Algeria Cuts Ties With the UAE Over Airspace
ALGERIA · FOREIGN POWERS
Key Facts
- Gas customers Italy took 23.3 billion cubic metres of Algerian gas in 2024, about 39% of its imports; Spain took 11.7 billion, also about 39%.
- Top supplier China sold Algeria US$10.58 billion of goods in 2024, about 22% of everything Algeria imported.
- Foreign investment Net direct investment from abroad was US$1.54 billion in 2025, about 0.5% of an economy of US$287 billion, as of October 2026.
- US trade US goods exports to Algeria were US$1.28 billion in 2025 and imports US$2.24 billion, a US deficit of US$959 million.
- UAE rift Algeria’s foreign ministry cut ties with the United Arab Emirates on 10 September 2026; its defence ministry closed airspace to Emirati aircraft.
- Borrowing Algeria owed foreign creditors only US$6.9 billion at the end of 2024, about 2.7% of its output.
Algeria’s foreign partners fall into three groups: European gas buyers led by Italy and Spain, a Chinese supplier that sells it more goods than any other country, and American, Asian and Gulf energy companies that hold contracts with the state oil and gas firm Sonatrach. As of October 2026 foreign direct investment is small, at US$1.54 billion in 2025, and the state keeps control of the strategic sectors.
Algeria’s Foreign Money at a Glance
Algeria is a state-led economy of 47.4 million people and an output of US$287.0 billion in 2025, the World Bank’s figures show as of October 2026. Oil and gas dominate, and the US State Department says hydrocarbons have historically supplied 95% of export revenue and about 40% of government revenue.
Foreign money arrives mainly as contracts rather than as ownership. Net direct investment from abroad was US$1.54 billion in 2025 and US$1.30 billion in 2024, which is about 0.5% of output in both years.
Foreign borrowing is small too, with external debt of US$6.9 billion at the end of 2024, about 2.7% of that year’s output. The State Department describes the government as historically debt-averse and resistant to foreign financing.
Algerians abroad send home more cash than foreign investors bring, with personal remittances of US$1.69 billion in 2025. The wider picture of who runs the economy is in the Rio Times guide to Algeria’s economy and its key players.
Europe, the Gas Customer
Europe is the first reason Algeria matters abroad, because pipelines tie Algerian gas fields to Italian and Spanish homes and factories. Eurostat, the European Union’s statistics office, counts 40.1 billion cubic metres of Algerian gas imported by EU countries in 2024.
Italy took 23.3 billion cubic metres of it, which was 39% of all the gas Italy imported that year. Spain took 11.7 billion, also 39% of its imports, while Germany took none from Algeria in 2024.
Eni, the Italian energy group, calls itself the leading international energy company in the region on its Algeria page. It signed a 30-year production-sharing contract with Sonatrach on 7 July 2025 for the Zemoul El Kbar area of the Berkine Basin, with planned investment of US$1.35 billion.
Under a production-sharing contract the foreign company pays the exploration costs and recovers them from the oil or gas it finds, and the rest is split with the state. Eni says the area covers about 4,200 square kilometres and absorbed neighbouring assets that had been under separate contracts.
Spain’s main link is the Medgaz pipeline, which runs under the sea from Beni Saf in Algeria to Almería and has carried gas since 2011. Its operator says it raised the line’s capacity by 25% in November 2019.
Germany is a newer customer. Sonatrach and the German gas group VNG signed a supply contract on 16 July 2026 during President Abdelmadjid Tebboune’s official visit to Germany, with deliveries to the German market starting on 1 January 2027.
The two companies also partner in hydrogen projects called ALTEH2A and SoutH2 Corridor, which aim to produce hydrogen in Algeria for export to Europe. The Czech utility ČEZ, for its part, extended its gas contract with Sonatrach by one year from 1 October 2025, with the gas flowing through the pipeline that links Algeria to Italy.
Trade data show how concentrated the buyers are. Of the US$51.9 billion of goods Algeria reported exporting in 2024, Italy took US$12.4 billion (24%), France US$7.6 billion (15%) and Spain US$6.4 billion (12%), according to the United Nations trade database Comtrade.
France is also the third-largest source of Algerian imports, at US$3.11 billion in 2024, just behind Italy at US$3.17 billion. For the pipelines and gas politics behind these numbers, see the Rio Times explainer on Algerian gas and Europe.
American Oil Companies and Washington
The United States buys more from Algeria than it sells. Census Bureau figures show US goods exports to Algeria of US$1.28 billion in 2025 and imports of US$2.24 billion, a US trade deficit of US$959 million.
In the first eight months of 2026 US exports were US$1.00 billion and imports US$1.93 billion, a deficit of US$929 million, as of October 2026. The US deficit with Algeria was US$1.45 billion in 2024 and US$959 million in 2025.
