Independent of Moscow (I)

Energy Partnership

The recently concluded German-Algerian Energy Partnership is a component of Germany's efforts to diversify its imports of energy resources. Back at the end of March, both countries sealed their cooperation in a joint memorandum of understanding signed by German Minister of the Economy, Sigmar Gabriel (SPD) and Algeria's Minister of Energy, Youcef Yousfi. May 20, the steering committees of both sides held their first joint meeting in Berlin, which focused, among other things, on "the diversification of the energy mix, the expansion of renewable energy" as well as "issues of gas supply security."[1]

Oil and Gas

Algeria is the third North African country - after Tunisia and Morocco - with which Germany has concluded an energy partnership. Alliances with Tunisia and Morocco are primarily concerned with access to these two countries' wind and solar energy potentials to satisfy the energy needs of European - especially German - companies. These partnerships had been concluded particularly within the framework of the - largely unsuccessful - Desertec Project.[2] Therefore, cooperation with Algeria has a more far-reaching character. The alliance with Algeria should permit Berlin access to this North African country's fossil energy resources. Thus, the German Ministry of the Economy declared in an energy partnership press statement that Algeria is "one of Germany's important suppliers of crude oil" and is "already now, the third most important source of European gas imports," and therefore, in the long run, "makes also an important contribution to the assurance of German gas supplies."[3] However, Algeria, as Germany's crude supplier, currently plays, in fact, a rather minor role. It provides at present only three percent of Germany's total oil imports, and Germany does not even import Algerian gas. Nevertheless, the potential is enormous. Algeria is the world's sixth largest gas exporter and a significant oil producer.

Pipeline Plans

For years, there has been a discussion in Germany about the possibility of replacing, at least partially, the Russian with an Algerian gas supply. Already in the last decade, plans were made for a European consortium - including the Wintershall Corp. headquartered in Kassel - laying a pipeline from Algeria through the Mediterranean to Italy. The project - "Galsi" - was put on ice, because falling gas prices made the project too expensive. Now it may become possible to revive the project, but this is still uncertain. Last year, Spain emerged as a possible transit country for supplying Central Europe with Algerian gas. Spain is currently covering fifty percent of its gas requirements from Algeria, to which it has two pipelines. At the EU level, Spain is campaigning to continue these pipelines from Spain to France, to feed Algerian gas into Central Europe's gas supply line. This could cover "at least twelve percent of Russian gas imports," according to the spokesperson of the association of Spanish gas companies, Medigas.[4] The German former EU Energy Commissioner, Günther Oettinger, had also been a strong proponent of this alternative. The Ukraine crisis demonstrates, he declared, "just how important the extension ... of missing junction pipelines between the member nations" is, "to improve the security of the EU's energy supply."[5]

Spin-off Profits

Beyond assuring satisfaction of Germany's energy requirements, the energy partnership with Algeria promises German companies also new investments and profit opportunities. German businesses have been able to greatly enhance their position in Algeria over the past few years. This country has become the largest market for German plant constructors in North Africa, even surpassing Egypt. In 2014, exports of German machines rose by 42 percent in comparison to the preceding year. The export of equipment for producing and distributing electricity rose by 117 percent in 2014. German companies are active, even in direct on-site exploitation of Algerian energy resources. The Linde AG, headquartered in Wiesbaden, founded a joint venture for the extraction of helium gas with Sonatrach, the largest Algerian state-owned enterprise. The Düsseldorf-based E.ON AG holds 49 percent of the shares of a license for prospecting in eastern Algeria's Rhourde Yacoub region.

Solar Boom

This cooperation's institutionalization opens additional possibilities for German companies to also benefit from Algeria's ambitious plans for expanding its production of renewable energy. In early 2011, the Algerian government announced its plans to derive around 40 percent of its electricity from renewable energy sources by 2030. Algeria's large currency reserves resulting from its gas and oil sales renders the necessary investment possible and, in principle, provide the needed investment security for German companies. But, until now, the execution of this program has not progressed beyond its early stages. The German state-owned business agency, Germany Trade and Invest (gtai) reported that only two of the photovoltaic solar parks, currently under construction, will generate together 22 MW of electricity, when operational. The Algerian government's objective, on the other hand, is to produce 25 gigawatts by 2030.[6] There is, therefore, a potential for the beleaguered German solar industry [7] to create a market for its products. Albeit, contracts for the construction of other photovoltaic solar facilities, have been granted to Chinese solar industry companies, which have long since outflanked their German rivals in global competition. This is where the new German-Algerian energy partnership comes in: Contracts that the country cannot obtain under free market conditions, should be assured through support at the political level.

[1] Deutsch-Algerische Energiepartnerschaft gestartet. www.bmwi.de 20.05.2015.
[2] See Ein gescheitertes Schlüsselprojekt.
[3] Gabriel und Yousfi gründen deutsch-algerische Energiepartnerschaft. www.bmwi.de 26.03.2015.
[4], [5] Susanne Kaiser: Algeriens Vormarsch endet an den Pyrenäen. www.zenithonline.de 16.09.2014.
[6] Germany Trade and Invest: Algerien im Focus 2015. www.gtai.de.
[7] See Abstiegskämpfe.