Oil Crisis: Algeria “works out” three schemes in conjunction with 9 countries to recover $ 10 dollars

Algerian Energy diplomacy has embarked on the move again, after witnessing the worsening scenario of the scathing collapse in oil prices, standing at less than $ 50 a barrel since 28 October of last year, at a time when some stakeholders reaffirm the projected recurrence of this inevitable scenario, following the steady decline of oil prices on the global market, as evidenced by the latest collapse of the price of gas, a nightmare that has become exhausting burden for the Public Treasury of the Algerian state.

As a remedial action, Algeria has of late decided to engage in close political contacts with 9 countries for economic purposes, primarily with the foremost opponents in the oil market, namely Saudi Arabia and Iran, in addition to Libya, Russia, Nigeria, Venezuela, Kuwait, Qatar and Indonesia in a bid to breathe new life into the sagging oil prices.

In this line, oil expert Mr Manmah Bouziane, told “Echorouk” that the oil stock exchange had lost during the last 15 days nearly US $ 10 dollars, a figure that the Algerian government is seeking to retrieve on the occasion of the official meeting of the Organization of Petroleum Exporting Countries “OPEC” slated for the end of the month of November in Vienna (Austria), while not denying the adverse impact of the US presidential election and the victory of Donald Trump on all stock exchanges, including the oil market, especially in the light of the possibility of the latter to alter the deadlocked political situation now prevailing in the Middle East, saying that this expected change would inevitably shore up the oil stock exchange in the coming months.

He added that the “geostrategic transformation” in this part of the world is witnessing a difficult juncture, and has had a direct and nefarious impact on the price of the oil barrel which is hopefully expected to be given a fresh momentum by a final accord on a sustainable oil output cap by all the members of the Opec organization and with an active contribution to this effect from non-Opec countries notably from Russia.

It should be recalled that regarding Algeria’s energy assets, hydrocarbons wealth has underwritten Algeria’s growth for decades, allowing the country to accumulate 10 years. However, the dramatic drop in oil prices since mid-2014 has had an impact. Despite GDP growth of 4% in 2014, Algeria also experienced its first current account deficit since the late 1990s, equivalent to 18% of its GDP.

With hydrocarbons accounting for 95% of exports, nearly 30% of GDP and 60% of government revenues, Algeria has been exposed to fluctuations in global oil and gas prices. With oil falling from $ 115 to below $ 40 per barrel between June 2014 and December 2015, its earnings from hydrocarbons exports have dropped by around 50% in 2015, and according to the IMF its imports will be exports for the first time in 15 years.

The impact of this on the broader economy highlights the centrality of Algeria’s energy sector, and the country has begun to tap into its decline. In response to this situation the government has made aggressive plans to boost oil and natural gas production, including increasing onshore exploration, starting production on unconventional deposits and reforming the regulatory framework to improve investment attractiveness.