Algeria Looks (again) To Shale

Frontier Energy Network Member, Francis Ghilès, is a specialist on security, energy, and political trends in North Africa and the Western Mediterranean, a senior associate research fellow at the Barcelona Centre for International Affairs (CIDOB) and a Visiting Fellow, King’s College, London.

As discussions on a major agreement with the US company Chevron continue, Algeria is expected to launch a new round of exploration tenders before the summer. Non-conventional areas (which hold reserves of shale gas and other liquid gas, essentially condensate) will account for a third of the new areas to be opened up for exploration.

Frontier Energy Network Member, Francis Ghilès.

Since the revision of the hydrocarbons law enacted in 2019, leading international companies which have signed exploration agreements with ALNAFT (Algeria's agency for the development of hydrocarbons) include ENI, ExxonMobil, TotalEnergies and Equinor. Chevron for its part is a major producer of shale in the US and Argentina and is expected to double its production of hydrocarbons from this source, to 1.5MMboe (million barrels oil equivalent) by 2030-2040. The US Energy Information Authority (EIA) estimates Algeria’s resources at 97,000bcm (British cubic metres) of natural gas and 121Gb (billion barrels) of liquids, the bulk of which are condensates. Technically recoverable resources would amount to 20,000bcm of gas and 5.7Gb of unconventional liquids, the third largest in the world after China and Argentina.

Algerian authorities have been very hesitant about giving the go-ahead for the development of shale resources but two factors have weighed on their decision: the outlook for long term hydrocarbon demand has been revised upward and thanks to Putin’s war in Ukraine, Europe is actively seeking alternative sources of both oil and gas to replace Russian supplies. While conventional areas are under-explored which is hardly surprising in this vast country, those holding shale are untouched. One year after the imposition of Western sanctions on Russian exports of gas, Algeria is one of many countries stepping into the breach.

But the pursuit of shale, given environmental concerns, comes with challenges. The authorities are mindful of the protests which, eight years ago, engulfed towns across Algeria’s vast Sahara desert region, in an unprecedented environmental protest movement. Towns from Tamanrasset near the frontier of Niger to Ghardaia, just south of the vast Hassi R’Mel gasfield, to Ouargla just west of the country’s oldest oil field, Hassi Messaoud, were the scene of often violent confrontations between demonstrators and the police.

Visits to the region by senior officials, including the prime minister Abdelmalek Sellal, the Director of National Security, General Abdelghani Hamel and the Minister of Energy, Yousef Yousfi, failed to sway the demonstrators; only the brutality of the gendarmerie and the harsh prison sentences handed down by the judiciary finally did the trick. As demonstrations reached the far away capital, Algiers, the then president Abdelaziz Bouteflika insisted that “all energy sources, whether conventional or not, are a gift of God and it is our duty to uses them for the development of the country, while strictly respecting the environment.”

Methods of extracting shale have improved a lot over the past decade but recourse to fracking and the injection of large volumes of sand mixed with water and chemicals deep underground at high pressure to fracture the rock and release trapped oil and gas carry costs. The large aquifer which lies under the Sahara and spreads across Algeria, Tunisia and Libya is vital for life in the region. Will the authorities be transparent in the management of these new risks? The question hangs in the air.

Those who live in the belt of Saharan towns are a volatile mix. They include former Touareg nomads, the proud kings of the desert of yesteryear who pine for their former lifestyle; former Black African slaves to whom independent Algeria gave education; and Arab tribes such as the Chambas, whose most famous scion, Moktar Ben Moktar was a hardline Islamist leader whose main claim to fame was the attack on the gas field of In Amenas in January 2013.

Many of those who work for the state oil and gas company come from the north of Algeria and are paid four to five times more than locally contracted workers who are employed in catering, transport and cleaning. Locals are unhappy because they allege that the oil and gas wealth extracted from their region has, since independence in 1962, funded economic development in the heavily populated northern coastal regions. Such grievances coupled with fears for their unique environment, fuels resentment.

Algeria stands well positioned to reinforce its importance as a secure provider of gas to Europe. The country is stepping up its deliveries of piped gas to Italy while continuing to pump gas through the pipeline which runs from Oran, in the west of the country to Almeria in Spain (not to mention Liquefied Natural Gas (LNG) ships.)  The agreement with Chevron, when it is signed, will mark the beginning of a new era in gas.  But it is one that comes with environmental and economic concerns that the government would do well to address.

This article first appeared in the Arab Digest.