M Multipolar World

Building trust can take
the form of investment

Energy & regional integration in the Western Mediterranean
The Mediterranean
in a multipolar world up to 2030
© CIDOB edicions
Edited by
CIDOB Foundation
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08001 Barcelona
Tel. 93 302 64 95
Fax. 93 302 21 18
[email protected]
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Francesc Badia i Dalmases
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Print
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ISBN: 978-84-92511-29-7
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Barcelona, october 2010

CONTENTS
JORDI VAQUER I FANÉS & MOHAMMED BELMAHI 5
Foreword
AMAR DRISSI 7
Phosphates, energy and the rest: The alchemy of the Maghreb
ABDERRAHMANE HADJ NACER 19
The Western Mediterranean region must reinvent itself
HOUDA BEN JANNET ALLAL 25
Water desalination and solar in the Mediterranean region
MUSTAPHA K. FAID 45
The importance of energy issues in intra-Maghreb relations and in the

relationships between the Maghreb and Europe
DR. TILL STENZEL 63
Solar energy and the Maghreb region
FRANCIS GHILÈS 75
Building trust can take the form of investment. Some ideas to add to a faster
growth in the Maghreb
FOREWORD
Jordi Vaquer i Fanés
CIDOB Foundation
Mohammed Belmahi
OCP Foundation
I
n view of the challenges which confront the Western Mediterranean
world in the years ahead, the Barcelona Centre for International
Affairs is committed to building scenarios that highlight its potential
as an area of growth and innovation and fosters a better future for the
people who inhabit its northern and southern shores. With that purpose
in mind, and under the general title of “The Mediterranean in a multipo-
lar world up to 2030”, CIDOB is working on a three year research
program (2010-2012) whose aim is to analyse how countries in the area
might overcome their differences and imagine a common future.
The research program, carried out in partnership with OCP Foundation in

Rabat, brings together internationally recognised experts. It has opened
three lines of research devoted to analysing and making proposals on
issues critical to the future of the region. The focus of our research in
2010 is role played by energy in developing downstream industries
and reinforcing regional integration, which would allow the Western
Mediterranean to be an actor in its own right on the world stage. We
will then focus, in 2011, on the idea of the Western Mediterranean as a
laboratory where the future of the Euro-African space could be mapped
out. The third focus, during the last year of the research program, will be
on the economic governance of Western Mediterranean countries, and
how this might impact on the region’s future.
With the final purpose of building a comprehensive understanding of

the region’s future, CIDOB’s Western Mediterranean research project
has adopted a prospective methodology offering a platform for analy-
sis, information exchange, and the sharing of views – in other words,
a laboratory of ideas- that could offer insights and practical tools for
decision makers, be it at a political, economic or private level. The pro-
gram is also building a network of experts drawn form the region and
beyond.
5
As a result of the initial phase of the research, which focused on energy
and regional integration in the Western Mediterranean, we are presenting
a first report which include 5 comprehensive papers written by analysts and
authors who are well acquainted with energy issues and who have taken
stock of the current state of play in the Western Mediterranean: the need
for the region to reinvent itself energy-wise, the industrial potential of link-
ing phosphates extraction in Morocco with gas supply from Algeria or the
promising possibilities of solar energy, with a close look at a case study link-
ing the latter with water desalination.
With the aim of exploring future scenarios and bringing fresh ideas for
action in the region, these background papers were circulated and dis-
cussed by the participants at a specialised seminar that was held in CIDOB’s
headquarters in Barcelona, in early July 2010. Under the title of “Building
Trust can take the form of Investment”, Francis Ghilès, CIDOB’s senior
research fellow and director of the research program proposes, as a conclu-
sion, some concrete ideas to add to a faster growth in the Maghreb, drawn
from the enriching discussions.
The region has a lot of potential that has been wasted for too long, and
it is high time to surmount the complexities and move ahead. As Francis
Ghilès writes in his paper, on the region “there is no shortage of capital,
and if capital is fleeing the region it is precisely because the regional leaders
– in the Maghreb but also in southern Europe - seem unable to think out
of a box […]. Now is the time to practice a little economic realpolitik, dis-
cuss some really new ideas, face up to the role energy and other minerals
could play as facilitators or basic enablers in helping to anchor the Western
Mediterranean firmly in the new world economic map”.
If we are earnestly committed to looking ahead to 2030 with a degree of

optimism, we have to start putting together the building blocks of a better
future today. This publication aims to provide some serious ideas for action.
FOREWORD
6
PHOSPHATES, ENERGY
AND THE REST:
THE ALCHEMY OF THE MAGHREB
Amar DRISSI
7
PHOSPHATES, ENERGY AND THE REST: THE ALCHEMY OF
THE MAGHREB
Amar DRISSI
Executive Director, Office Chérifien des Phosphates (OCP)1
“If we don’t do the impossible,

