Algeria’s energy exports stagnate in 2015 as production falls

Algeria’s energy exports stagnated in 2015, held back by lower oil and gas production and a rise in domestic consumption, official data seen by Reuters on Monday showed.

The North African OPEC member is trying to increase oil and gas production which has stagnated for a decade. But many foreign oil companies are reluctant to invest because of Algeria’s contract terms and the drop in world oil prices.

Total energy sales reached 100 million tonnes of oil equivalent, unchanged from the previous year, while production declined 1.3 percent to 153 million tonnes of oil equivalent, the data from the energy ministry said.

Energy sales make up 60 percent of the state budget and account for 95 percent of Algeria’s total exports despite efforts to diversify the economy.

Crude oil and condensate production fell 2.8 percent to 58.9 million tonnes of oil equivalent, while natural gas output dropped 1 percent to 82.5 billion cubic metres, the data showed.

Liquefied natural gas (LNG) production declined 7.6 percent to 27 million cubic metres. Oil refined products output dropped 4.6 percent to 29.3 million tonnes, and petroleum liquefied gas output rose 2 percent to 9.6 million tonnes.

Algeria relies on earnings from the energy sector to pay for its imports and a wide range of subsidies, from food to housing. But public finances have been hit by low oil prices, forcing the government to freeze some infrastructure projects and raise the price of some subsidised products.

The government has also launched a campaign to reduce domestic energy consumption but demand is still on the rise.

Demand for refined products, mainly gasoline and diesel oil, rose 5.5 percent to 18.3 million tonnes, while natural gas consumption increased by 5 percent to 39.5 billion cubic metres.

Demand for electricity rose 8 percent last year.

Foreign exchange reserves fell $35 billion in 2015 to $143 billion, while its trade deficit reached $13.71 billion in 2015, reversing a $4.306 billion surplus in the previous year.

Algeria last year made 22 oil and gas discoveries, down from 32 in 2014, as it struggles to attract foreign investment to boost its energy sector.

State energy firm Sonatrach’s main partners BP and Norway’s Statoil last month said they would withdraw foreign workers from two gas plants in the southern gasfield belt after an attack by militants on one site.

In 2014, Algeria awarded only four of 31 oil and gas blocks on offer to foreign consortiums. It has postponed a round of bids for oil and gas exploration planned for 2015, but Sonatrach is in talks with foreign partners about how to improve their offers.