A net exporter of energy with considerable oil and gas resources, Algeria is now actively diversifying its economy to build a more resilient, productive, and modern state.

Algeria’s energy consumption significantly increased in the past two decades. It has the third-largest air-conditioning market on the continent, with Egypt and Nigeria leading. The air-conditioning market in the country has been growing and is set to increase by 7.9% every year during the forecast period of 2025- 2031.

Over 95% of Algeria’s power generation relies on natural gas. To address its heavy reliance on hydrocarbons and align with global decarbonization trends, the country is advancing its energy diversification strategy with a sharp focus on renewable energy and green hydrogen.

Through its ‘National Program for the Development of Renewable Energies’, the country aims to increase its renewable energy production by 30% till 2035, with a target of 15 GW. The government has further launched a program for the development of off-grid renewable energy, specifically aimed at remote areas without a national grid connection.

Algeria’s ‘National Hydrogen Strategy (2023–2040)’ was launched to drive the energy transition goals. The strategy outlines the creation of a comprehensive green hydrogen ecosystem, including the establishment of research, development, and training centers dedicated to hydrogen.

The scheme targets large-scale green hydrogen production in Algeria and its transport to Europe through the planned 'SoutH2 Corridor' project. The planned 3,300 km pipeline is designed to deliver 4 million tons of green hydrogen annually connecting North Africa with Italy, Austria, and Germany.

Though, Algeria's energy landscape is evolving, its economy heavily relies on fossil fuels, which account for more than half of its budgetary revenues and for almost its total export earnings.

Algeria is the second-largest liquid fuels producer and the largest natural gas producer in Africa, based on EIA’s estimated 2024 production levels. The country aims to unlock new oil and gas potential, investing $50 billion in oil and gas projects through 2027.

The latest oil and gas bid round represented the country’s anticipation to build on its success to entice further investment in Algeria’s upstream market. The country is also exploring unconventional resources like shale gas to maintain its role as a key energy supplier. The production will not only bring benefits to the local market, but support global demand through exports. With Algeria seeking to increase annual gas production to 200 billion cubic meters over the next five years, the country is expected to play a much larger role in supporting European demand.

The country is set to invest $7bn into new petrochemical and refining projects with the aim of increasing value and stimulating economic growth by developing advanced manufacturing techniques. The plan aims to increase the percentage of processed hydrocarbons from 32% currently to 50% by 2027.

Algeria is expected to offer substantial potential for future growth. Multiple new investment opportunities are being created in the country for developing hydrocarbon resources and renewable energy installations.

Editor