A general view of Tiguentourine Gas Plant in In Amenas, 1600 km (994 miles) southeast of Algiers. (Image: Reuters)

North Africa is a long-standing, major producer of natural gas, with Algeria and Egypt playing particularly significant roles. The region鈥檚 role as an exporter of gas has been in the spotlight in recent years as a result of the war in Ukraine, with Europe pivoting away from imports of Russian pipeline gas and seeking alternative supplies. However, a combination of domestic challenges within North African countries and international market dynamics is holding these countries back from reaching their full production and export potential.

North African countries鈥� reserves are considerable. According to the Gas Exporting Countries Forum (GECF), Algeria had an estimated 159 Tcf (4.504 脳 1012 m3) of proven natural gas reserves in 2023. Egypt鈥檚 proven gas reserves for that year were estimated at 63 Tcf (1.784 脳 1012 m3).

However, growing domestic gas demand, as well as production challenges, has increasingly constrained North Africa鈥檚 export ability. According to a January 2025 report from the UK-based Oxford Institute for Energy Studies (OIES), North Africa鈥檚 gas exports fell by almost 30% between 2021 and 2024, with the largest drop seen in Egypt.

Efforts are underway to address this. Both Algeria and Egypt are holding new oil and gas bidding rounds, and Libya 鈥� where the political situation remains highly volatile 鈥� is planning to do the same. The region鈥檚 producer countries hope to attract new investment from international oil companies (IOCs) to help boost output. However, even if they succeed, it will take time for investment to translate into new production.

Regional trends

GECF data show that Algeria鈥檚 marketed gas production in 2023 amounted to 3.7 Tcf (1.055 脳 1011 m3), while its gas consumption rose to 1.9 Tcf (5.29 脳 1010 m3). Algeria exported 1.2 Tcf (3.45 脳 1010 m3) of gas via pipeline and 628 Bcf (1.78 脳 1010 m3) in the form of LNG that year.

鈥淐urrently, Algeria is one of the main suppliers of natural gas to Europe,鈥� a GlobalData Middle East and Africa upstream analyst, Rami Khrais, told COMPRESSORtech2. 鈥淚n 2024, Algeria was the second-largest pipeline gas supplier to Europe, after Norway. Algeria exports gas to Europe through two pipelines: TransMed and Medgaz, with Spain and Italy being the largest consumers of Algerian gas on the continent. Algeria also exports LNG to Europe and other countries, primarily Turkey. Algeria provided around 15% of Europe鈥檚 gas needs last year.鈥�

A view of a gas plant seen from the desert road of Suez outside Cairo, Egypt. (Image: Reuters)

Khrais added that Algeria was now the only country in North Africa exporting gas to Europe, following the decline in production in Egypt and Libya.

Egypt鈥檚 marketed gas production totalled 2.1 Tcf (5.93 脳 1010 m3) in 2023, while its domestic demand reached 2.2 Tcf (6.19 脳 1010 m3) that year, according to GECF data. In 2024, Egypt lost its status as a net gas exporter and turned to LNG imports in order to cover the shortfall between domestic output and growing demand.

One of the major challenges for Egypt is the depletion of the giant Eni-operated Zohr field. The field, which had previously accounted for around 40% of Egypt鈥檚 gas output, has underperformed expectations, seeing production decline more rapidly than anticipated.

鈥淭his decline has forced Egypt to halt LNG exports from the Idku and Damietta plants and secure contracts to import LNG cargoes through a floating terminal,鈥� said Khrais. 鈥淎s a result, it is unlikely that Egypt will be a gas-exporting country in the foreseeable future.鈥�

This trend is playing out across the broader region.

鈥淭hat鈥檚 the story with much of North Africa 鈥� the growth of domestic demand,鈥� Rapidan Energy鈥檚 director of global gas, Alex Munton, told COMPRESSORtech2. He sees a similar scenario playing out in Algeria, with 鈥渘o real supply growth鈥� while domestic demand gradually increases.

Missing out

These dynamics are hampering North Africa鈥檚 ability to meet rising demand from Europe for non-Russian sources of gas.

鈥淩ising domestic consumption and a lack of investment represent the primary obstacles preventing Algeria and other North African countries from increasing energy supplies to Europe or even maintaining current levels,鈥� said Khrais. He added that Algeria鈥檚 gas production was expected to decline gradually over the coming years, 鈥渦nless the country decides to improve its investment environment to attract more major players to its upstream sector鈥�.

However, Khrais sees the latest developments as having the potential to spur development of new production in North Africa.

