Algeria is no longer an oil country

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The decline in Algerian oil exports threatens to further economic suffering and the possibility of a repeat of the protest demonstrations that toppled President Abdelaziz Bouteflika two years ago, as Algeria is struggling to keep pace with oil and gas shipments, which are a basic lifeline for its economy after years of mismanagement and lack of foreign investment.

Bloomberg news agency quoted Cherif Belmhoub, Minister of Economic Outlook, that the sharp decline in Algerian oil and gas exports may cancel the country as an oil country within a decade, indicating that Algeria will no longer be an oil country. Despite the rise in oil prices above $60 a barrel yesterday for the first time in more than a year, they are still less than half the breakeven price needed by the Algerian budget, which is $ 135 per barrel according to the International Monetary Fund, which is the highest parity price,of the budget in the Arab world.

It quoted Jalil Harchaoui, a fellow at the Global Initiative Association in Geneva, the political leadership in Algeria is under major economic blows, and for the first time in two decades, the country must make politically painful and creative decisions to attract foreign investments in foreign currencies.

She mentioned that Algeria's oil and gas exports fell by about 30 percent in 2020, and this decline continues this year, as the country's sales abroad fell to 290,000 barrels per day last month, 36 percent less than in December and the lowest level since 2017. Noting that Algeria's weak oil production may miss the recent price recovery.

Traders said that Algeria also failed to take advantage of the high prices of LNG in mid-January due to its lack of surplus quantities of gas to sell on the spot market.

For his part, Farren Price, director of Energy Research, Envirus, said, Algeria has one of the largest per capita welfare budgets compared to its OPEC peers. Maintaining social spending will be necessary if the country is to avoid popular protests. The continuous administrative changes in the Algerian National Oil Company (Sonatrach) have not made the management of the oil sector in the country easy. There is a lot of pressure on the institution and the government.

Bloomberg indicated that despite Algeria hinting at more foreign investment in the energy sector, it is still one of the most isolated economies in Africa, and the country's politicians are reluctant to allow international companies to enter Algeria and control its oil resources, explaining that The government is also concerned about what it considers to be exploiting the International Monetary Fund or global bond investors to obtain assets or funds that it could invest in the oil and gas fields.

El Harchaoui concludes, it is likely that foreign funds will enter Algeria at present, and this raises a question that the government considers painful about sovereignty, as it considers borrowing money or relinquishing property rights in investment operations as a concession of national sovereignty.