While spot LNG prices in Asia have jumped 68 percent in a single week and European benchmarks have surged 50 percent, Algeria finds itself unable to capitalise on the windfall. The country continues to sell the overwhelming majority of its gas under long-term supply contracts with fixed pricing formulas, leaving it structurally cut off from the spot market rally that is enriching more flexible exporters.
Algeria is Africa’s largest natural gas producer, according to the US Energy Information Administration, and exports most of its gas through multi-year pipeline agreements with European buyers. Its gas policy has historically prioritised pipeline volumes and contractual stability over spot market exposure — a strategy that provides revenue predictability but sacrifices upside in a price spike.
The problem is compounded by domestic constraints that are steadily eroding the country’s exportable surplus. Internal gas consumption surpassed 45 billion cubic metres in 2023, driven by the fact that more than 95 percent of electricity generation runs on natural gas. Pipeline delivery flows dipped to 49 bcm in 2024, down from more than 52 bcm the previous year, even as European buyers were actively seeking alternative suppliers.
Algeria’s LNG sector faces additional structural headaches. Despite holding 30 million tonnes per year of liquefaction capacity, the country has been unable to fully utilise these facilities because of aging infrastructure and frequent breakdowns at the Arzew liquefaction plants — contributing to the loss of 230 million cubic metres in export sales in 2025 alone.
The combination of contractual rigidity, rising domestic demand, and ageing export infrastructure means Algeria is watching from the sidelines as peers with greater spot market exposure reap significant windfalls.
Source: North Africa Post