Italian Foreign Minister Luigi Di Maio meeting with his Algerian
counterpart Ramtane Lamamra and Minister of Energy and Mining Mohamed
Arkab in Algiers, 28 Feb 2022
Well, that leads me then to my second question, which is
supplementary to the first: is Europe capable of seeing the opportunity?
Well, Europe has seen the opportunity, at least Italy has seized the
opportunity very quickly. Italy saw the crisis coming in a way when in
November of last year, the president of Italy paid a state visit to
Algeria and a major contract was signed, over $1 billion, between Eni
(Ente Nazionale Idrocarburi) and Sonatrach the Algerian state company.
This is important for a number of reasons. One, the cooperation
between the Italians and the Algerians in oil and gas predates
independence in 1962. Why? Because Enrico Mattei the founder of Eni
advised the provisional Government of Algeria, which was negotiating for
independence from France in 1960 to 62, on oil and gas. History reminds
us that General de Gaulle wanted to detach the Sahara where oil and gas
had been found in the mid 50s, from what was going to become the new
Republic of Algeria. He failed and the Italians helped the Algerian
nationalists if you will, or freedom fighters as they were then called,
to frame their oil and gas policy. So there is a deep political
understanding between Italy and Algeria.
Second point, the first ever underwater gas pipeline was built with
Italian technology provided by Saipem between Algeria and Italy via
Tunisia and the Strait of Sicily. It was inaugurated in 1983. And it's
always functioned very smoothly ever since. Third point, which is
important for Algeria, is that Italy has the technical ability,
companies such as Saipem, Fincantieri, all kinds of companies. It has a
know-how in oil and gas and LNG plants and all this chain of oil and gas
and condensate. Italy can provide Algeria with all it needs in terms of
technology, building pipelines and exploration. The Italians are very,
very good at this game, not just Eni but all host of companies. So these
are the reasons why the agreement with Italy is particularly important
when you ask, is Europe appraised of what it might get out of Algeria. I
would simply point out that the visit of the Prime Minister Mario
Draghi to Algiers on Monday (April 11) accompanied by the head of Eni,
the Minister of Foreign Affairs, etc is important. Why? Because Mario
Draghi, as former head of the European Central Bank, a former member of
Goldman Sachs is really a man of power, he is at the heart of the power
structure of the West. So his visit to Algiers does not go unnoticed by
anybody.
There is then this opportunity, as everyone scrambles for gas,
for Algeria. But to go back to Sonatrach, can Sonatrach meet the
challenge?
I think there are two or three points to be made. The first is that
Algeria has plentiful reserves of gas. Half the territory of this
country, which is the largest in Africa geographically, has not been
explored. Even in the areas which have been explored, many areas have
not been explored with the modern methods available in the last 10-15
years. Recent discoveries
near Berkine by Eni suggests that there is a lot more gas to be found,
because geologically the areas which have not been explored are very
similar to the ones which have.
The second point: the Algerians boast, according to American
statistics - which are very reliable - the third biggest reserves of
non-conventional gas in the world, ex aequo with Argentina, on
top of that, conventional resources. So Algeria is a vast reservoir of
gas. Sonatrach has the technicians. What Algeria lacks is an economic
policy which accepts reforms all across the range. Now, there is a case
for arguing that the only way to move the Algerian leadership and the
generals in particular, is to get Italy and other Western countries,
notably Germany, which is discussing buying gas from Algeria. If these
countries really put money on the table, and as I understand it, the
offers being made, the preliminary offers being made to Algeria to
develop gas are well over $100 billion. Now, all these are large
figures. Nonetheless, if developed countries show a real willingness to
put their money where their mouth is and to say we're going to engage in
long term contracts, i.e. 10-15 year contracts, we're going to develop
this and that gas field that might be the one way of moving Algeria
towards a more modern, a more transparent management, not just of the
oil and gas sector, but of its economy.
This is why I would argue that when you look at Europe/ Algeria,
Europe/ Africa, in terms of oil and gas, everything is up for grabs
today. What has happened in Ukraine has fundamentally changed the
tectonic plates. They're moving. How they will move, in what direction,
the years ahead will tell us. But it is an extremely interesting
situation. The crisis in Ukraine has thrown open a game, which seemed to
be a closed game and a foregone conclusion, short term contracts and
all the rest of it. Now we are in a different world, it's going to be
messy, it's going to be complicated.
How complicated?
Let us remember that in Europe, there are at least 15, if not 20
million citizens of North African origin, let us remember that there is
an enormous amount of trade between Spain, Italy, France, Belgium,
Germany, and North Africa. And if we want to confront the problem of
illegal immigration and poverty in Africa, we are going to have to take
some very bold decisions in Europe, in Brussels.
These are difficult decisions. But gas is one of the key factors in
this and may be rejigging our geostrategic thinking. That's the point,
really, gas is part and parcel of a serious rethink, which will not only
have to occur in Europe, it will have to occur in North Africa. So
maybe this crisis will force the European leaders to change their
software, because they have to change their software.
Algeria became independent 60 years ago, Tunisia, and Morocco more
than 60 years ago. The Moroccans will always be polite vis a vis
Europeans. But what they think about Europe's economic policies towards
them in private, you'd be surprised. The Algerians are much more
upfront, and they just go for the jugular. And the Tunisians basically
say nothing today, because they're dependent on Europe and America and
the IMF, to help them through a very difficult economic phase. So I
think that maybe this crisis, which is going to force a reset of many
clocks, on many subjects, on many issues of economics, maybe this is the
opportunity. And Europe will have to learn in the process that
preaching democracy is of absolutely no use. Because for the last 30,
40, 50 years, the West, I include America, have been preaching democracy
selectively. What has been done for Palestine, what has been done in
Libya, what has been done in Iraq: the Arabs are very sensitive to this.
And Europe is going to have to decide what it wants in the next few
decades. That requires clear thinking. That requires new ideas. I don't
think it's impossible. It does require bold leadership.