Can Algeria replace the Gulf to meet Europe’s energy needs?

The writer is an associate fellow at the Centre for Analysis of Strategic Policy and International Affairs.

A crisis in the Strait of Hormuz has consequences that extend well beyond the Middle East. As one of the most critical arteries of global energy trade, even limited disruption in this narrow passage can trigger economic, political and security repercussions worldwide.

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Tensions in the Strait of Hormuz may disrupt not only energy flows but also broader international trade routes. The most immediate impact of instability would be a sharp rise in oil and gas prices. A significant share of global oil supplies and a large volume of LNG exports pass through this route. Gulf countries, among the world’s top LNG exporters, depend heavily on this corridor.

The increasingly strained geopolitical situation could lead to delays or even a halt in LNG shipments, intensifying competition among buyers in Europe and Asia. Even without a full closure, higher risk premiums, rising shipping insurance costs and delays could significantly constrain supplies.

Role of Algeria

European countries, which have relied heavily on LNG since the Russia-Ukraine war, may face disruptions to energy supplies. Alongside accelerating investment in renewable energy and expanding strategic petroleum and gas reserves, Europe also has the option of strengthening partnerships with alternative suppliers.

While the region faces several challenges, Algeria is emerging as a potential beneficiary of the crisis, as its gas exports avoid the Strait of Hormuz entirely. Algeria’s geographic position also gives it a pivotal role in its engagement with Europe, particularly Mediterranean coastal countries.

Algeria has become a critical partner, not only as a supplier but also as a geopolitical alternative to one of the world’s most vulnerable energy chokepoints. With its established energy infrastructure and close proximity to Europe, Algeria is well placed to benefit from this shifting landscape.

Additionally, supply chains in southern European countries are being reconfigured to minimise geopolitical risk. Europe’s growing scramble for Algerian gas cannot be fully understood without considering the strategic vulnerability of the Strait of Hormuz. As tensions linked to Middle Eastern conflicts intensify, the risk of disruption in this narrow maritime corridor has become a central concern for global energy markets, reshaping supply strategies and redefining Algeria’s role.

This is one of the key reasons Gulf countries have insisted on the unconditional and permanent reopening of the Strait of Hormuz.

Algeria holds some of the world’s largest proven natural gas reserves and has long-standing pipeline connections to Europe, including the TransMed pipeline to Italy and Medgaz to Spain. Its state-owned energy company, Sonatrach, has been actively expanding production and export capacity in recent years.

Unlike LNG suppliers that rely on complex and costly shipping logistics, Algeria’s pipeline infrastructure offers a relatively stable and cost-effective delivery mechanism. This has made the country an attractive partner during periods of energy crisis.

Two key players

Recent high-level visits underscore Europe’s urgency. Italian Prime Minister Giorgia Meloni travelled to Algiers on March 25, followed closely by Spanish Foreign Minister José Manuel Albares, in efforts to secure long-term supply agreements and deepen energy cooperation. According to Asharq Al-Awsat, Algerian gas accounted for more than 29 per cent of Spain’s total gas imports during the first two months of the year, citing figures from Enagás. These supplies are delivered through the Medgaz pipeline, in which Sonatrach holds a 51 per cent stake, while Naturgy is a minority shareholder. Sonatrach also owns around 4 per cent of Naturgy.

Italy and Spain are Algeria’s largest gas customers, and both have been at the forefront of Europe’s push to reduce dependence on Russian energy. Italy, in particular, has positioned itself as a gas hub for Europe, leveraging Algerian flows to supply central and northern markets.

In short, Italy and Spain are seeking to secure long-term pipeline gas agreements, expand import capacity from North Africa — particularly Algeria — and reduce their exposure to LNG price volatility linked to risks in the Strait of Hormuz.

Opportunity and pressure

For Algeria, this surge in demand presents a significant economic opportunity. Increased exports can boost state revenues, stabilise public finances and fund domestic development projects.

However, it also brings challenges. Algeria has no option but to balance export commitments with domestic consumption, which has been rising steadily. In addition, infrastructure upgrades and investment in exploration are necessary to sustain higher output levels. Internal political stability and effective regulation will be essential to encourage foreign investment and support these efforts.

Despite its advantages, Algeria faces constraints that could limit its ability to fully capitalise on this opportunity. The country needs to modernise infrastructure and remove bureaucratic obstacles in order to compete with LNG exporters such as the US and Russia, which remain major players in the global energy market.

Despite favourable conditions, Algeria cannot fully replace Gulf LNG volumes. Its production capacity, infrastructure limitations and domestic demand constraints mean it can only partially offset global disruptions. However, even marginal increases in Algerian exports could have significant strategic value during crises, particularly in stabilising southern European energy systems.