Algeria, a former colony of France, has historically looked North to Europe to satisfy its economic needs.  The relationship with the United States seems to be growing warmer with every passing year, however, and Algeria has quietly become America's number four trading partner in the Arab world with 2006 bilateral trade reaching $16.6 billion.

The U.S. Energy Information Administration estimates that Algeria has the eighth largest natural gas reserves in the world.  That nation's energy sector is responsible for 30 percent of GDP and accounts for over 95 percent of export earnings.  More than 100 U.S. corporations are now doing business there and, despite the small drop in U.S. merchandise exports in 2006, Algeria is sourcing increasingly sophisticated goods from the United States, including telecommunications equipment, aircraft, and drilling and oilfield equipment.  Opportunities also exist for U.S. companies to assist Algeria in its efforts to ramp up Sonatrach, the state-controlled energy firm, both inside the country and internationally.

Algeria's role as a critical supplier of gas to Europe and the United States has international companies taking advantage of its location and vast reserves to invest billions of dollars into natural gas projects.  BP, Norway's Statoil, Italy's ENI and Spain's Repsol are among key investors in Algeria--developing gas fields, building liquefied natural gas (LNG) facilities, and expanding pipeline capacity to cash in on the growing demand for cleaner energy.

With this in mind, it is no surprise that greenfield FDI projects in Algeria posted 52 percent average annual growth during the period 2002 to 2005, according to the U.N Conference on Trade and Development (UNCTAD).

Algeria's first integrated LNG project is Gassil Touil, where production is scheduled to begin in 2009.  The product was primarily designed for the U.S. market, but increasing demand from Asia is giving the United States a run for its money.  H.E. Dr. Chakib Khelil, Algeria's Minister of Energy and Mining, recently announced that Chinese and Indian producers are competing to develop Algerian oil reserves will also be placing pressure on U.S. producer margins.  Such increased competition suggests that U.S. companies may need to offer joint venture deals elsewhere in the world with Algerian firms in an effort to improve their standing for Algeria-based tender blocks.

Links

Algerian Chamber of Commerce and Industry
Country Commercial Guide (pdf)
CIA Factbook
World Bank
Embassy in the U.S.
U.S. Embassy in Algeria