Algeria: Africa’s gas superpower

This article is a follow-up on one from three weeks ago titled, “The Decade of Gas Initiative: A Review,” and is the second of a handful of articles I will be doing on the gas sector, which is crucial as Nigeria’s chosen transition energy and for Nigeria’s energy security and revenue objectives.  “The Decade of Gas Initiative”, as laudable as it is, does not adopt an express strategic perspective by juxtaposing Nigeria’s natural gas development programme against the leading gas producer in Africa. Algeria’s ranking as the leading African natural gas producer and exporter is overwhelming, and its ambition to double its natural gas production in the next five years will make its position unassailable by its African peers for a relatively long period of time. Algeria has completely bridged the gap between its global ranking as the country with the 11th largest proven gas reserves and its position as the 10th largest natural gas producer in the world, unlike Nigeria. There is, therefore, a great deal Nigeria can learn from Algeria’s remarkable gas development strides over the past six decades. This is the primary motivation for writing this article.

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Algeria has the second-largest proven gas reserves in Africa and the eleventh globally (4,504 trillion cubic metres) after Nigeria (5,976 trillion cubic metres, the largest in Africa and ninth globally). Algeria also has the third-largest untapped global resources of shale gas, of 3,419 trillion cubic feet (tcf), 707 tcf of which are recoverable with current technology, and 121 billion barrels of condensed shale oil, of which 5.7 billion barrels are recoverable.  Algeria ranks as the largest natural gas producer in Africa and the tenth in the world, while Nigeria is sixteenth globally. According to the 2025 Annual Statistical Bulletin of the Gas Exporting Countries Forum (GECF), Algeria produced 185 billion cubic metres (bcm) or 6.53 trillion cubic feet (tcf) of gas in 2024, which is more than the gas produced by the other four major African natural gas-producing countries of Nigeria, Egypt, Libya and Mozambique. (It should, however, be noted that the absolute figures produced in the GCEF 2025 statistics, as 2024 gas production data for its member countries, are on average double the figures presented in the 2023 International Energy Agency (IEA) report. For example, where GCEF assigned 185 bcm gas production to Algeria in 2024, IEA assigned a more conservative 2023 figure of about 99 bcm. This also applies to all other member countries. That, however, does not change the ranking of Algeria as the preeminent gas producer in Africa.

More than half of the gas produced in Algeria is exported, while the balance is consumed domestically. Growing local consumption has led to a decrease in the volume available for exports. Of the volume consumed domestically, 42 percent is used for power generation, 24 percent for residential buildings and services, 19 percent by industry and 14 percent for operations in the hydrocarbon sector. Gas accounts for 97-99 percent of Algeria’s electricity generation.

“Algeria’s proximity to Europe, with its Mediterranean coastline, gives it a geographical advantage as a gas exporter to Europe. Algeria has historically been the fourth major gas exporter to the European Union, behind Norway, the United States and Russia, but the geopolitical consequences of the Ukraine war are changing all that.”

Algeria became the first liquefied natural gas (LNG) exporter in the world in 1964 when it delivered its first cargo to the United Kingdom. It currently has three operational LNG plants and has the largest gas liquefaction capacity in Africa, although Nigeria is the leading LNG exporter in Africa. Algeria’s total gas exports in 2024 were about 49 billion cubic feet (bcf), making it the largest gas exporter on the African continent. But LNG accounted for only eight per cent of its gas export, while the bulk was exported by pipelines to Europe, which is Algeria’s primary gas export market. Algeria uses two active pipelines to export gas to Europe, namely the TransMed (Enrico Mattel) to Italy through Tunisia and the Medgaz Pipeline, which supplies gas directly to Spain. A third pipeline, the Maghreb-Europe Gas Pipeline (MEG) (Pedro Duran Farrel), which took gas through Morocco to Spain and Portugal, has been inactive since 2021 due to a diplomatic faceoff between Algeria and Morocco. A fourth pipeline, the GALSI pipeline, is also not operable due to technical, economic and political challenges. Before the Russia-Ukraine war, Algeria supplied about 11.6-12.6 percent of Europe’s gas imports, but that has increased to 21.6 percent in late 2024, making Algeria the leading gas exporter to Europe in October 2024, ahead of Russia. Algeria’s proximity to Europe, with its Mediterranean coastline, gives it a geographical advantage as a gas exporter to Europe. Algeria has historically been the fourth major gas exporter to the European Union, behind Norway, the United States and Russia, but the geopolitical consequences of the Ukraine war are changing all that.

However, Algeria’s gas sector has been in decline since 2017, when its total natural gas production peaked at 262 billion cubic metres, according to GCEF statistics. This is, however, a common trend among seven out of the twelve members of the Gas Exporting Countries Forum (GECF). The Algerian oil and gas sector is heavily dominated by Sonatrach, the state-owned oil and gas behemoth, which is the largest company in Africa by revenue. Algeria’s nationalistic investment environment acts as a disincentive to foreign investment. Over-dependence on gas-fired electricity (97%), lack of progress on power sector reforms and independent power production frameworks create rigidities and exposure to climate change vulnerabilities. Despite ambitious renewable energy and hydrogen programmes, the vigorous pursuit by the European Union – Algeria’s major gas export market – of a reduction in gas consumption as part of its decarbonisation programme creates medium- to long-term challenges for the Algerian energy sector, which need to be addressed by flexible government policy. Heavy subsidies on fuel and electricity only further constrain fiscal viability options.

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The foregoing aside, following years of decline in exploration and production, Algeria has embarked on an ambitious plan to invest $60 billion with international energy partners like ExxonMobil and Eni in the next five years up till 2030 as a result of the huge opportunity created by Europe’s plan to diversify its energy supply sources away from Russia – fallout of the ongoing war in Ukraine. The foreign capital component of the ambitious investment plan was not made known, but it is clear that the state-owned oil and gas company, Sonatrach, will most likely provide the bulk of the money. About 80 percent of the investment will go into hydrocarbon exploration and production, according to Energy and Mines Minister Mohamed Arkab, with plans to double Algeria’s gas production and reduce gas flaring to below 1 percent by 2030. The plan includes investing in refining and petrochemicals and an additional 3,200 megawatts (MW) of renewable energy. There will also be new licensing rounds, including gas-focused blocks that will attract international oil companies like ExxonMobil and Chevron to shale gas exploration. A notable development will be the construction of two new pipelines using “100 per cent local capacity”.

The foregoing has been an attempt to showcase the remarkable milestones Algeria has achieved over the years as Africa’s preeminent gas producer and as one of the global gas production powerhouses and a major gas supplier to the European Union, especially its Mediterranean neighbours of Italy, Spain and Portugal. While Algeria’s and Nigeria’s geographical and geopolitical situations, internal political dynamics, public policy and enabling investment environments may be remarkably different, what is most important is a strategic vision that captures the nation’s economic imperatives in the gas sector backed by a vigorous and unyielding commitment to produce desirable results.

Mr Igbinoba is Team Lead/CEO at ProServe Options Consulting, Lagos.

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