Algeria, rich in natural resources, is Africa’s top natural gas producer and the third-largest oil producer. The country has 159 trillion cubic feet (Tcf) of proven natural gas reserves, mostly in the Hassi R’Mel field, discovered in 1956.
It also holds 3.9 billion barrels of oil reserves in Hassi Messaoud. Algeria ranks third globally in recoverable shale gas, with an estimated 707 Tcf.
Other key resources include iron ore (2.5 billion tons in Gara Djebilet), mercury (25% of global production from Azzaba), and untapped gold near the Atlas Mountains.
However, infrastructure gaps and security risks in remote areas are challenges. Hydrocarbons account for over 95% of export earnings and 30% of the GDP.
Algeria’s Natural Resources And Their Locations
Here are natural resources that have been discovered in Algeria, including their locations:
| Natural Resources | Locations |
|---|---|
| Oil | Hassi Messaoud (northeastern Sahara), Zarzaïtine-Edjeleh (Libyan border), El-Borma (Tunisian border), Illizi Basin, Berkin Basins |
| Natural Gas | Hassi R'Mel (central Algeria), southern and southeastern regions |
| Shale Gas | Seven major basins, including Ghadames Basin |
| Iron Ore | Gara Djebilet (southwestern Algeria), Mecheri Abdelaziz (near Gara Djebilet), Boukhadra Mine, Ouenza Mine |
| Mercury | Azzaba region |
| Gold | Near the Atlas Mountains |
| Zinc and Lead | Kherzet Youcef Mine, Oued Amizour exploration area |
| Helium | Associated with natural gas fields |
| Solar Energy | Throughout the Sahara Desert and Mediterranean coastal regions |
| Hydropower | Northern parts of the country |
Algeria’s Natural Resource Discoveries
In 1956, the country discovered Hassi R’Mel, its largest natural gas field, holding about 85 trillion cubic feet of proven reserves. Two years later, Hassi Messaoud, the largest oil field, was found in northeastern Algeria.
With an estimated 3.9 billion barrels of recoverable oil, it became central to Algeria’s oil industry, producing high-quality crude with low sulfur content.
In 1964, Algeria became the first country in the world to produce liquefied natural gas (LNG) at the Arzew facility. This boosted its energy exports and positioned it as a pioneer in LNG technology.
The 1970s and 1980s saw further exploration in southern regions, including the Illizi and Berkine Basins, to expand the country’s hydrocarbon portfolio.
Algeria strengthened its energy exports in the 1980s and 1990s with key pipelines like Enrico Mattei (1983) and Pedro Duran Farell (1996), which transported natural gas to Europe.
In 2013, a study revealed that Algeria had 707 trillion cubic feet of recoverable shale gas, ranking third globally. However, development faced challenges like water shortages and environmental concerns.
Between 2016 and 2020, the Southwest Gas Project linked remote gas fields to Hassi R’Mel through new infrastructure. This helped counter production declines, meet domestic demand, and maintain export commitments. Algeria is still a major energy player today.
Viability Of Resource Exploitation In Algeria
Algeria has vast oil, gas, and mineral resources, but several challenges limit their full potential. Many key fields, like Hassi R’Mel and Hassi Messaoud, are deep in the Sahara, far from cities.
Poor infrastructure makes transport and extraction difficult. Shale gas, despite being abundant, needs costly upgrades in rigs and pipelines. The government has invested $2 billion to stabilize production, but more is needed.
Water scarcity is another issue. Fracking requires large amounts of water, yet over 95% of shale reserves are in arid regions. This causes conflicts with agriculture and has sparked protests since 2014.
Environmental concerns also slow Algeria’s change to renewable energy, with its transition plan struggling due to poor implementation and weak investor interest. Security risks add to the problem.
Militant attacks on facilities like In Amenas make operations risky. The government has increased security, but threats still scare off investors.
Institutional barriers also complicate matters. Strict hydrocarbon laws, like the 2006 tax on oil companies and Sonatrach’s mandatory 51% stake in projects, limit foreign interest. Corruption scandals have also damaged confidence. The economy faces pressure as well.
Aging oil and gas fields are producing less, and weak investment in exploration worsens the decline. Falling global oil prices since 2014 have also hit Algeria hard, cutting into export earnings, which contribute to 97% of its foreign revenue.
Export Potential Of Algeria’s Natural Resources
Algeria is a key player in global hydrocarbon exports. It also has untapped mineral resources and growing non-hydrocarbon sectors.
| Natural Resources | Export Value/Volume | Primary Market |
|---|---|---|
| Natural Gas | $26 billion (2023) | Europe (Spain, Italy) |
| Crude Oil | $23 billion (2021) | Global |
| Iron Ore | Untapped reserves (2.5 billion tons) | Global |
| Mercury | 25% of global consumption | Global |
| Gold | Largely untapped | N/A |
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1. Hydrocarbon Exports
Hydrocarbons dominate Algeria’s economy, accounting for over 92% of exports from 2018 to 2022. The sector contributes 19% to the GDP and 43% to budget revenues.
Algeria is Africa’s top natural gas producer. Record-high production in 2023 helped offset crude oil declines. It mainly exports liquefied natural gas to Europe, with Spain and Italy as major buyers. In 2023, hydrocarbon exports generated over $26 billion, down from $32.5 billion in 2022.
Oil production is around 900,000 barrels per day. By 2025, capacity is set to reach 1.155 million barrels per day. In 2021, Algeria’s crude oil and petroleum exports were valued at $23 billion.
Algeria has the third-largest recoverable shale gas reserves globally, estimated at 707 trillion cubic feet. Environmental and infrastructure challenges limit its use, but future export potential remains high.
2. Mineral Exports
Algeria’s mineral wealth adds to its export profile. The Gara Djebilet site holds 2.5 billion tons of iron ore, with plans for international trade.
Algeria produces 25% of the world’s mercury, mainly exported from Azzaba. Gold deposits near the Atlas Mountains are still largely untapped but could provide new export opportunities.
Economic Impact Of Algeria’s Natural Resources
Algeria’s economy strongly depends on hydrocarbons, which contribute to the country’s GDP, exports, and government revenues.
1. Contribution To GDP And Exports
Between 2016 and 2021, hydrocarbons contributed 19% of Algeria’s GDP. They generate over 92% of export revenues, with natural gas making up 60% of the total hydrocarbon output.
Even with declining oil prices in 2023, strong gas exports helped maintain a trade surplus. However, between 2018 and 2022, non-hydrocarbon sectors contributed 78% of the GDP.
2. Fiscal Impacts And Budget Revenues
Hydrocarbons provide 43% of government revenues. Algeria needs oil prices at $87.6 per barrel to balance its budget, but falling prices since 2022 have worsened fiscal deficits.
Inflation hit 9.7% in early 2023 but is expected to ease by 2025 with careful policies. To manage budget shortfalls, Algeria relies on foreign exchange reserves and dividends from Sonatrach, its state-owned energy giant.
Algeria is pushing for economic diversification to reduce its reliance on hydrocarbons. The government plans to expand solar energy by 2030. Non-energy exports rose from $2 billion in 2019 to $5 billion in 2023. Reforms, such as lifting the restrictive “51/49” rule for non-strategic sectors, aim to attract private investment.