Algeria, Russia, and Europe

In light of Jean-François Cirelli’s statements on Sonatrach’s importance to the European gas market, and Angela Merkel’s visit to Algeria, Jeff VAil writes the following:

Russia hopes to leverage increased influence with Algeria to exert greater influence in global natural gas markets. Because Algeria is one of Western Europe’s few true alternatives to Russian natural gas supplies, especially given the prospect of sharp increases in Algerian natural gas exports, Algeria represents either a threat to Russian natural gas leverage, or a great enhancement of that leverage by entering a defacto gas cartel. At a minimum, we know that Russia and Algeria are actively engaged in talks on this topic. Also, a recent offer by Gazprom to buy all of Libya’s additional oil and gas production supports this suggestions that Russia hopes to control Europe’s alternative sources of natural gas.

[Via alle]

3 thoughts on “Algeria, Russia, and Europe

  1. I doubt this will gain much traction. Sonatrach doesn’t need Gazprom. Unlike Russia, Algeria’s gas exports are not locked up solely in pipelines. Sonatrach already has greater latitude to divert its LNG cargoes in order to capture the highest price, and Energy Minister Chekib Khelil has made a lot of statements recently about Algeria’s intention to stop using long-term export contracts for its gas. With gas prices approaching oil parity in Asia, Algeria – like other gas exporters – is seeking more flexibility and more options to shift LNG cargoes. Sonatrach and Gazprom also signed an MOU for cooperation on gas projects (upstream and asset swaps) that expired late last year with no real results. European concerns about energy supplies and Gazprom’s power notwithstanding, Algeria’s strategic goals aren’t so neatly linked to Russia or Gazprom.

  2. I am inclined to agree. Algeria has been moving close to western European states, almost in spite of Gazprom, as well. It doesn’t mean the Russians won’t keep trying.

  3. A good quote, as I was researching this topic. A very complex situation. Further complicated by the whole Georgia fiasco, which occurred after you wrote this entry. As well as Rice’s “historic visit” to Libya.

    It is a delicate balancing act by Libya, as they wrench out the best deals from both sides realizing the strategic importance of their supplies.

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