The Algerian groups Sonatrach and Chinese SOOGL announced on May 28, 2022 the signing of a “oil production sharing” amounting to $490 million. While twenty states, including the United States and France, have pledged to put an end to foreign financing of fossil fuel projects, Beijing is pushing its investments and loans to Africa.
For a period of 25 years, this contract provides for the construction on the perimeter of Zarzaitine, in the south-east of Algeria, of a “project to enable the recovery of 95 million barrels of crude oil”, according to the statement released by the official Algerian agency APS. The agreement was signed by the vice-president in charge of Sonatrach’s exploration and production activity, Mohamed Slimani, and the general manager of Sinopec Overseas Oil and gas Limited (SOOGL), Wu Xiuli.
In early January, the Sonatrach group announced $40 billion in investments between 2022 and 2026 in oil exploration, production and refining as well as gas prospecting and extraction. Great prospects for Beijing.
Despite international mobilization to limit gas and oil exploration, Algeria and other African countries do not intend to give up the exploitation of their resources. Senegalese President Macky Sall spoke out against a halt to funding the exploitation of fossil fuels in the name of the fight against global warming.
While the G7 countries have just committed to ending all international financing of fossil fuel projects, China continues to invest in oil and gas, offering its long-term loans, particularly in Africa . This debt constitutes “a serious danger” to see the world plunge into a new financial crisis, warned German Chancellor Olaf Scholz on May 27, 2022.
“There is a really serious danger of seeing (trigger) a next big debt crisis in the South linked to the loans granted by China, which itself does not have a big picture because of the many actors involved.”
Olaf Scholz, German Chancellorat AFP
“It would plunge China and the countries of the South into a great economic and financial crisis and, moreover, would not spare the rest of the world”insisted the German leader. “So this is a serious concern.”
China has long been accused by the West of using the “debt trap” to influence other countries. The argument is that China lends money long-term to other states, which end up having to cede control of key assets if they can’t repay it. For its part, Beijing says its loans are aimed at alleviating poverty.