What would Algeria do without its revenue from energy exports?
Rabat – Algerian authorities are sounding the alarm bell for the energy-rich nation, saying that the country may lose its gas exporter status as early as 2022.
Mustapha Guitouni, Algeria’s energy minister, made the announcement in a speech yesterday. Guitouni said that Algeria may not be able to meet the requirements of the international market if exportation continues at its current pace.
If nothing changes now, the country’s gas depletion ratio will reach “irreversible” proportions by 2022, the minister announced.
The minister, who said he is “worried about the future” of the country’s gas reserves, said that the worrying developments are mainly due to excessive national consumption. The country must strike a balance between moderately satisfying its internal energy needs and keeping its stature as a leading gas exporter, Guitouni offered.
“If we continue to consume [gas] as this rate, by 2022 we will not able to export to foreign markets; we will only have enough for our internal needs…. Algeria produces 130 billion cubic meters of gas and half is consumed on the national market,” he said.
Meanwhile, he added that of the total volume of gas that the country produces, “30 percent have to be kept in the wells to keep the system active.” In addition, the state “heavily subsidizes” gas consumed by Algerians, putting a great financial burden on the state.
And bearing in mind that gas consumption on the national level has risen by 10 percent annually in the past five years, the government is spending enormous sums to maintain the consumption level of Algerian households at its current level, Guitouni suggested.
Last year, Algeria produced 100 million cubic meters of gas on a daily basis. Nearly half of that number, 45 million, was used by Algerian households. The minister worried that consumption level is rising more rapidly than production level, and the government will not be able to sustain the current configuration of Algerian gas market.
But what will Algiers do to both satisfy the consumption demands of its population and maintain its exporter status?
The minister suggested one option is to introduce new tax measures on gas consumption.
The objective is to either curb national consumption level or decrease the state’s subsidy burden. But the measure will unlikely be fully implemented, given Algeria’s “rentier regime” whose survival mainly depends on state largesse and generous tax cuts.
Guitouni’s alarming predictions come a month after the publication of an equally grim study on Algeria’s economic prospects.
But the report’s predictions are even more sinister than the minister’s, as the findings indicated that deep economic crises would hit the North African country as early as 2019 if bold and radical changes are not implemented.