Protests against extraction of shale gas through hydraulic fracturing have intensified since beginning on 1 January and will continue given competing economic drivers and popular opposition. Amid environmental concerns, protester opposition will likely intensify should developments be perceived to favour foreign and northern Algerian workers, reinforcing long-held local perceptions that the oil and gas sector has not brought local benefits or alleviated unemployment in the south. Worsening sentiment towards the wider sector resulting from the growing opposition to shale gas could subsequently have negative consequences for other existing operators in Algeria’s conventional oil and gas industry.
On 1 March, some 40 police officers were injured in clashes with anti-shale gas protesters at a demonstration in Ain Saleh. This was the latest in a series of demonstrations that began in Ain Saleh in January and quickly spread to Ouargla, Ghardaia, Adrar, Tamenrasset, llizi, and other southern towns. Currently the protests are largely directed towards the government and the state-owned oil company, Sonatrach, which is the majority partner in all shale gas projects per government regulations. Protesters have called for a moratorium on exploration of shale deposits, arguing that the hydraulic fracturing process, or fracking, will have negative environmental consequences and harm groundwater reserves and aquifers that residents in the south are heavily reliant on.
Anti-fracking sentiment is in part a manifestation of multiple popular grievances against the oil and gas sector in the south that could provide the foundation for broader unrest against the industry. Despite the region containing the majority of Algeria’s conventional oil and gas reserves, residents of the south commonly perceive that the government has neglected investment in local public services and infrastructure. High levels of unemployment and perceived favouritism towards north Algerian and foreign workers have previously encouraged strikes and demonstrations among workers and the employment practices of future operators could feasibly worsen such grievances.
There is a fundamental tension between protesters’ demands and economic pressures, with Algeria in critical need of the revenues that shale gas could generate. Algeria’s existing hydrocarbons industry accounts for 97 percent of exports and in recent years the sector has suffered from declining foreign investment due to unattractive fiscal terms and other regulatory challenges. The government introduced a more investor-friendly hydrocarbons law in 2013 but the industry response has been tepid and in October 2014 Algeria announced it had awarded only four of the 31 blocks offered under the country’s fourth licensing round, which included both conventional and shale gas acreage. Algeria is estimated to have 707 trillion cubic metres worth of recoverable shale gas resources, the fourth largest in the world, according to the US Energy Information Administration. Amid disappointing investor interest, maturing existing fields and a decline in the discovery of new ones, as well as rising domestic energy consumption, the government is likely to continue the pursuit of shale exploration and future production even in the face of rising unrest.
Although not currently the direct target of protesters, the unrest presents both operational and security risks for foreign companies conducting conventional exploration and production in southern Algeria. Road closures have affected some existing movement and personnel and local staff at some existing operators’ facilities have joined protests in solidarity with the demonstrators. With protests expected to persist and intensify should shale exploration continue, there is a risk that operators will be increasingly exposed to the indirect impact of unrest. Sentiment against shale exploration could easily widen to include conventional oil and gas operations and previous social media criticism of the government’s stance on shale exploration has also specifically targeted French companies who have been labelled hypocritical in light of France’s domestic ban on fracking. While there is nothing to indicate an increased threat of militancy at present, disaffection among local personnel could also be exploited for more violent purposes by hostile actors, as witnessed in the 2013 In Amenas attack, when some support staff at the facility were thought likely to have cooperated or inadvertently provided information to militants.
The dispute over shale exploration is also becoming increasingly politicised and shows no signs of abating in the short-term. On 3 March, opposition Islamist legislators boycotted the opening session of parliament over a draft law to regulate the exploration of shale gas. The Coordination for Liberties and Democratic Transition, which includes five main opposition parties and an array of civil society groups, has stated its support for the protests and the government’s past reluctance to negotiate with the opposition suggests a political solution is unlikely.
A critical longer-term dynamic that could affect the future of the industry will be the health of 78-year old President Bouteflika. The president has been in poor health since 2005, and had a mini-stroke in 2013. His potential death and unclear succession already threaten to fuel major political instability in Algeria and any presidential successor could seek to placate wider politically-related unrest and gain popularity through interim measures such as a temporary moratorium on shale exploration. The uncertain timeframe on political succession and economic drivers encouraging shale exploration however mean that by the time of succession, the industry could already be at production phase and therefore much more difficult and contentious to suspend.
The clear tensions between economic drivers and public opposition in the south will be difficult to resolve. Although mainly concentrated in the south, some demonstrations have already taken place in the capital Algiers. An increased frequency of unrest and the geographical expansion of demonstrations as the issue progresses should be seen as indicators of the growing potential for negative sentiment towards the wider sector. This will potentially expose existing operations as well as shale-specific projects to growing unrest and therefore merits ongoing attention throughout 2015.