Falling oil prices stress Algeria’s vulnerabilities
As Iran, freed from economic sanctions, is set to add oil to a glutted global market, Algeria appears to be one of the most vulnerable hydrocarbon exporters.
Algeria boasts more than 
Falling oil prices stress Algeria’s vulnerabilities
As Iran, freed from economic sanctions, is set to add oil to a glutted global market, Algeria appears to be one of the most vulnerable hydrocarbon exporters.
Algeria boasts more than 12 billion barrels of oil reserves and about 160 trillion cubic feet of natural gas. It is Europe’s third largest supplier of gas. It is connected to world markets through natural gas pipelines and has a large shipping fleet that sends liquefied natural gas (LNG) from several plants to customers in Europe and elsewhere.
Thanks to Algerian President Abdelaziz Bouteflika’s policy of national reconciliation, Algeria skirted most of the horrors of radical Islamic fundamentalism. Its energy sector is well-entrenched with secure long-term investors. Operating costs are relatively low.
However, with Iran formally re-entering the international oil market, Algeria faces greater challenges. The government’s financial policies are highly dependent on hydrocarbon revenues. Its margin to manoeuvre is restricted by public wariness about austerity measures and political opposition to recently introduced constitutional reforms.
Algeria planned to hike oil production 5% in 2016 to help offset the effects of falling prices. However, if prices slide further, it could be forced to reduce oil output because of production costs.
Algeria could find in Iran a challenging rival in the gas market and could consider withdrawing from the Organisation of the Petroleum Exporting Countries (OPEC) as a last-ditch attempt to defend oil prices.
The looming crisis from declining oil prices is a reminder of Algeria’s failure to introduce changes