Start Industry in Algeria

The industries of Algeria, which traditionally have been concentrated around Algiers and Oran, have included carpet mills, cement factories, chemical plants, automobile assembly plants, food-processing installations, oil refineries, soap factories, and textile plants. Other major industries have produced bricks and tiles, rolled steel, farm machinery, electrical supplies, machine tools, phosphates, sulfuric acid, paper and cartons, matches, and tobacco products.

 

Before independence, industry made significant gains. New enterprises were developed in food processing and packaging, textiles, leather, chemicals, metalworking, building materials, and farm machinery. A new large steel plant was built at Annaba, a petroleum refinery at Algiers, a petrochemical complex at Arzew, and a phosphate production center at Djebel Onk, near the Tunisian border. Other industries were set up to produce automobiles, tractors, cement, rubber tires, and ammonia.

 

French firms were nationalized after independence, between 1962 and 1974. The government put great emphasis on the development of the hydrocarbons sector, including the building of refineries and natural gas liquefaction plants. Algeria contains an estimated 11.8 billion barrels of proven oil reserves, but analysts consider Algeria to be underexplored. As of 2005, Algeria had four oil refineries with a capacity of 450,000 barrels per day. Algeria's crude oil production in 2004 was 1.23 million barrels per day. Algeria is a member of the Organization of the Petroleum Exporting Countries (OPEC), and its crude oil production quota was set at 862,000 barrels per day as of November 2004. Algeria has been pressing to have its OPEC quota raised, as its production capacity is increasing rapidly.

 

The government has encouraged diversification away from Algeria's heavy reliance on hydrocarbons, although those efforts have not been entirely successful, especially given the increase in oil and natural gas export revenues since 1999. Algeria is considered to be underexplored, and significant oil and natural gas discoveries have been made in recent years, which have increased Algeria's proven oil reserves to 11.8 billion barrels, placing it 14th in the world in total oil reserves. Algeria's proven natural gas reserves were 160 trillion cu ft in 2005, the eighth-largest in the world. The state-owned hydrocarbons company, Sonatrach, invested nearly $20 billion between 1996 and 2000 on new pipelines and extensions. The company's Trans-Maghreb pipeline opened in 1996, supplying Spain and Portugal with natural gas, and Sonatrach substantially increased the capacity of its Trans-Med gas pipeline to Italy. In 2001, Sonatrach undertook a feasibility study on another natural gas pipeline under the Mediterranean to Sicily, the Italian mainland, and southern France; the project could come on-stream by 2008. The Medgaz natural gas pipeline, to be completed in 2008, will link Beni Saf, Algeria, to Almeria, Spain. As of 2005, there was also the possibility of a Trans-Saharan natural gas pipeline, running from Nigeria, across the Sahara, and on to Algeria and the Mediterranean coast. In 1998, Sonatrach issued bonds for the first time, showing the regime's loosening hold on the state-run enterprise. Algeria's oil and natural gas industries increasingly are becoming more open to foreign investors.

 

The textile and leather industry declined 14.7% in 2001, and 27 state-owned textile companies had gone out of business since 1996, resulting in a loss of 22,000 jobs. Textile manufacturer Group Texmaco, however, was successful as of 2002. It accounted for 30% of the market and had 18,000 employees, although it was operating at 20% capacity in 2002. The textile industry by 2005 was faced with competition from Asia, particularly China.

 

As of 2004, industry accounted for about 57.4% of the nation's GDP. The hydrocarbons sector (mostly petroleum and natural gas) alone accounted for 30% of GDP in 2005 and over 96% of export revenues. Algerian industry has been in the process of a structural transformation as it moves from a socialist, government-controlled economy to a free-market economy. Consequently, industrial production has fallen as inefficient plants are closed and large oversized industries are scaled back. As of 2002, of the 1,270 state-owned companies, 53% were considered sound after substantial restructuring, 30% were functioning but in poor financial shape, and the remaining 18% were bankrupt or nearly so (approximately 230 companies). The government has spent $15 billion to restructure industry in the early 2000s. By 2004, the estimated industrial production growth rate stood at 6%.