Algeria: More Output Declines, More Protests

23 Aug 2019 Issue: 62 / 34 By: Aydin Calik

For the first time in 36 years Algeria is consuming over 50% of its gas output. As production from key fields continues to decline, less and less is available to export, squeezing the country’s already challenged finances. Reforms and investment are key but Algeria’s ongoing political paralysis looks no closer to an end.

Algeria’s consumption of gas is now well over 50% of output which itself tumbled by 8% year-on-year in the first half of 2019. With sales of oil and gas continuing to make up 93% of the country’s export revenues, policymakers face the daunting challenge of trying to do more with less. Nationwide protests demanding a political and economic revolution are now in their sixth month. The government is essentially paralyzed, and the ‘system’ protestors want to overthrow has dug in.

The state may be in limbo but its finances are in freefall. The $3.2bn trade deficit for the first half of the year brings the total deficits racked up since the 2014 oil price crash to a whopping $53.1bn. Highlighting just how dependent Algeria is on its energy sector is the fact that the 6.6% year-on-year fall in export revenues in the first half was exactly the same as the fall in the price of its key Sahara Blend crude (see table). (CONTINUED - 1329 WORDS)