Algeria Facing an Energy Deadlock: Lack of Strategy and Looming Crisis

Algeria, rich in natural resources, paradoxically finds itself in a perilous situation regarding energy policy. Despite possessing significant oil and gas reserves, the country struggles to capitalize on these assets due to a lack of long-term vision. This absence of strategy, combined with rigid state control, hampers sector development and jeopardizes the nation’s economic future.

The government of Abdelmadjid Tebboune continues a centralized management approach to the energy sector, refusing to open the market to foreign investors. This stance, aimed at preserving sovereignty over resources, has nevertheless led to technological stagnation and declining production. Sonatrach, the national hydrocarbons company, is now facing growing inefficiency and a loss of competitiveness in the global market.

Historically, Algerian energy policies have been driven by a desire to retain resources to ensure long-term self-sufficiency. However, in a global energy transition context, this strategy has proven counterproductive. The lack of investment in renewable energies, particularly green hydrogen and solar power, prevents the country from diversifying its energy mix and preparing for future challenges.

The resulting economic difficulties translate into declining revenues from hydrocarbons, which account for 90% of Algerian exports. This excessive dependence on hydrocarbons exposes the national economy to significant vulnerability amid international market fluctuations. The government’s failure to diversify revenue sources has led to an exodus of young talents seeking opportunities elsewhere.

Furthermore, Algeria lags in the exploitation of petroleum and gas derivatives. Unlike other exporting nations that have developed thriving petrochemical industries, Algeria struggles to capitalize on this financial resource. The lack of modern infrastructure and incentive policies hinders local hydrocarbon processing, thus limiting economic benefits for the country.

Given this situation, prospects remain bleak. The failure to establish a sovereign wealth fund financed by oil and gas revenues jeopardizes long-term economic stability. Additionally, domestic gas consumption continues to rise, threatening exports and exacerbating the budget deficit. Without a deep reform of its energy strategy, Algeria risks plunging into a prolonged economic crisis.

To avoid this scenario, the country must rethink its approach and integrate a genuine energy transition policy. Opening up to foreign investment, developing renewable energy sources, and better resource management are key solutions that would enable Algeria to break free from stagnation and secure a more prosperous future for its citizens.