鈥淭he suspension of Russian gas supplies to Europe via Ukraine at the start of this year might increase the strategic importance of Algerian pipeline gas and LNG,鈥� he said. 鈥淭his could encourage Western companies, particularly in countries like Italy and Spain, to deepen their co-operation with Algeria鈥檚 state-owned energy company, Sonatrach, to develop additional gas projects.鈥�

Crystol Energy鈥檚 CEO, Carole Nakhle, also pointed to the importance of new upstream investment in order to help North Africa meet its production and export potential.

鈥淒omestic reforms are essential as well as increasing investment in upstream to support production and discoveries,鈥� Nakhle told COMPRESSORtech2. 鈥淭o increase production, and subsequently exports (assuming local demand doesn鈥檛 rise faster), the region needs more investment in upstream activities 鈥� in aging assets by increasing recovery (we are seeing greater emphasis on recovery across the industry) as well as investment in new discoveries.鈥�

Positive signs

There are hopes that new investment could indeed be forthcoming, given the licensing rounds underway in North Africa and the interest being shown in the region by IOCs. Positive results from exploration encourage other upstream players to move in. However, the pace and relative unpredictability of exploration 鈥� not just in North Africa but globally 鈥� are cause for caution.

鈥淭here鈥檚 been some recent positive exploration news on the upstream but moving from discovery to production takes a while, and it remains to be seen just how significant some of the recent discovery announcements actually are,鈥� said Munton.

In the meantime, like Nakhle, he also pointed to moves to increase recovery from producing assets. One such project saw Baker Hughes announce in May 2024 that it had been awarded a contract by Sonatrach to provide compression trains to help boost output from Algeria鈥檚 Hassi R鈥� Mel gas field.

鈥淚n Algeria, there is going to be a market for equipment,鈥� Munton said. 鈥淚t鈥檚 a market that will require increasing levels of investment in equipment, particularly compression, to get as much out of these aging natural gas fields as possible, Hassi R鈥� Mel being the giant field producing for decades and absolutely vital to Algeria鈥檚 gas sector.鈥�

Khrais also cited efforts to increase production from Hassi R鈥� Mel as being worth watching to assess the attractiveness of Algeria鈥檚 investment environment.

鈥淎lgeria鈥檚 expansion projects in the Hassi R鈥橫el field should be closely monitored, along with its efforts to develop unconventional gas reserves in the Ahnet and Berkine basins,鈥� Khrais said.

On top of this, the new Algerian licensing round will be closely watched, especially as it is the first bid round to be held in Algeria in over 10 years. It comes as various IOCs are eyeing the country鈥檚 upstream sector, having stayed away in recent years owing to a combination of factors including security concerns 鈥� notably in the wake of the terrorist attack on the In Amenas gas plant in 2013 鈥� complex bureaucracy and an unfavorable investment environment.

鈥淎lgeria has been not closed off, but it has been a very restrictive environment post the In Amenas terrorist incident,鈥� said Munton. He added that Algeria and IOCs would need to consider how best to re-engage in order to address the challenges that have deterred these companies in the past.

There is already evidence that re-engagement is happening. Aside from the bid round, Algeria has also been engaged in bilateral talks with various IOCs that have resulted in memoranda of understanding (MoUs) being signed, aimed at advancing new exploration and development opportunities. Most recently, Algeria鈥檚 National Development Hydrocarbon Agency (ALNAFT) signed a deal with Chevron for offshore co-operation in January. This follows a number of preliminary agreements signed with other IOCs including ExxonMobil over the past couple of years.

鈥淚 think it鈥檚 very notable that these announcements have been made in the first place, particularly given the geopolitical context, with Algeria鈥檚 stance, being a very independent voice on geopolitical issues and certainly unaligned with the US and the West,鈥� said Munton. IOCs can contribute their expertise in maximizing production from mature areas and can offer skills, technologies and capabilities that Algeria would benefit from, he continued, but added that the political context remains 鈥渧ery challenging鈥� for these companies.

鈥淚 think we have to be quite cautious in terms of how quickly we think there鈥檚 going to be a return of significant activity by the Western majors and US majors in particular,鈥� Munton said. 鈥淚t鈥檒l take time, but potentially it could make a difference 鈥� we鈥檙e just not talking anytime soon.鈥�

Midstream challenge

While there is some progress in the upstream sector both in Algeria and more broadly across North Africa, this may not translate to new midstream infrastructure. Prospects look poor for major planned cross-border pipelines, such as the proposed 4,128-km (2,565-mile) Trans-Saharan Gas Pipeline.

That pipeline was first proposed in 2009, as a route for shipping Nigerian gas to Algeria via Niger. But while the three countries signed new agreements to advance the project in February 2025, there is considerable skepticism over whether the pipeline will ever be built.

