In the energy war being waged parallel to the conflict in Ukraine, Westerners and Russians are multiplying measures and countermeasures, such as the gas price cap on which Algeria has just taken a stand.
The European Union and the G7 have responded to Moscow’s threat to suspend gas supplies by capping Russian oil prices. A similar measure has been announced for gas imported by European Union countries.
| Also read: Gas market: Embassies from Algeria to Europe
Algeria, a major gas player, has just announced its position on the issue of capping energy prices.
The Western measure went into effect on December 5. It is associated with a partial embargo on imports of Russian oil into the territory of the European Union.
While the price of a barrel was around $85, the price of Russian oil is around $60. Analysts are divided on the effectiveness and consequences of the measure.
Prices quickly fell to $75 before rising slightly, but analysts fear a significant rise due to additional costs of delivering Russian supplies to more distant destinations and a possible drop in Russian production, which could mean missing the spare part and western technical support.
Many believe it will be importers in the South who will feel the surge the most, as the West has the means to withstand high prices.
In the case of gas, the European Union decided on Monday to limit the price for imported supplies to EUR 180 per MWh. Russia called the measure “unacceptable”.
Algeria is a historic partner of Russia and a reliable supplier of energy, especially gas, to Europe. Your position on this issue has been eagerly awaited and has just been announced.
Energy and Mines Minister Mohamed Arkab said on Tuesday December 20 that Algeria does not support the idea of capping natural gas prices, which he says could directly affect investments.
Gas: Algeria evokes a ‘unilateral’ decision
“Algeria does not support the idea of a price cap (…) Energy markets must remain free in order to be able to continue upstream achievements and investments,” Arkab told the press on the sidelines of an Algerian-German Energy Day. held in Algiers.
Following the rise in gas prices since the outbreak of the war in Ukraine, Algeria has imposed revisions of long-term contracts on its main customers to bring them into line with market prices. Mr. Arkab highlighted this long-term price agreement.
“Algeria is seen as a reliable and secure supplier for Europe and we are in agreement with our European partners on the long-term prices,” he said.
The Algerian minister, in his speech at the Algerian-German Day’s work, described Europe’s decision as “unilateral” and believed it could affect the oil and gas industry as well as other changes in European legislation, such as those introduced in Regarding CO2 neutrality.
Algeria has suffered from divestments in its energy sector for many years. To attract more foreign direct investment, it passed a new hydrocarbons law, and current global tensions are seen by observers as a boon to persuade Western companies to make the necessary investments to increase production.
In recent months, Algeria has been under pressure to increase gas supplies to Europe, which wants to rid itself of Russian hydrocarbons.
Similar agreements have been signed with Italy, but Algeria’s current production capacities do not cover much of Europe’s additional demand.
This requires more investment. The same Mohamed Arkab made this clear in an interview with the German newspaper Der Spiegel last June. “We hope that the Europeans will not change course and will not leave us alone with the investments,” said the Algerian minister.
Algeria wants the energy issue to be treated with an economic approach, far removed from politics.
With the opening of the national production fair on Tuesday, December 13th, the President of the Republic, Abdelmadjid Tebboune, published several messages on the geostrategy of oil and gas.
In particular, he expressed a desire to boost Algeria’s gas exports to 100 billion cubic meters by next year, almost double the current levels, and said that energy issues should not be politicized.