Algeria is experiencing a surge in interest from states keen to tap into the North African country’s energy reserves, as the global oil and gas crisis deepens amid Iran's continued closure of the Strait of Hormuz. Earlier this month, Amin Nasser, Saudi Aramco’s chief executive, warned that the depletion of onshore inventories was “rapidly accelerating,” as Gulf energy exports remain stuck behind the maritime blockade.
Along with Angola and Nigeria, Algeria is one of Africa’s largest producers of hydrocarbons, and its proximity to customers in Europe makes it of growing interest as importers fret over a prolonged supply crisis from countries such as Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, and Bahrain.
In April, Algeria launched its 2026 licensing round, offering seven exploration blocks located in Ouargla, Illizi, Touggourt and El Bayadh. They include both gas and oil prospects that officials claim contain hundreds of millions of barrels of oil and large volumes of natural gas. The aim is to boost output and attract foreign investment. Successful bidders will sign production-sharing or participation agreements with state energy firm Sonatrach early next year. Algeria’s Oil and Gas Minister Mohamed Arkab said the new bidding round “will help strengthen global energy security and reinforce Algeria’s role as a regional energy hub”.
Increasing demand
In early May, Algeria and Egypt signed two energy agreements aimed at strengthening supply security, with Egypt buying Algerian crude. Alongside that, a subsidiary of state-owned Egyptian General Petroleum Corporation has signed a $1bn contract to start developing the second phase of Algeria’s Hassi Bir Rekaiz oil field. Italian firm Arkad is a member of the consortium.
Demand is high, but Algeria has five refineries capable of processing around 30 million tonnes of crude every year. Currently, the top importers of Algerian oil are Ukraine (109,984 shipments), the European Union (71,144 shipments), and Lithuania (42,815 shipments). China is also a customer. In recent weeks, there have been several high-level visits, including Italian Prime Minister Giorgia Meloni, Spanish Foreign Minister José Manuel Albares, and Portuguese Foreign Minister Paulo Rangel. On the agenda has been Algerian energy supplies to Europe.
There are, however, questions about Algeria’s capacity to meet rising energy demand, and suggestions that this might be the time for the country to diversify its energy sources to include shale gas. The latest official data show that Algeria’s natural gas production rose by 1.5% year-on-year in February to 8.95 billion cubic metres, an increase of 128 million cubic metres compared with the same period last year.
Average daily output also climbed to 11.29 billion cubic feet, up from 11.12 billion cubic feet per day in February of the previous year. At the same time, domestic gas consumption increased by 4% to 5.17 billion cubic metres, driven mainly by the power generation sector, which alone consumed 1.64 billion cubic metres and depends almost entirely on gas. This prompted economists to sound the alarm, as rising domestic demand for gas adversely affects the country’s exports, particularly to southern Europe.
