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President Sarkozy's visit to Algeria
The French President has just concluded an official State visit to Algeria. Mr Nicolas Sarkozy was in Algiers from the 3rd to the 5th of December, during a trip marked by the signing of contracts worth 4.3 Billion euros as well as Sarkozy’s condemnation of French colonial rule as “profoundly unjust and contrary to the three founding words of our Republic, freedom, equality and brotherhood; not quite the official apology the Algerians were hoping for yet “a step in the good direction” for Noureddine Yazid Zerhouni, Algeria’s Interior Minister.
This was Mr Sarkozy’s second State Visit to Algeria since having taken office in May 2007. He had already visited the country on the 10th of July 2007 where he exposed his Mediterranean Union project. The project was officially unveiled during a State Visit to Morocco in late October and further detailed during Euromed’s Ministerial Conference that took place on the 6th of November in Lisbon. One could expect that Mr Sarkozy’s aim in visiting Algeria was to promote this Union, especially as during that time, his project was being adopted by the French Commission on Foreign Affairs. If that was the case it went by unnoticed, for the political agenda was dominated entirely by energy concerns.
Energy supply has been a constant headache for Europe who is poorly endowed with resources to satisfy its large population. Yet the European Union as a whole does not have a coherent and efficient energy policy. Individual countries are left to fend for themselves. France imports 95% of the natural gas it consumes, of which 25% is provided by Gazprom the Russian state owned company that also supplies most of Europe. The Russians are known to have used Gazprom for political purposes, such as in Ukraine in 2005; and France is keen on reducing its dependency on Russian gas. But at the same time the French are demanding more of it. The best alternative would be to increase natural gas imports from Algeria.
Algeria is a major oil and gas producer, 98% of its export revenues come from hydrocarbons. It holds the eighth biggest gas reserves and is currently the fourth largest exporter of Liquefied Natural Gas (LNG) in the world as well as the fourteenth biggest oil producer. Algeria already exports 8% of its oil and 12% of its gas to France. It would be cheaper to import LNG from Algeria then from Qatar or Malaysia, the other big exporters. Via gas pipeline, France is already connected to the Algerian network thanks to a pipeline that passes through Spain which will be operational in France in 2009 and another one already functioning that passes via Sicily into Italy and then France. The other option worth considering would be the pipeline project that would bring gas and oil from the Caspian Sea to Eastern Europe, but that will not happen any time soon. And ever since the Algerian Government adopted a hydrocarbon reform bill in March 2005, foreign investment has flourished in the energy sector.
Yet there is a problem, France has but a small share of the Algerian energy market which is dominated by the Americans, the Spaniards, the Italians and the Chinese. Of the 25 biggest foreign partnerships in Algeria, only two are French. The Americans, Spaniards and Italians import more oil and gas then the French, who otherwise are the Algerians’ biggest trading partner. France needs to gain greater access to this energy market and for that they must offer what the Algerians want, a way to deal with the post oil and gas era that will eventually come. In other words, France must offer civilian nuclear technology to Algeria. But the latter is already talking of cooperation in nuclear matters with the Chinese and the Russians. They signed a draft agreement with the US in June 2007. The very next day, France started negotiating with Algeria on a generous nuclear deal and finally an agreement has been signed on the 4th of December. It provides Algeria with nuclear fundamental and applied research, the education of its technicians, the production of electricity in nuclear power stations, and the development of nuclear energy applied to agriculture, biology and water resources. France does have something to gain from this deal; it can access Algerian uranium deposits.
On the same day, France signed deals worth 4.3 Billion euros. Firstly, Gaz de France signed a contract with its Algerian counterpart, the state owned Sonatrach, to prolong its LNG supplies till 2019 which is worth 2.5 Billion euros a year. Secondly, Total signed a deal with Sonatrach to invest one billion euros in a petrochemical complex at Arzew. It is a port that handles 40% of Algeria’s total hydrocarbon exports including all of its LNG and oil condensate exports. Algeria had an ambitious plan to expand Arzew by constructing a petrochemical complex, a condensate refinery a desalinisation plant. Well that plan has just begun with French help. Thirdly the group Alstom agreed to build a combined cycle gas power station worth 800 Million euros. Other transport and audiovisual related agreements were signed as well.
All in all, President Sarkozy’s visit was quite productive, allowing France to implant itself more deeply in the growing Algerian energy market. The ties between Algeria and France are growing stronger.
Ines Ward
Research Assistant trainee
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- Origin CERMAM
- http://www.cermam.org/en/logs/zoom/president_sarkozys_visit_to_al/
- Publié le 7 December 2007