American oil firms are courting access to Algerian fields. Sonatrach’s chief executive Nour Eddine Daoudi visited the United States from 12 to 16 October 2026 and met six US energy and oilfield-service companies, ExxonMobil, Halliburton, Devon Energy, Baker Hughes, KBR and Occidental Petroleum, known as Oxy.
ExxonMobil signed a memorandum of understanding with Sonatrach in May 2024 to review development of the Ahnet and Gourara basins, which is a preliminary document and not a contract. Oxy has worked with Sonatrach in the Berkine Basin for years and, with Eni and the French group TotalEnergies, signed a hydrocarbon agreement for perimeters 404 and 208 in 2022.
Baker Hughes, with the Italian firms Nuovo Pignone International and Tecnimont, won an engineering and construction contract signed in May 2024 for the Boosting III Stage 2 project at the Hassi R’Mel gas field, Sonatrach says. KBR, a US engineering group, has been present in the Algerian energy sector since the early 1980s, the same release adds.
The US government’s own view of the business climate is mixed. Its 2025 Investment Climate Statement says a state-dominated economy presents challenges for US businesses, while naming agriculture, information technology, mining, hydrocarbons, renewable energy and healthcare as fields where officials seek US investment.
China, the Biggest Supplier
China sells Algeria more than any other country. Algeria’s customs data, as collected by Comtrade, show US$10.58 billion of Chinese goods in 2024, which is 22% of Algeria’s US$47.4 billion of imports.
China buys far less in return, with US$1.99 billion of Algerian goods in 2024, about 4% of Algeria’s exports. Chinese companies are active in Algerian oil and gas as partners and as contractors.
Sinopec, the Chinese state oil company, has been present in Algeria since 2002 and works with Sonatrach on the Zarzaitine deposit. On 25 February 2025 the two signed a production-sharing contract for the Hassi Berkane North perimeter, with a projected investment of US$850 million and China’s ambassador Dong Guangli present.
On 28 August 2026 Sonatrach and Sinopec signed a memorandum in Beijing covering conventional and unconventional hydrocarbons, complex reservoirs, petrochemicals and helium. A day later Sonatrach signed another memorandum there with the Chinese oilfield-services group Anton on shale-type resources and equipment made locally.
Chinese firms also win service work. A consortium of CAIEC and SLPI, two Chinese companies, won two contracts on 25 September 2025 to inspect five gas pipelines with a combined length of 3,576 kilometres, and Sinopec Guangzhou Engineering signed on 17 November 2025 to build a naphtha-treating unit at the Arzew refinery.
Russia, Turkey and the Gulf
Arms are the clearest Russian link, and they have shrunk. The Stockholm International Peace Research Institute (SIPRI), an independent research body, ranks Algeria 33rd among world arms importers for 2021 to 2025, with imports down 78% from the peak of 2016 to 2020.
SIPRI says Russian arms exports to Algeria fell substantially in that period, and it warns that Algeria is often secretive, so its estimates may be on the low side. Russia also sold Algeria US$2.02 billion of goods in 2024, about 4% of Algerian imports, the UN trade database shows.
Turkey combines trade with factories. It was Algeria’s fifth-largest source of imports in 2024 at US$2.57 billion, and it bought US$3.46 billion of Algerian goods.
The Turkish steel group Tosyalı runs a complex in Oran that its Algerian website says employs up to 8,000 people and makes it the biggest private-sector employer in Algeria. That figure is the company’s own.
The Gulf picture is mixed. Qatar’s telecom group Ooredoo has run a mobile network in Algeria since 2004, and the Saudi company Midad Energy North Africa signed a production-sharing contract with Sonatrach for the Illizi South perimeter on 13 October 2025 with the Saudi ambassador present.
Algeria’s foreign ministry announced on 10 September 2026 that it was cutting diplomatic relations with the United Arab Emirates, saying it had exhausted all means of keeping ties. Algeria’s defence ministry said it closed Algerian airspace from 11 September 2026 to all civil and military aircraft registered in the UAE, with a temporary exemption for commercial flights to and from Algiers airport until the end of 2026.
Asian energy firms are also in the field. Thailand’s PTTEP has worked in Algeria since 2002 and signed a memorandum with Sonatrach on 5 October 2026, while Indonesia’s Pertamina signed three service contracts on 22 December 2025 to lift its share of crude oil, condensate and liquefied petroleum gas from the Menzel Ledjmet perimeter.
Lenders, Rules and the Investment Climate
The International Monetary Fund (IMF), the global crisis lender, is an adviser here rather than a lender. Its 2025 review of Algeria, concluded by its board on 11 September 2025, found the outlook broadly positive but clouded by growing fiscal vulnerabilities.
The IMF’s database puts general government gross debt at 52.1% of output in 2025, as of October 2026. Algeria joined the New Development Bank, the lender set up by the BRICS group of large emerging economies, on 19 May 2025, according to the bank’s member list.
