Algerian Energy Minister Mohamed Arkab and Qatari Ambassador Abdulaziz Ali Al-Naama met in Algiers in mid-August to discuss the development of new bilateral projects.

Behind this desire to strengthen economic cooperation, however, lies a long-distance battle between the two countries over gas supplies to the European Union, which is at loggerheads with Russia, once its leading supplier.

At the heart of the battle that dare not speak its name are two leading oil industry figures: Taoufik Hakkar, chairman and CEO of the state-owned Sonatrach group, and Qatar’s Energy Minister Saad Sherida Al-Kaabi, also chief of QatarEnergy.

Lately, the two leaders have been making a series of announcements to highlight their respective countries’ resources, with the goal of playing a key role in the new energy order.

Two tough characters

The EU reached its target for filling gas storage stations last August, but with an estimated capacity of almost 90%, the risk of winter power cuts cannot be ruled out.

As a major exporter of liquefied natural gas to Asian countries, Qatar – one of the world’s leading LNG producers, along with the United States and Australia – has set itself the goal of securing new contracts in Europe, Algeria’s preferred sales territory.

Courted by the Europeans since the start of the war in Ukraine, the boss of Algeria’s state-owned hydrocarbon giant has sought to reassure them by reiterating that “Algeria is ready to provide additional gas supplies to the European Union in the event of difficulties”.

QatarEnergy’s CEO has been more direct. “The worst is yet to come … European countries risk running out of energy if they don’t have an adequate plan, and if they don’t sit down with the producers,” he says.

At the helm of QatarEnergy since 2014, Al-Kaabi is an advocate of tough methods. His strategy is based on three key elements: streamlining operations, aggressive expansion and putting pressure on business partners.

On the other hand, Hakkar, who is also known for his outspokenness, prefers to remain pragmatic so as not to offend his European partners, despite his solid negotiating skills – such as the upward revision of gas contracts with European buyers.

Sonatrach’s gas production will reach approximately 102 billion m³ in 2022, of which 50 billion m³ will be exported. The ambition is to double the quantities destined exclusively for export by 2023.

For its part, QatarEnergy, via its subsidiary Qatargas (recently renamed QatarEnergy LNG) produced 178.4 billion m3 in 2022, of which 80 billion m³ was exported abroad, making it the world’s leading exporter of liquefied natural gas.

TotalEnergies, ENI, Repsol join relay

This summer, Hakkar reached an agreement with TotalEnergies to boost production at the Tin Fouyé Tabankort II (TFTII) and Tin Fouyé Tabankort Sud (TFT Sud) gas fields.

At the same time, the Algerian company delivered cargo of 90 million m³ LNG to its Italian partner, ENI, via the new floating regasification terminal in Piombino, Italy, as part of its drive to boost gas exports.

Determined to stimulate investment to boost Sonatrach’s capacities, Hakkar was behind the signing of a contract with Spain’s Repsol and Indonesia’s Pertamina worth more than $800m.

Its objective: secure nearly 150m barrels of oil equivalent (boe), according to the Algerian CEO, who also said that he “believes in the future of gas and oil”.

With the North Field, which is estimated to contain 10% of the world’s known natural gas reserves, Al-Kaabi has also enlisted the help of France’s TotalEnergies to expand this mega-project and extend its reservoirs. “40% of the total quantities of new liquefied natural gas that will reach markets by 2029 will come from Qatar Energy,” he says.

However, even though interest in gas from the Gulf emirate has been evoked by Central and Eastern European countries, including Hungary, the Czech Republic and Slovenia, only one contract has been signed between Qatar Energy and a European country, in this case Germany, for a 15-year supply.

However, Al-Kaabi seems unworried about the marketing of these huge volumes of LNG in Europe: “New contracts will be signed with European customers after the summer,” he says.

Multiple constraints

“European buyers prefer short-term supply agreements, as opposed to Qatar’s strategy of signing long-term contracts,” Mehdy Touil, an industry specialist, tells us.

Having worked for Sonatrach and Qatargas, he justifies the EU’s choice by its commitment to reduce fossil fuel consumption by 2030, but also by the no-resale clause imposed on traders by the Gulf emirate.

Recognising the strategic location of Algeria, already a major supplier to the European market, Touil believes that Sonatrach is nevertheless facing two difficulties: rising local demand and infrastructure problems.

Sonatrach would like to increase its production capacity, but is still unable to do so. “The company is facing maintenance and storage problems,” says Touil.

However, in order to replace Russian gas, “Sonatrach and QatarEnergy remain two pieces in a more global jigsaw puzzle”, says Francis Perrin, director of research specialising in energy issues at the Institut des relations internationales et stratégiques(IRIS).

“The European Union clearly needs several suppliers. Algeria and Qatar alone are not the solution, but both are involved, as are Norway, the United States and other gas-producing countries,” he says.