Algiers, July 10, 2023 – During a meeting held on July 9 in Algiers between Patrick Pouyanné, Chairman and CEO of TotalEnergies, and Toufik Hakkar, Chief Executive Officer of Sonatrach, several agreements were signed to strengthen the cooperation between the two companies in the production of natural gas in Algeria, the delivery of liquefied natural gas (LNG) to Europe, as well as the development of renewables in Algeria.
Under a first agreement, which remains subject to the approval of the Algerian authorities, Sonatrach and TotalEnergies have agreed to convert the production contracts for the Tin Fouyé Tabankort II (TFTII) and Tin Fouyé Tabankort Sud (TFT sud) fields in southern Algeria (Sonatrach 51%, TotalEnergies 49%) to the framework established by the new Algerian Petroleum Law enacted on December 11, 2019.
In this context, Sonatrach and TotalEnergies will pursue the investment program already launched to increase the gas production of TFTII and TFT South, which includes the upgrade of existing facilities and the drilling of additional wells. The combined production of the two fields is expected to exceed 100,000 boe per day by 2026, versus a level of around 60,000 boe per day in 2022, thus increasing the potential export of Algerian gas to the European market.
Under a second agreement, Sonatrach and TotalEnergies have extended for the year 2024 deliveries by Sonatrach of 2 million tons per year of LNG to TotalEnergies at the port of Fos-Cavaou, near Marseille, France. These deliveries of Algerian liquefied natural gas contribute directly to energy security in France and Europe.
3. Energy transition: developing renewables in Algeria
Under a third agreement, TotalEnergies and Sonatrach will cooperate to develop renewable energy projects in Algeria, specifically:
"I am delighted to sign these new agreements with our strategic partner Sonatrach. They testify to TotalEnergies'' close ties to Algeria, whose resources contribute directly to Europe''s energy supply and security. We are also delighted to be able to support Algeria in its energy transition and in the development of its huge potential for renewable energy production," said Patrick Pouyanné, Chairman and CEO of TotalEnergies.
About TotalEnergiesTotalEnergies is a global multi-energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. Our more than 100,000 employees are committed to energy that is ever more affordable, cleaner, more reliable and accessible to as many people as possible. Active in nearly 130 countries, TotalEnergies puts sustainable development in all its dimensions at the heart of its projects and operations to contribute to the well-being of people.
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The EU-Algeria energy forum: a new narrative in the making or just another missed opportunity?
The Algeria-EU business forum on energy cooperation held in Algiers last 23 and 24 May has for the first time put together Algerian and European industry representatives and public officials, including regulatory authorities. The forum aimed to foster European investments in the Algerian energy sector, from hydrocarbons to electricity, energy efficiency and renewables, identifying the obstacles hindering the improvement of the sector''s regulatory environment. The initiative is framed in theEU-Algeria Strategic Energy Partnership, which is intended to reinforce energy cooperation between Algeria and the EU.
It has been argued that social, political and economic balances are shifting in the Mediterranean, and thatEurope should offer a more credible narrative for regional energy cooperationto match Algerian preferences.1The possibility of oil prices being ''lower-for-longer'' is building up an internal consensus on the need to modernise theAlgerian economy, and shifting political economy balances may further give rise to the conditions needed for genuine energy reform. In order to deliver additional incentives, a greater European engagement has been proposed to help the Algerian economy in different ways, from diversifying its productive base, renegotiating the EU-Algeria Free Trade Area, cooperating in renewable energy and finding more paths to politicalrapprochement.2
"The most effective incentive the EU could offer would be an attractive model to integrate the country into the European energy market"
If the Algerian government''s propensity to reform is on the rise, the most effective incentive the EU could offer would be an attractive model to integrate the country into the European energy market, addressing its demand-security preferences. On the Algerian side it would be important not to continue missing the opportunity to project the country as a significant provider of energy security to an EU willing to diversify its gas imports away from Russia.3For instance, the EU could consider offering Algeria better prospects of accessing the EU''s gas market in exchange for good energy governance to provide a more attractive framework for energy reform.4
If Algeria is unable to reform its energy sector, and the EU is unable to offer sufficient incentives to support the hesitant government in doing so, it would be a serious failure for both sides. For Algeria it would mean losing the opportunity to capitalise on its vast energy resources, modernising its economy and pursuing an economically sustainable development path. For Europe it would mean turning Algeria from being part of the solution to the EU''s energy challenges into its next energy security problem and, more critically,it would further destabilise its already troubled Southern neighbourhood.
"The Forum was mainly perceived in Algeria as a renewed episode of Europe applying pressure to open up its energy sector and to renegotiate the long-term contracts that are set to expire through 2021"
It is true thatthere was a concession to more constructive paths to energy cooperation, such asa €10 million technical assistance loanto support Algerian renewables and energy efficiency programmes.6Some participants found the dialogue concerning renewables and energy efficiency far more constructive than the positions expressed on the oil and gas sector. This may sound paradoxical because Algeria has the lowest rate of renewable achievability in North Africa, with installed capacity lagging behind most other countries with regard to its own targets.7
1G. Escribano (2015), ''Towards a Mediterranean Energy Community: No Roadmap Without a Narrative'', in Rubino, Otzurk, Lenzi & Costa (Eds.),Regulation and Investments in Energy Markets. Solutions for the Mediterranean, Academic Press, Elsevier.
2See for instance the op-ed by Javier Solana, ''Peril and Promise in Algeria'', Project Syndicate, 25/II/2016; G. Joffé (2015), ''The Outlook for Algeria'', IAI Working Papers 15/38; A. Lebovich (2016), ''Algeria: The Stirrings of Change?", in A. Dworkin (Ed.),Five Years On: A New European Agenda For North Africa, ECFR, February, p. 39-51; and S. Tagliapietra & G. Zachmann, ''Reinvigorating EU-Algeria Energy Cooperation'', Bruegel Blog,, 10/VI/2015.
3G. Escribano, ''A political economy of low oil prices in Algeria", Columbia Center on Global Energy Policy Working Paper, forthcoming.
4G. Escribano (2015),op. cit.
5Reuters, ''European Union and energy firms court Algerian gas cooperation'', 24/V/2016.
6Forum d''affaire UE-Algérie sur l''Energie, Communiqué de presse conjoint, Algiers, 24/V/2016.
7B. Brand (2015), ''The Renewable Energy Targets of the MENA Countries: Objectives, Achievability, and Relevance for the Mediterranean Energy Collaboration'', in Rubinoet al., op. cit.
8El Watan, "Marché Européen du gaz: L''Algérie mise en difficulté", 24/V/2016.
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