Macron seeks warmer ties with Algeria, but gas deal remains elusive

In a three-day visit, French President Emmanuel Macron will stop in the capital Algiers and Oran, Algeria's second-largest city. PHOTO: AFP

PARIS (BLOOMBERG) - French President Emmanuel Macron travels this week to Algeria, a former French colony and one of the world's largest gas producers. But it is unlikely that the President will return with the one thing that has European leaders scouring the globe for: commitments for alternative supplies of liquefied natural gas.

Even though Mr Macron will be accompanied by Ms Catherine Macgregor, chief executive of utility Engie SA, the trip is not about replacing gas imports from Russia, according to French officials close to the president. Furthermore, it's unlikely Algeria has excess supply to offer France.

Energy markets have been thrown into turmoil since Russia started squeezing gas supplies to Europe, leading German Chancellor Olaf Scholz to accuse Moscow of using energy as a weapon to retaliate against European Union sanctions.

Concerns over the economy pushed the euro to a record low against the US dollar this week, with inflation at the fastest in years.

Mr Macron warned of potential hardships in coming months and asked the French to "accept paying the price for our freedom and our values", in a speech last week commemorating the liberation of a town in southern France in World War II.

Italian Prime Minister Mario Draghi visited Algeria twice since Russia invaded Ukraine six months ago.

In July, he announced that the Algerian state energy company, Sonatrach Group, would supply Italy with an extra four billion cubic m of gas over an unspecified period.

Algeria has provided Italy with 13.9 billion cubic m of gas since the start of 2022 - 113 per cent more than was initially earmarked for Rome, according to a statement by Sonatrach.

Italy, which is linked to Algeria by pipeline, is doing better than many European peers in reducing its dependence on Russia following Moscow's invasion. The nation has cut its reliance on Russian gas to 25 per cent from about 40 per cent at the start of 2022.

New reservoirs

Algeria is already Europe's biggest gas supplier after Russia and Norway, including to France. It has discovered new reservoirs that have drawn growing interest.

Rather than clinching new commitments for energy supplies, Mr Macron will be looking to reset relations after years of tensions, said the officials who asked not to be identified as per standard practice.

In a three-day visit, Mr Macron will stop in the capital Algiers and Oran, Algeria's second-largest city. He will meet young entrepreneurs, religious leaders and hip-hop fans.

Mr Macron's 2017 presidential win was warmly welcomed by Algiers. On the campaign trail, he denounced what he called "crimes against humanity" committed by France during its colonial rule of Algeria, and during his first term he returned the severed heads of hundreds of Algerian resistance fighters that had been held for a century and a half in a Paris museum.

Change of tone

Mr Macron's tone changed, however, as Algeria's ageing military leaders, who have ruled since independence from France, tried to stem mass pro-democracy protests. He accused Algeria's "political-military system" of being "tired" and stoking "hatred toward France".

In response, Algeria closed its airspace to French military planes, affecting peacekeeping operations in Mali, and recalled its ambassador to Paris over what it called "unacceptable interference in its internal affairs".

France has also slashed by half the number of visas granted to Algerians - as well as to Tunisians and Moroccans - after their governments refused to facilitate the return of nationals living in France with irregular immigration status.

The north African country has increasingly turned to Turkey, China and Russia for commercial deals, and to Italy for energy agreements.

Even if Mr Macron manages to make amends during his visit, Algeria's state-run energy company, lacking investment, says it doesn't have the capacity to provide more to France in the short term.

The best Mr Macron can hope for is to try to lay the foundations for a new relationship, according to Mr Ali Bey Nasri, president of the National Association of Algerian Exporters. "France has to start seeing Algeria like a partner," he said.

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