we shall be faced with the unthinkable”
Petra Kelly
Introduction
The usual rhetoric about the Maghreb is rather tired and thread bare.
Full of outdated clichés, straight banalities or trite simplifications, it keeps
oscillating between trivia or grand designs with a healthy dose of postur-
ing, wishful thinking and pointless sloganeering. How to say something
new about the Maghreb, that alluring but faceless oxymoron? How
to say something new about regional integration, industrial synergies,
something new that may get us out of the well-trodden paths, some-
thing that shakes the old patterns, and forces us to think out of the box?
The economic and global crisis in the Maghreb may be primarily a crisis
of ideas, a crisis of representations, a crisis of analysis, a crisis of thought
and decision process, a crisis of perceptions. While we tend to over-focus
on economic results, outcomes, which are actually only the consequence
and the end result of various processes at work, things may seem intrac-
table. Therefore, if we want to change, we have to change twice: change
the reality of our situation and change our perception of reality2.
As is usually the case, we are flooded with a lot of information but lit-
tle knowledge. Navigating the challenges of the Maghreb development
and industrial integration will require some hard facts, analysis, recom-
mendations for action with a healthy dose of creative thinking. Food for
thought more than dogmatic stances will help us frame vital questions.
In so doing, we may provide more questions than answers.
1. The article expresses the personal
Instead of just repeating all that has been said about the cost of non- view of the author and does not
Maghreb3, we will try to go for some real stuff and build some practical reflect the position of OCP
meaningful cases and proposals which are concrete, tangible and make 2. De Brabandere Luc : The forgotten
half of change, Dearborn, 2005
economic sense. Along this line, there may be small nudges4, a lot of 3. International Crisis Group
muddling through with questions, surprises and incomplete ideas which 4. T h a l e r & S u n s t e i n : N u d g e s ,
may force us to think. Penguin, 2008
9
Current context and long term trends in world
chemical industry
There is a powerful economic trend which has been with us for

more than a decade and will continue relentlessly: the migration of
chemical industries form the northern part of Europe to the southern
hemisphere. Specialty chemicals (such as vitamins, colouring agents,
industrial dyes…) have massively left Continental Europe to China 5
and other parts of the world. The European specialty chemical indus-
try which was active and innovative in the fifties has been in retreat
since most of the scientific patents have started to fall into the public
domain and can thus be easily copied all over the world6. In a ten-year
time frame, the Gulf has built a powerful petrochemical industry which
is best exemplified by SABIC in Saudi Arabia.The rationale behind these
new value levers is major shifts in demand, supply, cost competitiveness
and attractive long term margins that will further re-shape the whole
industry.
As far as petrochemicals are concerned, they will go through several

upheavals that will shake and remodel the whole landscape over the
next 10-15 years:
• Continued focus on social prioritization: Middle East is likely to add

capacity downstream for purpose of job creation (even at expense
of return on investment7)
• Relentless globalization: Asia/ME still continue to become the
demand and supply centers
• Powerful buyers looking upstream
• Continuous technological innovation: Gas to olefins, Coal to olefins,
Biotech, U.S. natural gas developments (shale gas)
• Industrial learning curves: China/India are making major advances in
capex/opex efficiency gains
Depth and length of the downturn will vary by “product” with low cost
being the key competitive advantage8.
• Though Europe and non-China Asia will likely feel the most pain,
exposures among players vary greatly based on location and end-
use mix of their portfolios, and their financial exposures
• Chemicals will suffer the downturn in differentiated ways, based
especially on their exposure to the hard-hit automotive and con-
struction sectors
• As far as the ethylene chain is concerned:
– We should witness pain in petrochemicals over the next few
5. As an example, China capex savings
vs. typical western levels (green-
years, particularly for naphtha crackers
field)in polyester plants could fetch – If no additional closures are initiated, ethylene (cracker) uti-
up to 60-70% lizations will fall to the lowest levels ever since globalization
6. What will stay is core R&D in spe- surfaced in the past 20 years
cific segments such as pharmacy,
agro chemistry, specialties
– Ethane crackers in the U.S. and propane crackers across regions
7. Source: SRI, CMAI, ICIS, interviews, benefit from “excess NGL” conditions and low natural gas prices
McKinsey Chemicals in the Middle • Recovery, once it comes, is bound to generate very strong demand
East Initiative growth
8. Scott Andre,Alexander Vogel:
Industry Perspective on
Petrochemicals 10-15 Years Out,
Mc Kinsey
PHOSPHATES, ENERGY AND THE REST: THE ALCHEMY OF THE MAGHREB

10
The chemical migration to North Africa: still in limbos
The whole traditional European chemical landscape is vanishing, and is in

the process of being remodeled in a radical way. This means opportuni-
ties for countries who can boldly take advantage of it. A recent study by
Mc Kinsey demonstrates that there are many opportunities available to
skilled players to take advantage of long term trends
• “Seek low cost feedstocks in ME, Russia, or other stranded locations.

