Sanctions, revenues impede Algerian gas import to Syria
Enab Baladi – Muhammed Fansa
Expectations were dashed after the visit of the Syrian regime’s oil minister to Algeria regarding the possibility of concluding an agreement to supply Algerian gas to Syria, after hints that began more than six months ago.
The visit of Firas Kaddour, the newly appointed Minister of Oil, to Algeria on April 26, which lasted for three days, did not result in the export of Algerian gas to Syria.
According to the statement of the Algerian Ministry of Energy and Mines, which was issued at the end of the visit, the opportunities for cooperation between the two countries included the fields of hydrocarbon exploration and seismic survey, marketing of petroleum products, electrical maintenance, and spare parts, and the exchange of expertise in the mining field.
To escape sanctions
The statements about the possibility of importing Algerian gas were issued by the government of the regime about six months ago, during the era of the former Minister of Oil, Bassam Tohme, who revealed negotiations with Algeria, which took place on October 12, 2022, in Moscow, where the two parties agreed to speed up the procedures for concluding a cooperation contract between the two countries to supply domestic gas to Syria.
At the time, the Algerian Minister of Energy, Mohamed Arkab, confirmed his country’s readiness to receive a Syrian delegation to end the procedure quickly, but the delegation did not go until last month, headed by a new oil minister, without any results leading to a gas transfer deal.
The two ministers met at the time, Tohme and Arkab, on the sidelines of the “Russian Energy Week,” with talk of a deal to supply gas after several diplomatic visits between the two parties, based on the unbroken political relations between the regime and Algeria.
The economic analyst in Middle East affairs, Mohamed al-Futaih, avoided approaching the file of cooperation between Syria and Algeria in a “black or white” manner, meaning that Algeria would either completely refrain from supplying gas or would supply it in huge quantities to fill any shortfall in the Syrian energy sector, he told Enab Baladi.
Al-Futaih suggested that the US and European sanctions would be an important factor in influencing the Algerian decision, especially at a time when Algeria is trying to maintain a good level of relations with the United States to strengthen its position during the chronic political disputes with Morocco.
The gas-rich country is trying to strengthen its relations with EU countries and contain differences with France, but al-Futaih does not rule out the possibility that Algeria will provide small amounts of gas in line with its political approach to the Syrian file without these supplies having noticeable effects on the stability of the energy sector and electricity generation in Syria.
The week preceding the meeting of the two oil ministers on the sidelines of the “Russian Energy Week,” members of the US Congress presented an amendment to the sanctions of the Caesar Act imposed on the Syrian regime to include commercial transactions of gas and electricity.
The US sanctions prevent the completion of two separate projects aimed at supplying Lebanon with electricity through Syria (the Arab gas line between Egypt, Jordan, Syria, and Lebanon, and the electrical link between Jordan and Lebanon via Syria), as they have not been fully completed yet, due to the failure to obtain official US approval to exempt these projects from the sanctions related to the Caesar Act.
Algeria is one of the ten largest natural gas-producing countries in the world and the third in the Arab world after Qatar and Saudi Arabia, with a production share of 100 billion cubic meters in 2021, according to BP Petroleum, and an export share of 56 billion cubic meters in 2022.
According to the data of the Ministry of Oil and Mineral Resources, the annual production of natural gas in Syria does not exceed 4.5 billion cubic meters, with a daily production rate of 12.5 million cubic meters, of which 12 million cubic meters per day is clean gas.
This caused an increase in the suffering of the Syrians in obtaining domestic gas after adopting its delivery via the government subsidy card on basic commodities, or the so-called “Smart Card.”
Economist Mohamed al-Futaih believes that Algeria needs to achieve the largest possible financial return from its energy sector.
Algeria has not fully recovered from the turmoil it witnessed in 2019, and the government showed, in December 2022, during the approval of the general budget for the current year, its keenness to avoid imposing any new taxes or financial fees to maintain support levels.
The expected deficit for the current year amounts to $43 billion out of the total budget estimated at 100 billion, compared to $74 billion for 2022, as Algeria benefited from the boom in oil and gas prices in 2022, against the background of the Russian-Western conflict, to contain the deficit, which was estimated at $31 billion at the time.
According to al-Futaih, the significant decline in energy prices compared to 2022 prices will make Algeria keener to achieve the largest possible financial returns by exporting the bulk of Algerian energy to EU states.
Russia not present in gas equation
What increases the logistical difficulties in transporting Algerian gas is the absence of any pipelines linking Syria and Algeria and the fact that Syria does not own any oil tanker, while there are three pipelines linking Algeria with the European countries importing gas from it.
The economist explained that the energy crisis after the Russian-Ukrainian war increased the demand for ships transporting gas and oil, which increased the costs of maritime transport.
On the other hand, al-Futaih indicated that there have not been any transfers of Russian gas to Syria so far, despite Russia’s suspension of gas exports to Europe and its resort to exporting its huge surplus of gas by sea to China and India.
Al-Futaih also attributed the Russian abstention to Western sanctions, as there are no sanctions to date that prohibit dealing with Russian energy exports, as is the case with Iran, which transports quantities of gas and crude oil to Syrian seaports.
Russia’s transfer of gas to Syria will make gas exporting and transporting companies “vulnerable” to Western sanctions imposed on Syria, according to al-Futaih.
Russia is ranked second in the world in natural gas production, with a production share of about 700 billion cubic meters in 2021.
The PJSC Gazprom, a Russian majority state-owned multinational energy corporation, indicated that its gas exports outside the former Soviet Union fell in 2022 by 45% to 100.9 billion cubic meters, which is the lowest level after the collapse of the Soviet Union.
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