Spanning just 919 square miles, Algeria is OPEC’s largest member country, and the largest country in Africa, with a population nearing 40 million. For the Republic of Algeria, the economy revolves around oil.Almost 35% of Algeria’s gross domestic product is oil. In fact, oil maintains a staggering 2/3 total exports. Other exports include natural resources, like iron ore, lead, uranium, and phosphates.
Algeria had its first commercial oil discovery back in 1956 with Edjelleh. It was a big year for Algeria, as its second discovery, Hassi Messaoud oil field, was also found that year. Production began shortly after, in 1958.
With oil making up such a large amount of exports, it is no surprise that Algeria’s slight dropping off of oil barrels each year has sparked a new flurry of activity, as those in the industry strive to bring in new oil companies.The current level of Algeria’s crude oil production stands at 1.32M for May, the same as it was the month prior. However, it has dropped 3.65% from the year before. Oil prices are hitting multi-week lows and glut worries are creeping in.
Talks in Algeria
Oil Minister Jabbar Al-Luaibi has asked for oil and gas production to increase, in order to help bump up national revenue. This year, OPEC’s second largest oil producer managed to churn out 4.51 million barrels each day in January--yet was down to 4.36 million barrels daily in July, as Bloomburg discovered.
The Organization of Petroleum Exporting Countries will meet in Algeria September 26-28 for the International Energy Forum. It is there that Saudi Arabian Energy Minister Khalid Al-Falih aims to "stabilize the market,” he was quoted as saying to the Saudi Press Agency. The Russian Energy Minister, Alexander Novak, is open to chatting about an oil production freeze.
Iran, however, who is ready to boost their output, may not be on board with this stabilization idea. After years of sanctions that were only recently lifted last January, they are ready to get back into full production. A cap on production is not on their agenda, nor is it likely on Iraq’s.
The output freeze talks alone may drive up pricing, as occurred last April. Those interested in stabilization call for not only a freeze on production, but a reduction in production as well.
Everyone will be watching Algeria for the talks between the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producers to see if it will mean a more stabilized future for oil or a global oversupply in the crude market.