Algerian natural gas exports surged, giving Europe an additional supply cushion

Algeria is keeping its promise to supply more natural gas to Europe as the continent continues to replace Russian imports.

LNG exports from Algeria hit record highs in the first nine months of this year, rising 35% year-on-year to 9.94 million tonnes (Mt), according to data from Kpler.

Algeria’s liquefied natural gas exports are supported by a growing surplus at home. According to LNG analyst Laura Page of Kpler LNG, domestic gas production has increasing consumption.

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“Algeria has flowed more gas to Italy via the Trans-Mediterranean pipeline this year, but less gas has flowed to Spain,” Page told NGI. “As a result, much of Algeria’s excess gas was exported as LNG.”

Kpler Insight forecasts that Algerian LNG exports will reach more than 13 million tons this year, up from 10.2 million tons in 2022. Algerian exports are expected to reach their highest level since 2010.

Algeria is Europe’s third largest gas supplier and almost 85% of its gas exports are destined for Europe. However, the country’s lack of investment in new infrastructure has led to technical problems and, at times, limited exports. Unplanned outages reduced year-on-year LNG exports by 15% to 10.2 Mt last year.

“Last year’s outages were very costly for Algeria, especially given high global LNG prices,” said Poten & Partners’ Jason Feer, global head of business intelligence.

“But it looks like Algeria will be able to maintain LNG production once some technical issues are resolved,” he added. “State Sonatrach worked hard to get production they lost.”

France was the largest buyer of Algerian LNG, importing 2.29 Mt of the supercooled fuel in the first nine months of the year, according to Kpler. Italy came in second with 1.35 Mt, followed by Spain, which imported 0.97 Mt of LNG from Algeria.

Export production support

Gas production in Algeria rose to 102 billion cubic meters (Bcm) last year, or about 3.6 Tcf. This was marginally more than the 100.8 Bcm the country produced in 2021 after 20 years production levels of 80-90 Bcm per year.

However, this year’s output showed the results of recent exploration efforts. Page pointed out that in the first eight months of this year, domestic gas production rose by nearly 7 Bcm to more than 71 Bcm, according to data from the Joint Organizations Data Initiative (JODI).

EnergyAspects analyst Jacopo Casadei told NGI that Algerian production has increased as more producing fields have been connected. He noted Sonatrach’s recent announcement that the Hassi Ba Hamou field was online to provide 4.5 Bcm/d of production.

Algeria has also become the largest gas supplier to Italy after Russia cut off supplies last year, Casadei said. Italy is expected to import approximately 23 Bcm of pipeline gas from Algeria per year, up from nearly 22.5 Bcm of pipeline gas imported in 2022 and 20 Bcm in 2021.

Casadei said stronger Algerian pipeline exports to Italy were supported by a contract volume increase between Eni SpA and Sonatrach this month by another 3 Bcm/y.

For now, Algerian supplies provide an additional cushion with European warehouse stocks at record levels almost 99% full.

“Europe would be able to fill storage relatively easily even without the Algerian increase because stocks were very high at the end of last winter and many of the problems in 2022” at export terminals in Australia, Malaysia and the United States have been resolved. since then, Feer said.

“So Algeria meant it. We have so much LNG right now that some projects have cut production because clients don’t need it all right now.”

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