December 20, 2007

Global Gas Battle Opens New Front in Algeria

Source: Kommersant

A new front, the Algerian one, has opened in the global struggle for energy supply diversification. That became absolutely clear after The Wall Street Journal reported with reference to Sonatrach president Mohamed Meziane that the cooperation pact signed by Sonatrach and Gazprom in August 2006 has expired. A little earlier, Algeria emitted, accidentally or not, leakages that it is dissatisfied with the quality of military equipment supplied from Russia. Most surprisingly, the criticism was coming not from the immediate customers in the Algerian armed forces, who seemed to be satisfied, but from President Bouteflika’s civilian associates.

These events are obviously interlinked. Especially if taking into account the high stakes in the strategic partnership between Algeria and Russia. Due to their natural resources, these two countries would have been able to control up to 40 percent of natural gas supplies to the EU, had they made joint efforts. So, European consumers decided to stake on Algeria and Libya in an attempt at neutralizing Gazprom’s growing pressure. The struggle for energy supply diversification, initiated by the EU so eagerly, makes Gazprom’s presence in those countries unacceptable for the gas consumers. The U.S. feels similar anxiety: it hopes to keep bringing its own, and not Russian, gas from Algeria.

So, the anti-Russia consensus among Algeria’s chief Western patrons, the EU and the U.S., has become inevitable. Things got even worse for Russia when the outer pressure on Algeria was complicated by the clan struggle between different influence groups inside the country. Here again, energy resources are to blame. The end of war and growing oil and gas export revenues led to rapid redistribution of political weight from the ‘army elite’ to the ‘energy lobby’. Bouteflika, staying neutral for several years, eventually sided with the energy officials, which brought him a positive approval by Western partners, the U.S. first of all.

This repartition of influence could not help affecting the cooperation with Russia, especially in the military equipment sphere. The army and power agencies were gradually edged out from the economy, then from the domestic policy-making, and from the foreign policy at last. Meanwhile, Russia’s politics in Algeria has been built on confidential relations with the most influential power officials, who are now moved to the background. That is why Russia should not expect good news from the Algerian front now.

Still, Gazprom-Sonatrach relations are not completely ruined. Although Russia and Algeria are far from mutual understanding yet, and the ‘gas cartel’ was termed as utopia, Sonatrach and Gazprom have become working well for each other. Despite everything, both monopolies are slowly but steadily moving towards a common aim: towards increasing the role and the share of exporter countries in the international gas market.

Andrei Maslov, director of the RosAfroExpertiza Center