Lower LNG output leads annual decline in Algeria’s energy production

4/5/2016

By Hamid Ould Ahmed

ALGIERS, April 4 (Reuters) -- Algeria's energy exports stagnated in 2015, held back by lower output and a rise in domestic consumption, official data seen by Reuters on Monday showed.

Total energy sales reached 100 million tons of oil equivalent, unchanged from the previous year, while production declined 1.3% to 153 million tons of oil equivalent.

The North African OPEC member, a major gas supplier to Europe, is trying to increase oil and gas production, which has stagnated for a decade. But foreign oil companies remain reluctant to invest because of Algeria's contract terms and the drop in world oil prices.

Energy sales make up 60% of the state budget and account for 95% of Algeria's total exports despite efforts to diversify the economy away from oil and gas.

The country relies on earnings from the energy sector to pay for its imports and a wide range of subsidies, from food and fuel to free housing.

However, public finances have been hit since crude oil prices started falling in June 2014, forcing the government to freeze several economic projects.

Its foreign exchange reserves, which are usually used to cover deficits, fell $35 billion in 2015 to $143 billion, while its trade deficit reached $13.71 billion in 2015, reversing a $4.306 billion surplus in the previous year.

It has failed to reverse a decline in oil and gas output due to a lack of foreign investment in recent years.

Crude oil and condensate production fell 2.8% to 58.9 million tons of oil equivalent in 2015, while natural gas output dropped 1% to 82.5 billion cubic meters, according to the data.

Liquefied natural gas (LNG) production declined 7.6% to 27 million cubic meters. Oil refined products output dropped 4.6% to 29.3 million tons.

Petroleum liquefied gas output rose 2% to 9.6 million tons in 2015, the data showed.

Algeria has launched a campaign to reduce domestic energy consumption but demand is still on the rise.

Demand for oil refined products, mainly gasoline and diesel oil, rose 5.5% to 18.3 million tons, while natural gas consumption increased by 5% to 39.5 billion cubic meters.

Demand for electricity rose 8% last year.

(Reporting by Hamid Ould Ahmed; Editing by Patrick Markey and Susan Fenton)