Tebboune offers a spotty but improving record as he seeks re-election in Algeria

4 Sep 2024 - By Jon Marks | 8 minute read

Two candidates representing long-established parties – Hassani Cherif of the Mouvement de la Société pour la Paix (MSP) and Youcef Aouchiche of the venerable Kabyle-based Front des Forces Socialistes (FFS) – have been cleared to stand in Algeria’s presidential election on 7 September. But the winner will almost certainly be the self-styled ‘independent candidate’, President Abdelmajid Tebboune, who is standing with the might of the Algerian state behind him.

Tebboune has not had the most comfortable of rides since replacing the late Abdelaziz Bouteflika in late 2019, but concerns that rival factions in the military/security-dominated establishment – widely known as le Pouvoir (‘the Powers-that-be’) – might stymie his route to a second term have been overcome. Tebboune has been able to deliver a populist message during the short campaign, including some much-improved economic indicators and hydrocarbons-financed social spending welcomed by many Algerians.

The formal opposition was much less of a problem for Tebboune than any pouvoir critics. Many of the political and social complaints that drove the El Hirak protest movement onto the streets and pushed Bouteflika out of power remain, but the opposition is still cowed by the security forces and partisan courts. The Algerian system’s ‘deep state’ substructure remains in place, even if some of the faces and factional alignments have changed.

On the international stage – where Tebboune has often failed to impress – the regime’s much-vaunted radical credentials have been burnished by its support for a Palestinian state (along with longtime ally South Africa, few governments have been as diplomatically active over the Gaza war). Algiers has also continued a long-running rivalry with neighbour Morocco, sticking to its sponsorship of the Polisario Front liberation movement in the Western Sahara even as other governments have shifted their positions.

The recent decision by France’s President Emmanuel Macron to effectively recognise Moroccan sovereignty over the disputed territory has further complicated relations with Algeria’s former colonial power (AE 510). It followed similar moves by Spanish Prime Minister Pedro Sánchez in 2022 (which Madrid has since modified under intense Algeria pressure) and in 2020 by then United States President Donald Trump, who linked American recognition of a Moroccan Sahara to his push for Arab states to normalise relations with Israel. The potential for a new spat with France could hurt a web of business relationships, but plays well to the sentiments of Algerian nationalists.

Unlike the majority of pouvoir-dominated elections, Tebboune is standing against two parties with some credentials. The FFS has long provided credible opposition, while the MSP represents a ‘moderate Islamist’ tendency, rewarded on occasion with a smattering of ministerial jobs.

Both parties are generally seen as shells of the movements set up by their late founders Hocine A?t Ahmed of the FFS and Mahfoud Nahnah of the MSP. Neither has anything close to Tebboune’s financial muscle or his nationwide political reach.

In Djanet, in the deep south-east, on 29 August, the president stressed his commitment to delivering essential infrastructure and creating agriculture, tourism and services jobs for the long-isolated region’s youth. The government plans to travel to Djanet soon to hear locals’ demands, as it has done in recent years with the similarly-isolated Khenchela, Tissemsilt and Tindouf. Start-ups are on the agenda, as is increased cross-border trade with Niger and Libya. Exports have been growing in areas such as pharmaceuticals, white goods and processed products.

The number of wilayas (provinces) could also be doubled to around 100, to promote localised development. All of this is lauded by Tebboune’s supporters, including his backers in the old ruling Front de Libération Nationale (FLN) and other establishment institutions.

Tebboune’s record could be worse…

Boasts about an Algerian industrial revolution may be wildly overstated, but the industrial and services sectors have been cautiously opening up, while agricultural production has increased in recent years. Local entrepreneurs may still face problems with authority, but progress is reported, notably in agro-industry and even small-scale tech.

There is even talk of a new tourist visa being introduced, which would be issued at the point of entry. That could encourage more visitors to come to a country which has long shunned mass tourism, despite a 1,200km Mediterranean coastline and impressive historical sites.

Tebboune claimed Algeria is now “back on the rails”, with his “struggle against issaba [mafia] which has squandered national resources … the economic upturn and the delivery of the 54 commitments referred to by the revolution of November 1954” – meaning a return to core values of social justice and national sovereignty.

Some of these elements have been delivered by an administration still recovering from the chaos of the last Bouteflika decade, buoyed up by strong oil and gas revenues following Russia’s invasion of Ukraine in February 2022.

Managed correctly, opportunities beckon. African Energy earlier this year observed that one bellwether of change could be the development at last by state utility Sonelgaz of several gigawatts of solar power after more than a decade of trying (AE 507, 503).

