Algeria is open for business.
At least according to its president, Abdelmadjid Tebboune, who was elected in 2019 and hopes to win a second term later this year. To bolster his argument, Tebboune points to a 2019 hydrocarbons law and 2022 investment law that expand investment incentives.
But uptake has yet to meet Tebboune’s ambitions, in part because Algeria’s business climate is widely understood as opaque and inscrutable. While that reputation is largely deserved, some firms have succeeded in navigating the country – and turned substantial profits in the process. And new opportunities are luring many investors to take another look.
The energy sector illustrates this trend well.
Officials at Algeria’s Ministry of Energy & Mines recently revealed that oil and gas production had risen 1% last year, and projected similar growth through 2030. Those numbers are solid but hardly inspiring, which is exactly why they are opening new doors.
Algeria’s energy sector may be the country’s lifeline, but it is struggling to keep up. For the past two decades, domestic energy consumption has grown by nearly 4% annually, far surpassing production growth and eating into the energy sales that underwrite the country’s economy.
This explains why Tebboune and Energy Minister Mohamed Arkab are so eager for foreign investment: To remain an energy leader, Algeria must branch out beyond traditional oil and gas.
According to Arkab, national oil company Sonatrach is now in advanced talks with US majors about tapping Algeria’s shale gas reserves, which are believed to be some of the world’s largest. It’s also expanding its international operations, and may soon take another look at offshore possibilities.
At the same time, state electric utility Sonelgaz is leading the effort to expand Algeria’s renewable energy capacity 30-fold in the next decade. Last year, it held tenders for 3GW of solar installations, with plans to do the same again in 2024. The energy ministry just published its first hydrogen roadmap and is preparing pilot projects to test green hydrogen production and transport, aiming to serve the nearby European market someday soon.
Given all this, 2024 looks to be a crossroads for Algeria’s energy industry – with ample opportunities for enterprising foreign investors. Other industries from mining to manufacturing and agriculture to pharmaceuticals are also poised for expansion.
But there is truth to the rumors around Algeria’s business climate, which means not all foreign investors will succeed. An examination of recent case studies, however, reveals a great deal about the best ways to approach partnerships in Algeria. Those lessons are the subject of our regular Algeria Country Insights publications. They are complemented by Engage Interactive, our stakeholder mapping platform that provides investors with the keys to understanding evolving power dynamics in Algeria.
Upcoming Webinar – Navigating the Black Box: Keys to Successful Investing in Algeria
22 February 2024 | 10:00-11:00 AM EST | Online Webinar
Join our Head of Research for MENA Michael Knights and Andrew Farrand, Senior Advisor for Algeria, for this exclusive webinar on the keys to success for foreign investors. Register below.
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