• For ME feedstocks, create advantaged proposals by bringing ways to
create down-stream jobs (e.g., partner with fabricators)
• Develop relationships to access coal in China if CO2 issues will not
impact those assets for many years
• Investigate outlook for strongly advantaged U.S. ethane costs and, if
confirmed, identify economical changes to existing crackers or poten-
tial new investments
• Identify energy-intensive chemicals in the U.S. that will be advantaged
in a low natural gas price scenario
• Apply, to the extent possible, the capex advantages/techniques that
China can achieve to investments in other regions”9.
With regard to this process, it is clear that Northern Africa (Algeria,

Libya) still lags behind: this relocation process could spread and get more
impetus provided more rational conditions could prevail. Algeria could
still set up a full-fledged petrochemical industry10 which is still in limbos.
As for Morocco, chemicals were NOT11 part of its ambitious industrial
scheme called EMERGENCE launched in 2006: the rationale was that
the chemical fabric was tiny, fragmented with small actors and subcriti-
cal size which pointed to an inward-looking sector with few competitive
factors12 and hence a small potential for attracting outsourcing. Still
Morocco could take advantage of some relocation by fully leveraging its
scientific and technical workforce provided a serious upgrading effort. In
any case, and this may be the lesson which can be drawn from the Gulf
experience, a deliberate approach embodied in a strong State engage- 9. Industry perspectives: Petro-
ment is needed to attract and achieve any significant industrial relocation chemicals, 6th Annual Global
process13. Petrochemicals Conference Vienna,
10 February 2010
10. In spite of high cost of capital and
country risk considerations
JORF PHOSPHATE HUB (JPH): The Moroccan FDI as an 11. There is some talk today to expand
example of chemical relocation strategy the scope and reach of EMERGENCE
much as was done by Egypt which
now boasts 15 industrial sectors.
Due to high agricultural demand for efficiency and productivity coupled The risk is clear: diluting the much
with a relentless world food increase in consumption, the market for fer- needed state effort
tilizers will be rapidly growing over the next decades. 12. The cost differential is huge as com-
pared to China: 3 to 1. The sector
survives thanks to tariff barriers and
Within this context, the JPH program is a case in point of such a delib- a privileged access to public mar-
erate strategy to attract foreign direct investments (FDI) in this specific kets (on the fringes of cartelism)
chemical sector. Opening downstream value chain to direct Investors 13. Spain has been more or less in a
situation comparable to that
thru plug & play industrial plots would be tantamount to offering them of Eastern Europe with a massi-
a virtual upstream integration to the mine at most competitive cost. ve investment flux from France in
OCP clearly enjoys a competitive advantage which is access to a top- the motor industry in addition to
quality rock along geological reserves available for more than 500 years European agricultural subsidies.
This begs the question as to whe-
at current cost. ther Spain had any industry at all
to relocate in Morocco! A neighbor
could also be a competitor.
Amar DRISSI
11
More specifically, the FDI will benefit from competitive and reliable rock
sourcing with transparent pricing mechanisms thru:
a. Significant additional mining capacity by 2015 (+26m tons/year main-

ly in Khouribga).
b. Massive improvement of cost position mainly through shift in the
logistic system (from train to slurry pipeline), a fully integrated chain
supply platform (mine-to-port), access to pooled world class infra-
structure & services, environmental facilities at highest standards.
c. “One-stop-shop”: OCP will remain the sole rock supplier and service
provider through JPH on the whole chemical platform.
The main industrial features14 of the 18 ha-based JPH program will be:
• 10 new fertilizer manufacturing plants by 2020, with each a produc-

tion capacity of 450 KT P2O5 per year15,
• each plant will contain :
– a sulphuric acid unit: 1 350 KT /year
– a power plant: ≈58 MW
– a phosphoric acid unit: 450 KT P2O5/year
– one or several fertilizer units: 920 KT DAP/year
– several storage units for feedstock, utilities and finished products
Energy for industry: a win-win scenario in Maghreb
Gas capacity and availability is present. A major gas pipeline built in

