Algeria’s government was recently warned that ‘prudent reforms’ were needed as a result of the ongoing drop in oil prices if the country were to maintain a vibrant energy exportation sector.
The statement came from Zeine Zeidane, the former International Monetary Fund (IMF) Chief of Mission for Algeria. Zeidane is currently advising the IMF’s Middle East and Central Asia Department. Zeidane stated that, “These [prudent] policies will allow for a reduction in imports and strengthen…external competitiveness”, according to a statement published by APS, an Algerian domestic news agency. He went on to call for, “structural reforms that diversify the export sector and make it more competitive”. Zeidane also highlighted the importance of bolstering non-oil industry to lessen dependence on energy sales.
Algerian oil exports fell by approximately 43% in the first quarter of 2015 when compared to the previous year. The shortfall has largely been attributed to falling global oil prices, according to the Algerian government. Energy sales account for over half of Algeria’s governmental budget.
Due to the vital nature of energy sales, the issue of great importance to the Algerian government and represents a serious financial issue. Due to heavy spending on the part of the Algerian government, it currently estimated that the country will have significantly depleted its reserves by 2019.
In 2014 President Abdelaziz Bouteflika announced widespread investment in the non-oil economy, however, critics have stated that these plans have amounted to very little. The promised foreign investment has yet to appear on a large scale and, given the economic crisis afflicting the country at present, it is unclear as to who will replace Bouteflika when his mandate expires.
Despite the concerns over the future of Algeria’s oil industry, international firms continue to seek opportunities in the country. Paternoster Resources, an investment firm specializing in industries related to natural resources, announced a deal with Irish firm Littoral Oil and Gas whereby the two companies will jointly assess, acquire and produce from Algerian oil and gas resources.