鈥淭he Trans-Saharan pipeline project has remained on the table for nearly 20 years, but it has not moved in any direction,鈥� said Khrais. 鈥淒eclining gas production in Nigeria, security issues such as gas theft and terrorist activities, along with the long distance the pipeline would need to cross through the desert, make it an unfeasible project.鈥�

On top of this, there are questions over whether a new pipeline would even be needed.

鈥淭here is already an existing pipeline network between Algeria and Europe consisting of three lines: TransMed, Medgaz and GME,鈥� said Khrais. 鈥淲hile the GME pipeline was shut down in 2021 due to the diplomatic spat between Algeria and Morocco, the other two pipelines are not operating at full capacity. This means that there is already significant spare capacity in the network to transport more gas. In other words, the bottleneck lies in the volume of gas available for export, both in North Africa and Nigeria, not in the infrastructure needed to transport it.鈥�

Nakhle, meanwhile, noted that while a cross-border pipeline could make sense to the countries and companies involved, geopolitical realities and growing competition from both LNG and other sources of gas posed a challenge.

Competition

Indeed, growing competition from other suppliers is one of two major factors that Nakhle sees as holding back North Africa鈥檚 gas export potential, alongside growth in domestic gas demand within inefficient local markets. Competition from other suppliers is intensifying in Europe, with leading LNG exporters the US and Qatar seeking to send more volumes to the continent in recent years. On top of this, there is also growing competition from renewables.

鈥淩emember: one of the main 鈥榳eaknesses鈥� of natural gas is that it has a substitute in each of its applications,鈥� said Nakhle.

This was echoed by Munton, who pointed to Europe increasingly turning to LNG for replacing lost volumes of Russian gas in the short term, and to other sources of energy including renewables in the longer term.

鈥淭he longer that Europe is in this crisis mode and facing very, very high natural gas prices, the more pressure there is politically to transition away from gas, to look for alternatives and to increase investment in renewables,鈥� said Munton. 鈥淥f course, there have been lots of challenges with the expansion of renewables, but gas demand has dropped considerably in Europe over the last few years.鈥�

Short-term advantage

In the short term, this can put North African gas at an advantage.

鈥淔or the industry North Africa is, in some ways, a logical and attractive place to consider increasing activity because of its proximity,鈥� said Munton. 鈥淓urope needs the gas. North Africa is a proven gas province,鈥� he added. 鈥淚 think in the short term North Africa is still a vital piece of the supply picture.鈥�

A GlobalData senior upstream analyst, Paul Hasselbrinck, is relatively optimistic over North Africa having a supply role to play beyond the short term too.

鈥淗aving effectively phased out Russian piped gas and considering the slower development of alternatives to gas in renewable hydrogen and energy storage systems, Europe鈥檚 energy transition finds itself at a crossroads in looking for a secure supply of energy for the continent,鈥� Hasselbrinck told COMPRESSORtech2. 鈥淭his will likely mean a sustained gas demand in the medium-term future, underscoring Algeria鈥檚 continued importance as a supplier.鈥�

Hasselbrinck also pointed to the risk profile of competing sources of supply.

鈥淐urrent turmoil with Trump鈥檚 trade war and position on the Russia-Ukraine war damages the risk profile of a significant portion of current LNG supply to Europe from the US, opening up an opportunity for North African suppliers,鈥� he said. He added, though, that North African exporters would still have to compete with suppliers from elsewhere in the world.

鈥淭he uncertainty over North Africa鈥檚 advantage as a supplier holds back significant investments that are needed to fulfil this EU-North Africa energy partnership,鈥� Hasselbrinck said.

On top of addressing its domestic challenges, North Africa will also have to increasingly consider the emissions profile of its gas production, according to Nakhle.

鈥淭he business-as-usual model is not sufficient anymore in a world that is more climate conscious,鈥� Nakhle said of efforts to ramp up gas production. 鈥淣orth Africa is not globally competitive when it comes to carbon intensity. This is something that the industry and governments in the region should equally focus on.鈥�

Bearing these challenges and uncertainties in mind, Munton sees demand-side management as a useful tool for North Africa鈥檚 gas producers as they consider how best to proceed.

鈥淔rom a government standpoint, I think there really needs to be a look at renewables 鈥� particularly solar 鈥� and where that can help to reduce domestic natural gas demand,鈥� Munton said. 鈥淭he upstream is going to do what it鈥檚 been doing for some time, but on the demand side, I think that鈥檚 where there are more avenues by which the region could maybe look to make a difference.鈥