Algeria is redefining its energy policy in response to evolving dynamics in the European energy market and mounting climate risks. With hydrocarbon revenues forming the bedrock of its economy and a growing international focus on renewable energy, Algeria seeks to reinforce its strategic presence while diversifying its energy portfolio. According to a report by Solovieva Zoya A., PhD (Economics) and researcher at the Institute of Oriental Studies of the Russian Academy of Sciences, published in Vostochnaya Analitika, the country is leveraging its substantial natural gas reserves, along with its emerging ambitions in hydrogen and solar energy, to reposition itself within a rapidly evolving global energy landscape.
Strategic Objectives and Policy Foundations
The foundation of Algeria’s energy strategy was laid out by senior government officials, including Minister of Energy and Mines Mohamed Arkab. The approach prioritizes a gradual and responsible energy transition, centering on diversification of the energy mix with emphasis on cleaner and more affordable sources. This includes enhanced energy efficiency, the promotion of renewables, and better consumption control to preserve natural resources for future generations.
In parallel, the Ministry of Environment emphasized Algeria’s strategic commitment to achieving 30% renewable energy in its national mix by 2035. Under the Paris Agreement, the country also committed to reducing greenhouse gas emissions by 7% by 2030, potentially increasing this figure to 22% with international financial support.
Hydrocarbon Sector: Still a Pillar
Despite transition goals, hydrocarbons remain essential to Algeria’s economic and energy structures. From 2000 to 2022, fossil fuels consistently made up over 99% of total production, with natural gas comprising around 65% of primary energy use. In 2023, Algeria ranked 16th globally in proven oil reserves and third in untapped natural gas resources. Two-thirds of the country’s territory remains unexplored, suggesting significant potential for further development.
The national oil and gas company Sonatrach leads the expansion of exploration and production. In 2023 alone, 14 new gas fields were launched, and plans for 2024–2028 include $47 billion in hydrocarbon investment, $36 billion of which will go to primary production. Algeria also continues to open its energy sector to foreign investment under a new hydrocarbons law that simplifies tax and legal frameworks for international partners.
European Energy Integration
Europe is Algeria’s primary energy export market, accounting for 96% of liquefied natural gas (LNG) exports and over 85% of pipeline gas deliveries. This alignment is driven by geographic proximity and existing infrastructure, including the Transmed, Medgaz, and Maghreb-Europe pipelines. These routes connect Algeria with Italy, Spain, and beyond.
Algeria’s share in the European gas import market rose significantly in the context of geopolitical shifts and the European Union’s aim to phase out Russian gas by 2027. In Q1 2024, Algeria accounted for 19.7% of Europe’s pipeline gas imports, just behind Norway and ahead of Russia.
However, analysts warn that Algerian exports may decline by up to 4% in 2024 due to falling European demand and maintenance disruptions. Despite this, projections indicate that Algeria could increase its gas exports to over 100 billion cubic meters annually by 2030 if investments in field development and transport infrastructure continue as planned.
Green Hydrogen: A Strategic Priority
A cornerstone of Algeria’s long-term strategy is the development of green and blue hydrogen. A national roadmap unveiled in early 2024 outlines plans to begin exporting clean hydrogen to Europe by 2030, with targets to produce at least 10 million tonnes annually by 2050. Around 75% of this volume is expected to be exported.
Algeria aims to use its natural gas to produce “blue” hydrogen, while gradually expanding “green” hydrogen production via electrolysis using renewable energy. Germany has already committed €20 million to fund a pilot green hydrogen plant, while discussions continue on upgrading existing pipelines for future hydrogen exports.
Renewable Energy Development
The development of solar energy plays a key role in Algeria’s climate and energy policy. Although the country adopted a national renewables program as early as 2011, progress has been limited. By 2022, the installed renewable energy capacity was just under 590 MW, representing only 0.84% of total electricity production.
In 2021, Algeria created the joint venture SHAEMS to implement large-scale solar initiatives. The “Solar 1000+” project aimed to build 1000 MW of capacity across five sites, with 40–50% local content. Delays in tendering and project execution, however, reflect broader financial and logistical constraints.
Future solar projects, including the planned 2000 MW “Sonelgaz-EZ” initiative and a 4000 MW solar program in southern Algeria, are viewed as ambitious but face significant implementation hurdles due to funding, regulatory fragmentation, and inadequate infrastructure.
Climate Policy and Strategic Outlook
In mid-2024, Algeria introduced a new national climate strategy. Led by Sonatrach’s director for sustainability, it focuses on emissions reduction, renewable integration, and clean technology development. A key component is natural gas, which remains central to Algeria’s energy security and international role.
Environmental measures include afforestation programs and a reaffirmed commitment to reduce the carbon intensity of energy exports. Strategic partnerships with European countries, China, and the United States further signal Algeria’s commitment to expand its energy influence while navigating the green transition.
Strategic Realignment in a Shifting Energy Landscape
Algeria’s energy strategy reflects a pragmatic approach to global energy transitions. While hydrocarbons continue to dominate its economy, the country is increasingly investing in hydrogen and solar energy to adapt to the evolving European market. The energy transition is framed more as a complement to Algeria’s core fossil fuel exports than a replacement, with clean technologies positioned to reinforce its export potential and geopolitical relevance.
Geopolitical developments and Europe’s diversification away from Russian energy have created an opportunity for Algeria to expand its role as a key supplier. As global and regional energy demands shift, Algeria’s strategy of incremental diversification — built on natural gas, foreign partnerships, and emerging renewables — is likely to shape its future as a prominent player in the international energy arena.