…giving cautious encouragement to IOCs

However, many potential investors, including some international oil companies (IOCs), remain cautious about dealing with Algeria – a market where a few such as Italy’s Eni have found ways to operate without problems, but others (including France’s TotalEnergies) have periodically experienced difficulties or been shut out altogether.

Such is the attraction of tapping into an Opec member’s natural resources that US supermajors Chevron and ExxonMobil have made further tentative steps towards unconventional oil and gas deals with state giant Sonatrach. Their early-stage agreements are in line with a recognition by Algiers that Sonatrach needs help to develop shale gas and other unconventional reserves in order to maintain output. The US Geological Survey estimates Algerian shale gas reserves amount to more than 700tcf.

According to Sonatrach, its Chevron and Exxon deals fit into its plans to double natural gas output in the medium term, to reach 200 bcm/yr, and remain a key supplier to Europe.

Output has in fact been in decline from many major fields and there is much more to do. The heads of agreement signed by Chevron and Sonatrach in June focused on development opportunities in the Ahnet and Berkine basins. Underlining how slowly things have moved, this built on a memorandum of understanding (MoU) the US major signed with Sonatrach in 2020 “to evaluate prospective hydrocarbon plays”. Energy and mines minister Mohammed Arkab said it would allow Sonatrach to develop a major field.

After years of discussion, ExxonMobil finally signed an MoU with Sonatrach in May, focused on the south-western Gourara and Ahnet basins. Ahnet was the site of Algeria’s first trial shale well in 2014, which was abandoned after local protests – a problem for unconventional projects across the south that was reflected in some of Tebboune’s comments in Djanet.

Among US firms, Occidental Petroleum remains an operator, following its purchase in 2020 of Anadarko Petroleum; Oxy’s plan to sell that stake to TotalEnergies was stymied by the government, during one of Algiers’ periods of tension with Paris.

Oxy has experienced declining output from its share of the Berkine Basin fields, falling from 45,000 b/d in 2022 to 32,000 b/d in 2023 and 29,000 b/d in Q1 2024. It has not shown Anadarko’s earlier interest in exploiting shale in Algeria or southern Tunisia. However, there was cautiously positive news when, in mid-June, the Berkine development grouping of Sonatrach (51%), Oxy (24.5%), TotalEnergies and Eni (both 12.25%) awarded a seismic and geophysical studies contract to France’s Viridien, two years after announcing a headline $4bn contract.

Sonatrach has continued the flow of MoUs and other expressions of co-operation since Rachid Hachichi took over at the national oil company from the media-savvy but unpopular Taoufik Hakkar in October 2023 (AE 495).

Among recent agreements – which have all been concluded under the revised 2019 Hydrocarbons Law – TotalEnergies signed an MoU with Sonatrach in April aimed at concluding a hydrocarbon contract in the north-east Timimoun region; this could tie back to TotalEnergies’ existing Timimoun processing facility. In Q1 2024, Eni and Norwegian major Equinor signed an exploration MoU that could lead to developing reserves that would tie in to their major (and declining) south-western In Salah and In Amenas gas fields.

Among other developments that highlight the need to turn around declining output, Sonatrach is working to revive Algeria’s most important gas field, at Hassi R’Mel, where Italy’s Maire Tecnimont and US services giant Baker Hughes have a $2.3bn contract to install more compression infrastructure to maintain plateau output at 188 mcm/d.

Big decisions needed

With predominantly gas-fired electricity demand rising ever higher, Algeria may finally have to make some big decisions in Tebboune’s second term. Domestic refining has scaled up painfully slowly – petrol output rose from 27m t/yr in 2018 to 30.5m t/yr in 2023, despite big investment in refineries – while consumption remains heavily subsidised.

According to Sonatrach refining and petrochemicals vice president Slimane Slimani, the rehabilitation of three northern refineries (at Skikda, Arzew and Algiers) has allowed petrol output to rise from 2.2m tonnes in 2018 to 3.7m t/yr in 2023, while diesel output rose from 7.8m to 10.3m t/yr to meet national demand. A new refinery at key oil field Hassi Messaoud should enter production in 2027, supplying a further 2.7m t/yr of diesel, 500,000 tonnes of bitumen and 1.7m t/yr of petrol.

But while the Algerian market has been entirely supplied by Sonatrach since 2020, and should remain so, Slimani told one interviewer that, in addition to existing petroleum exports, 1m t/yr could be exported if consumer demand was reduced by “actions of rationalisation”. This implies that heavily-subsidised prices could be edged up.

This might be taken as a microcosm of the Tebboune years. Long frozen projects that exploit Algeria’s huge resources have gradually been implemented, while structural weaknesses in the economy persist and act as a break on faster progress. It remains in question whether this pattern will shift markedly during Tebboune’s expected second term.