Brussels, 06/06/2013 (Agence Europe) - As soon as a date is set for Energy Commissioner Günther Oettinger's visit to Algiers, the EU and Algeria will sign a memorandum of understanding on energy in order to establish “strategic” relations based on trade to the benefit of both parties. This will provide a guarantee of supply security in exchange for remunerative, stable and sustainable prices. According to convergent sources on both sides, the document is ready and has been fully accepted by Algeria and by the EU. The Energy Council in Luxembourg on 7 June is expected, except in the unlikely event of something going wrong, to give its final go-ahead. The item is to appear on the agenda of the Council when a brief round table debate should result in sealing the essence of the agreement.
On the card for years, the request to seal a commitment with such an agreement relating more to the principles and guidelines of this strategic cooperation was formalised in 2007 after simply marking time. It had been launched at the time when the EU was considerably concerned by its energy purchases and was signing deals with its main suppliers, Russia, the Gulf countries, Algeria and others. A network of gas pipelines in the north, south and east was to ensure that would be no cut in supplies by promoting supply diversity. The context has now changed not only economically and financially but also for energy (shale gas, shift away from long-term gas contracts as envisaged in Algiers, security, etc.) and remains uncertain. “It is a specific context marked by deep upheavals in the global energy map”, said Dr Abderrahmane Mebtoul, an academic who enjoys a reputation as analyst and chronicler in the Algerian media. Furthermore, the Algerians had already, on several occasions, shown themselves to be concerned at the shortcomings of a European energy policy that is still far from “common”. Algerian reticence has also delayed the setting in place of the memorandum of understanding, as it relates more to general reserve expressed in the country to anchor itself to Europe rather than directly to the content of the deal. The question of the double gas pricing practised by Algiers has given rise to much general discussion. Also, the new memorandum of understanding will bring up the question of disassociating gas and oil prices which has no longer been in force for at least three years and, Mebtoul said in an analysis for the daily Le Matin.dz, “What will happen to Algerian gas prices once medium- and long-term contracts have reached expiry, with Europe putting pressure on bringing prices down?” Italy, it is known, has called for downward renegotiation of the contracts for multiannual supply signed with the national hydrocarbons company, Sonatrach, and the announcement (or deferral?) of the GALSI gas pipeline project to pass through Sardinia (capacity: 8 billion cubic metres of gas for investment of between $2.5 and $4 billion initially).
The risk would, Mebtoul believes, be a loss of market shares in the face of fiercer international competition, while Algeria depends on the sale of its hydrocarbons which alone account for 98% of its exports. Hence the need for the country to link itself to Europe, its main client and main general supplier, through a “contract of confidence” providing supply security in the south-north direction and also permanent, stable, remunerative prices that ensure essential predictability in order to attract investors in energy and allow conventional gas reserves to be fully exploited as these, according to Sonatrach, make up 2,000 billion cubic metres, i.e. 1.3% of global reserves. Reform of the hydrocarbon laws is promised in order to attract investment.
The memorandum of understanding submitted for the Council's approval on Friday must seal this resolve to “act in common” not only in the gas sector but also in renewable energies, energy efficiency, on the basis of structured exchange of information, of market prospection analyses mainly through the participation of Algerian sector-specific bodies and institutions, and European joint research and innovation programmes, as well as with regard to civilian use of nuclear energy. An expert-level team will be formed within the existing joint institutions (Council and Association Committee). With this joint document, which is legally non-binding, Algeria plans to demonstrate that it will be a strategic and reliable partner for Europe. (FB/transl.jl)