europe of an oil and gas crisis, it is led to find certain alternatives and for which the eyes, in particular, of Spain, Italy and France are turning towards Algeria in parallel to negotiations initiated with Norway, the Netherlands and the United States.
Energy cooperation between Algeria and the European Union is based on a politico-commercial protocol. The first destination for Algerian gas remains the European market, essentially Italy (35%), Spain (31%) and France (7.8%), and the share of LNG representing 33% of exports.

The transport of gas from Algeria to the EU is done in particular by gas pipelines. First, we have the Transmed whose anchor point is Italy, the largest pipeline with a capacity of 33.5 billion cubic meters of gas passing through Tunisia, with in 2021 an export of around 22 billion cubic meters of gas and a possibility of an increase subject to the increase in internal production of an additional 10 billion cubic meters in the medium term with a resumption of substantial investments. Then we have the Medgaz with a direct anchorage in Spain from the western coastal algerian port of Beni Saf with a capacity of 10 billion cubic meters. As for the GME with a capacity of 13.5 billion cubic meters of gas transiting through Morocco to supply Spain, Algeria has decided to abandon the contract which expired on October 31, 2022 following the break in diplomatic relations between the Kingdom of Morocco and Algeria.
Moreover, it is useful to point out that the Algerian company ‘Sonatrach’ also faces several constraints. These are, in particular: fixed medium and long-term gas contracts whose clauses require a long timeframe of negotiation to be revisited, lack of ivestment in the sector due to the unattractiveness of the Hydrocarbons Law not yet amended, the high domestic consumption which risks exceeding current exports by 2030, the subsidy policy not yet reviewed, and the lack of control of the informal economy sphere representing approximately 90 billion USD according to the terms of the Government’s Action Plan .

In view of all these elements of analysis, it seems difficult for Algeria to put additional volumes of gas on the European market a present.

By Dr. Arslan Chikhaoui, Chairman of www.nordsudventures.com