Algeria Slams EU Gas Price Cap

Facts

• On Tuesday, Algeria, Africa's largest gas exporter, criticized the EU's recent decision to cap natural gas prices as an intervention disrupting the international energy market.¹
• The North African country's energy minister, Mohamed Arkab, rejected the EU's 'idea of limiting prices' for natural gas amid increased energy costs, noting that the move would have a negative impact on the flow of investment into the industry.²
• Speaking at the fourth German-Algerian Energy Day in Algiers, he condemned the 27-nation bloc for its 'unilateral' measure, and warned against the price cap's alleged destabilizing effect on international energy markets, while urging limitless 'non-discriminatory prices.'³
• Algeria’s criticism comes a day after the EU energy ministers on Monday agreed on a natural gas price cap at €180 ($191) per megawatt-hour after weeks of talks on the emergency measure. The gas price ceiling mechanism can take effect beginning Feb. 15, 2023.⁴
• Algeria is Europe's third-largest gas supplier, and the EU is seeking to scale up energy trade with the North African country as part of its efforts to diversify supplies away from Russia. To that end, the EU has also offered Algeria a 'long-term strategic partnership' for gas, renewables, and hydrogen.⁵
• During the German-Algerian Energy Day, Algeria's state-owned oil company Sonatrach and Germany's VNG AG signed a Memorandum of Understanding to build Algeria's first 'green' hydrogen plant, which will reportedly have a production capacity of 50 MW of electricity from solar power.⁶

Sources: ¹Euractiv, ²Ettelecom, ³Ansamed, ⁴Al Jazeera, ⁵Euobserver and ⁶Arab news.

Narratives

• Establishment-critical narrative, as provided by Bloomberg. The EU's price cap not only destabilizes the energy market but is also set to exacerbate the EU energy crisis and expose Europeans to supply shortages, as liquified natural gas suppliers may favor Asia if prices are higher there. While the EU celebrates itself for finally agreeing on the price brake, the ill-considered mechanism may help prevent extreme price hikes, yet it might ultimately undermine the EU's prosperity and social cohesion.
• Pro-establishment narrative, as provided by The national interest. The destabilizing factor is not the EU price cap but Algeria's geopolitical games and its proven willingness to weaponize its gas supplies. This is especially true in light of its growing ties with Russia and Iran. It's counterproductive and even dangerous for the EU to increase its dependence on Algeria to break away from Russia. The time has come for Washington and the EU to hold Moscow's ally accountable with sanctions.
• Narrative C, as provided by Consilium. By agreeing on a temporary price cap, the EU not only proved its ability to act but also lived up to its responsibility to shield its citizens from spiraling gas prices. Moreover, the deal provides a suspension mechanism if risks to the security of energy supply, financial stability, intra-EU flows of gas, or risks of increased gas demand come to light. With this breakthrough achievement, a united EU has shown shrewd strategic foresight.