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Algeria

[Source: NUSACC's U.S.-Arab Trade Outlook 2013]

Algeria’s new five-year plan (2010-2014) emphasizes a transition away from that nation’s enormous reliance on its oil and gas sectors. Algeria’s oil export revenue currently generates over 80 percent of the nation’s foreign exchange income. According to Algerian officials, $287 billion in new funds – coupled with $55 billion in existing funds – will be used for infrastructure development and capacity building that will better position Algeria as a knowledge-based society. Included in the plan are 500 new schools, 72 new hospitals, 47 new health centers, and two million new housing units.

The United States is the leading destination for Algeria’s exports, and American firms are vying for a bigger share of Algeria’s booming import market. Total bilateral trade in 2010 was $15.7 billion, $14.5 billion of which was American imports – predominately oil and gas – from Algeria. The strongest sectors in terms of both volume and dollar value are energy, food, machinery and electronics.

According to the Hon. David Pearce, U.S. Ambassador to Algeria, “America’s trade relationship with Algeria is our fourth largest in the region, and we are Algeria’s largest trading partner. Today, there are over 80 U.S. companies doing business in Algeria and most of the newer companies operate outside the hydrocarbon sector, in areas such as food, pharmaceuticals, machinery, construction, security, consumer goods and information technology.”

U.S. trade and investment opportunities in Algeria are immense. NUSACC’s Trade and Investment Mission to North Africa in October highlighted many of these opportunities to members of that high-level delegation.

Construction of the Rocade Highway, a 932-mile project, is only one of many projects aimed at connecting the interior of the country with the coast. Water network renovation, aqueducts, 19 dam projects, desalinization, and water treatment plants will be all tendered within the five-year investment plan. Algeria is also building out major new fiber optic networks and radio repeater nodes.

Several measures introduced by the Government of Algeria in recent years may well hamper foreign investment. One requirement mandates that Algerian nationals hold 51 percent of the share capital in foreign investment, while another requires that companies involved in foreign trade may not import goods for resale unless at least 30 percent of their capital is held by resident Algerian nationals.

Algeria is the world’s eighth largest oil exporter and supplies approximately 20 percent of Europe’s energy demand. Algeria’s Finance Minister, H.E. Karim Djoudi, expects that energy production cuts will shrink exports to $42.2 billion in 2011, down from $44.2 billion in 2010. Algeria’s forecasts for 2010 and 2011 are both made on the basis of a conservative average price per barrel of $60.

In March 2010, Algeria called for cutting production within the Gas Exporting Countries Forum (GECF, modeled on OPEC) to avoid oversupply. Algeria’s largest assets – oil and gas – are controlled by the state-owned company Sonatrach, which is the 11th largest oil and gas consortium in the world. Business Monitor International predicts that production will increase to 4.13 million bpd by 2014. By 2015, Algeria, Nigeria and Niger expect to start gas exports via the Trans-Sahara gas pipeline, which will be able to carry up to 25 billion cubic meters of gas per year.

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