Algeria's oil and gas industries pillars of its economy

AnalysisAfter an attack that struck at the heart of Algeria's vital energy industry, the stakes have risen sharply for the region's economic and military powerhouse.

The gas installations at In Amenas, in the remote southeastern desert, are among Algeria’s most important, accounting for 15 per cent of the country’s overall gas exports.

The huge oil and gas industries are pillars of the Algerian economy. They represent 98 per cent of its export revenue and 70 per cent of its national budget.

Thousands of foreign workers are based in the country, with overseas firms such as BP, Statoil, Gazprom and Shell retaining a big presence despite a 1971 nationalisation law that gives state energy firm Sonatrach a controlling stake in major plants.

Sense of alarm

The sense of alarm is all the greater in Algeria this week because Wednesday’s attack was the first of its kind. Never before, even at the height of the civil war that pitted Islamist forces against a broadly secular political-military leadership in the 1990s, was an attack such as this mounted against vital energy plants in the southern desert.

The Algerian communications minister, Mohamed Said Belaid, said during the siege: “This is an attack of multinational terrorists against the Algerian people and the Algerian state. The objective is clear: to destabilise Algeria.”

That view may help explain the uncompromising military response. “I knew it would end in a bloodbath,” Charles Pellegrini, former head of the anti-terrorist cell at the Elysée, told Le Parisien.

“Trained in Russia in the Soviet era, the senior ranks of the Algerian army never negotiate with terrorists and always deal with these types of situations Russian-style.”

Pellegrini added that Mokhtar Belmokhtar, the Islamist militant said to be behind the gas field raid, was the regime’s sworn enemy, a symbol of its years fighting Islamist groups.

“All that suggested that the hostage-taking could only have ended with a massive assault.”

The crisis will also turn the spotlight on to Algeria’s often fraught relations with Europe, the US and its neighbours.

Algiers, still recovering from the trauma of its long, bloody civil war, is accused by some of adopting an ambiguous stance towards problems in the lawless Sahara beyond its borders.

But its help is vital to attempts to contain the growing strength of Islamist militants in the vast swathe of desert that spans parts of Mali, Mauritania and Niger.

That may be why, amid all the foreign criticism of Algeria’s tactics during the siege, France offered Algiers its support. Paris, of course, is involved in a risky military intervention on Algeria’s doorstep in northern Mali. For it to succeed, it needs Algiers on its side.