The Algeria Declaration confirms the commitment of gas exporters to work for balanced and reliable markets

A group photo of the heads of delegations at the Gas Exporting Countries Forum summit in Algeria (Reuters)

Algeria

- The curtain fell today, Saturday, on the activities of the seventh summit of heads of government of the countries of the Gas Exporting Countries Forum, in Algeria, with a number of important decisions and recommendations for the members of the group and the international gas market.

The “Algeria Declaration” stressed the group’s rejection of any artificial interventions in natural gas markets, including attempts to influence price-setting mechanisms and risk management functions in the markets, in addition to politically motivated price caps, which lead to “exacerbating the restrictions on markets and discouraging the investments necessary to meet demand.” Increasing global energy demand.

The members also expressed their absolute rejection of the unilateral application of unprecedented and justified tax procedures and measures under the threat of ensuring the security of energy supplies for some, at the expense of the rules of natural gas markets, which may “threaten the exacerbation of imbalances at the expense of peoples living in fragile situations.”

On the other hand, the Summit Declaration called for timely investment in market stability, the unhindered flow of financial resources, and access to technology and knowledge transfer in a non-discriminatory manner.

Gas exporting countries stressed their rejection of any use of climate change as a justification for implementing measures that hinder investments in natural gas projects and for introducing any means of arbitrary discrimination or any convincing restrictions that directly violate the rules of international trade, according to the source.

The group also emphasized supporting the fundamental role of long-term natural gas contracts, in addition to pricing natural gas, based on the petroleum and petroleum products index to ensure the stability of investments in developing natural gas resources.

The Heads of State and Government welcomed the joining of the Republic of Mozambique, the Islamic Republic of Mauritania and the Republic of Senegal to the Forum, stressing the collective endeavor of the Gas Exporting Countries Forum to enhance cooperation and dialogue in the field of energy.

Abdelmadjid Tebboune during his presidency of the seventh summit of the heads of the Gas Exporting Countries Forum (Reuters)

Russian war on Ukraine

Regarding the repercussions of the current geopolitical tensions on the gas market, energy expert Abdel Rahman Ayya confirmed that, due to the Russian-Ukrainian war, gas prices reached historic record levels during the first six months of 2022.

Expert Ayya explained to Al Jazeera Net that Russian gas supplies to the European Union declined from 150 billion cubic meters in 2021 to 43 billion cubic meters in 2023.

The price in European markets rose, according to statistics from the Energy Institute of BP, from $3 per million British thermal units in 2020 to $37.48 on average in 2022, with respect to the Dutch “TTF” index for European gas prices, as he adds. Energy expert.

The same trend was observed in prices in both the German and British markets, as the rise reached 160% in 2022 and 270%, respectively, compared to 2021.

This also applies to Asian markets, as the price in the Japanese and South Korean markets rose to $33.98 per million British thermal units, after it was around $4.39 in 2020.

But gas prices gradually returned to their first level (i.e. before the Russian-Ukrainian war) starting in the fourth quarter of 2022, after Europe opened up to supplies of liquefied gas coming, especially from the United States, as expert Abdel Rahman Ayya explained.

Part of the ministerial meeting of the Gas Exporting Countries Forum in Algeria in preparation for the summit (Reuters)

Increasing the incomes of Arab gas exporting countries

As a result, Arab countries exporting natural gas benefited from the significant rise in its prices in global markets in 2022, as their incomes increased remarkably, according to the indicators presented by expert Ayya.

For example, the proceeds of natural gas exports in Qatar moved from $129.3 billion, according to OPEC statistics, in 2021, to $164 billion in 2022, while the same tally for Algeria jumped, according to the Central Bank, from about $7 billion in 2020. To $27 billion in 2022.

As for Egypt, revenues in 2022 amounted to about $8.4 billion, compared to about $3.5 billion in 2021, meaning additional income of $5 billion.

Regarding the Red Sea attacks and the Israeli aggression on the Gaza Strip, the Algerian expert believes that gas prices have not been affected by them until this moment, for political reasons, as liquefied gas tankers do not constitute a target for the Yemeni Houthi group, given that most of them are Arab, Iranian, or coming from Russia. Or heading to China.

The energy analyst added another reason related to avoiding a direct collision between the United States and major producers in the region, pointing to Saudi Arabia, Qatar and Iran.

Part of the Gas Exporting Countries Forum summit in Algeria (Reuters)

There is no substitute for fossil energies

On the other hand, international expert in the energy transition, Omar Haroun, said that the world was planning to abandon fossil energies in the 2050s, before the Russian-Ukrainian crisis shuffled all the cards, causing European gas reserves to decline in the winter of 2023 to less than 60%.

In an interview with Al Jazeera Net, analyst Haroun considered that this natural resource remains the most in-demand energy, the least polluting, and the most capable in the future of ensuring the continuity of supplying major factories with the energy needed for production.

The spokesman revealed that the members of the “Algeria Summit” control 47% of global exports via pipelines and 40% of marketed gas, and they also own about 70% of the world’s gas reserves.

Expert Omar Haroun warned that protecting energy supplies dominates global discussions today, explaining that many countries are unable to secure extraction and transportation operations, due to the security developments surrounding them, such as Iraq, Libya, and Mozambique.

The energy analyst added that the Red Sea is no longer a safe passage for marine shipments due to the war on Gaza and the entry of Yemen into the battle line.

Omar Haroun pointed out that the retreat of major powers from investing in African gas in politically and security-stable regions, such as Algeria, in exchange for heading to exploration in disputed spots, may complicate the global energy map in the future, especially for the European continent, as he put it.

High global demand for gas

Analyst Omar Haroun believes that US President Joe Biden’s decision to stop new exports of natural gas, indefinitely, harms the energy-hungry European economy, and “it will not find an alternative to gas to fill it, even if it requires reducing the carbon footprint, which is what most exporting countries are working on.” "For gas."

In this context, the report on the future of gas in 2050 issued by the Gas Exporting Countries Forum, which was presented on the sidelines of the seventh summit in Algeria, expected an increase in global demand for gas, estimating that its contribution to the global energy mix would move from 23% currently to 26% by 2050.

By the way, the Secretary-General of the Forum, Muhammad Hamel, said that “the golden age of natural gas is before us and not behind us,” stressing that the expected development will be accompanied by global investments in the gas industry worth $9 trillion.

Source: Al Jazeera