The legal framework limits foreign control in key fields. Since 2020 the 51/49 rule, which requires Algerian partners to hold 51% of a project, applies only to named strategic sectors, which are energy, mining, defence, transportation, infrastructure and pharmaceutical manufacturing, the State Department’s investment report says.
A 2021 law restored the rule for companies that import goods to resell them. A new investment law replaced the 2016 version in July 2022, and a draft mining law that would let foreign owners hold 80% of a mining project, up from 49%, was still pending as of June 2025, the same report says.
Embassies and Diplomats
The European Union’s delegation in Algiers is headed by Ambassador Diego Mellado, and China’s ambassador is Dong Guangli, whose embassy lists meetings with Algerian party leaders in October 2026. The US embassy in Algiers has been led since February 2026 by a chargé d’affaires, Mark Schapiro, which is the title of a diplomat who runs a mission when there is no ambassador.
Algeria’s ambassador in Washington is Sabri Boukadoum, who spoke at an energy forum in Louisiana on 15 October 2026 alongside Sonatrach’s chief. The forum was organised by the US-Algeria Business Council with support from both embassies.
For the wider diplomatic map around these partners, see the Rio Times explainer on Algeria’s geopolitics. Current coverage of the country is collected on the Rio Times Algeria page.
What It Means for US Readers
Algeria matters to Americans as a gas supplier to NATO allies Italy and Spain and as a market for US oilfield services. Any change in Algerian volumes moves European gas prices, which affects the American companies that sell liquefied natural gas to Europe.
US companies compete with Chinese, Turkish, Italian, Saudi and Asian firms for Sonatrach contracts in a state-run economy with ownership limits in strategic sectors. Sonatrach’s October 2026 meetings show it is looking for US technology and capital.
Investors and travellers should check the State Department’s current advisory and investment report before committing money or planning a trip. This guide covers foreign money and power, not security conditions.
What Is Not Known
No contract value or volume has been published for Sonatrach’s October 2026 meetings with ExxonMobil, Oxy and the other US firms, so it is not known whether any deal will follow. Sonatrach’s release gives no follow-up to the May 2024 ExxonMobil memorandum either.
Chinese money in Algeria is hard to total, because the Sonatrach releases on the CAIEC and Sinopec Guangzhou contracts give no values. The size of Russian arms purchases is also unclear, since SIPRI says Algeria’s secrecy may mean its figures are low.
The fate of the draft mining law that would raise foreign ownership to 80% is not known after June 2025. Algeria has not said how long the break with the UAE will last, and the exemption for commercial flights to Algiers runs only to the end of 2026.
Frequently Asked Questions
Who buys the most Algerian gas?
Among European Union countries, Italy and Spain take the most. In 2024 Italy took 23.3 billion cubic metres and Spain 11.7 billion, each about 39% of its gas imports, according to Eurostat.
Does Algeria buy more from China than from anyone else?
Yes. Algeria’s customs data show US$10.58 billion of Chinese goods in 2024, 22% of its imports and far more than Italy at US$3.17 billion.
Can foreigners own most of an Algerian company?
In non-strategic sectors, generally yes, since the 51/49 rule was lifted in 2020. In energy, mining, defence, transportation, infrastructure and pharmaceutical manufacturing Algerian partners must still hold 51%, and the rule also covers importers who resell goods.
Which US companies are talking to Sonatrach?
Sonatrach’s chief executive met ExxonMobil, Halliburton, Devon Energy, Baker Hughes, KBR and Occidental Petroleum in the United States from 12 to 16 October 2026. ExxonMobil signed a memorandum on the Ahnet and Gourara basins in May 2024.
Can Emirati planes still fly to Algiers?
Commercial flights to and from Algiers airport are exempt until the end of 2026, the defence ministry said. Other civil and military aircraft registered in the UAE have been barred from Algerian airspace since 11 September 2026.
Does Algeria borrow much from foreign lenders?
Very little. Its external debt was US$6.9 billion at the end of 2024, about 2.7% of output, and the State Department calls its government historically debt-averse.
Sources: World Bank indicators for Algeria (FDI, remittances, external debt, output), read 30 October 2026; Eurostat natural gas imports dataset nrg_ti_gas, updated 9 October 2026; UN Comtrade, Algeria reporter data for 2024; US Census Bureau, trade in goods with Algeria; Sonatrach press releases, 2025 and 2026; Algerian Ministry of Foreign Affairs, statement of 10 September 2026; Eni, activities in Algeria; Medgaz timeline; SIPRI, Trends in International Arms Transfers 2025; IMF, Algeria country page and 2025 Article IV; New Development Bank, member list; US State Department, 2025 Investment Climate Statement for Algeria; US Embassy Algiers; EU Delegation to Algeria; Chinese Embassy in Algeria; Tosyalı Algérie; Ooredoo Algérie.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
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