Low oil prices benefit Algiers

Seismic shifts in markets often bring with them equally notable shifts in perceptions. When crude oil reached $100 a barrel in January 2008, for example, reservoirs of oil and gas previously seen as too difficult and costly to access became increasingly attractive. The cost of production no longer exceeded the profits that could be generated.

With oil now hovering around the $60 a barrel mark after a brief flurry below $40 a barrel, complex and costly projects have been put on hold with much the same speed as they were commissioned. Contractors who could not move for work in 2008 are looking for new markets, and reassessing locations that in the past seemed to require too much effort to break in to.

Algeria is one such market, although by no means the only one. The country awarded $8bn worth of engineering, procurement and construction (EPC) contracts between January and May this year, close to the total value of projects awarded in the entire GCC. The awards have caught contractors' attention and, the state says, there is more to come.

Those working in the country still complain of excessive red tape, long delays in the tendering process, and of the insistence of state-energy giant Sonatrach on the use of the French language. But these considerations, much like the difficulty of deep-sea drilling for oil at $100 a barrel, no longer seem such a hindrance.

The current scenario also plays in Algiers' favour. A skilled and experienced body of workers is now vying to find work in Algeria, creating an increasingly competitive market. With capital expenditure costs on major oil and gas projects already down an estimated 20-30 per cent since the summer of 2008, the country is becoming more attractive to inter-national firms.