1992 supplies gas from Algeria to Spain through the Moroccan territory.
It has a current capacity of 12 BCM with a planned extension to 18 and
eventually to 24 BCM. The planned extension actually was not carried
out because in the meantime Algeria preferred to engage in another gas
route with an undersea pipe linking directly Algeria (Ain Temouchent) to
Spain (Almeria). Started in 2006, the pipe was completed at the end of
2009 with a theoretical capacity of 8 BCM. Though the project looked
excellent at that time (favored by tensions between Russian Gazprom
14. Upstream and downstream infras- and European consumers plus the possibility to export LNG to North
tructural facilities will comprise :
American clients), today the whole picture has been radically altered16
Water conveyors to supply the mine
with 45 millions de m3 / year from especially by 2 sets of factors.
the Ait Messaoud dam
Opening of 3 new mines and a. The first one is purely economic: it seems that the Spanish market will
construction of 3 new washeries
never be able to absorb 12+ 8 bcm which is the total quantity theo-
allowing Khouribga to rise from 20
to 44 MT/year retical available through the two pipes which link it to Algeria even if
Construction of a pipe carrying 44 the Spanish economic growth comes back.
MT/year a. The second one is the emergence of a technological revolution called
Construction of sea water desalina-
tion plants Jorf with a capacity of
shale gas. Against this grim backdrop, it makes quite sense for
60 M m3 /year Algeria to consider Morocco as a real commercial opportunity: out
Extension of Jorf Lasfar port faci- the 12 bcm theoretically sold to Spain, only 7 are actually sold which
lities leaves about one third capacity idle (3 bcm).
15. With an input of 1,600 KT of
phosphate rock since 3.6 T rock=
1T P205 Thus Algeria which was over-courted by Europeans went from a most
16. In 2009, the USA have become the favorable situation to a structurally depressed gas market where most
1st world gas producer (624 bcm) European countries, fearing for dependency, actively search for comple-
with an increase of 3,7 % compa-
red to the previous year (ahead of
mentary and alternative solutions.
Russian production that decreased
by 12,4 %, to 582,3 bcm).

12
Hence the attractiveness for Algeria of a new market within arm’s reach.
From a purely commercial perspective17, Algeria could sell 3 bcm with-
out any major infrastructure investment (except maybe just an access
connection linking it to Jorf Lasfar chemical facilities). Even in case of a
Spanish economic revival and a possible revving up of its economy, still
Algeria could just extend the capacity by adding some compression sta-
tions along the pipe. This was actually the way followed in the case of
the Algerian-Tunisian pipe which, thanks to a proper negotiation proc-
ess18, was further extended to 30 bcm and thus prevented and strongly
deterred the planned but still virtual direct pipe between Algeria and
Italy. Such additional capacity would be finely suit Morocco’s current
electrical needs in clean energy and would especially mesh with 2 power
plants coming into operation (Tahaddart and Ain Beni Mathar). Most
realistic figures quoted by specialists are about 2 bcm immediately (1+1)
with a full throttle fetching up to 5 bcm.
It is a bit ironic to see Morocco still operating its power plants with coal
while gas has clearly become the # 1 clean energy source and that its
territory is crossed by a major gas pipe19. Ideally, and if confidence pre-
vailed, Morocco could even forgo all its power plants and rely solely on
gas supply from Algeria, saving billions of dollars in power investment.
Energy cooperation could make a viable industrial Maghreb emerge.
Such a commercial rerouting make many of industrial projects profitable

while today they are hampered by the high cost of industrial electricity:
Morocco 9.6 cent € KW as compared to Tunisia 7.3, Algeria 3.5, South
Africa 1.6.
Case for a chemical Maghreb
Algeria is a major producer of gas and Morocco is a major producer of

phosphates present on the three segments of the value chain (phosphate
rock, phosphoric acid and fertilizers especially DAP). In 2009, OCP has
produced around 2MT of nitrogenous fertilizers (ie DAP and MAP) which
have required about 450,00T of ammonia20 mainly imported from the
Gulf and Trinidad…
A chemical Maghreb concept could be translated into different feasible 17. Historically, Spain and Portugal
schemes taking into account different issues (the gas price, financial and bought all gas while Morocco was
counting on the phase II extension
economic profitability, state perspective, economic operator perspective
which was actually bypassed by
etc.). A competitive joint ammonia plant could be one among others. the decision to build another pipe
directly to Spain.
A global package will have to be elaborated so as to keep the whole 18. A whole re-negotiation packa-
ge would have to de-emphasize
project in economic balance. Logistic considerations have to carefully the royalties amount and put full
weighed. The DAP granulation plant could be erected in Morocco and weight on gas usage itself not to
so might the phosphoric acid unit (since phosphoric acid would require mention the need to elaborate a
special vessels for transportation). Ammonia is not easily transported so purchase contract wit Algeria
19. Though obviously this pipe was not
it should be best optimized by having its set-up on Jorf platform. In the made for Morocco
case of a partnership with Libya, because of the lack of gas connection, 20. 1 T o f D A P D i - A m m o n i u m
it might be better to manufacture ammonia in Libya itself. OCP right Phosphate)= .25T Ammonia (N) +
now consumes about 450 KT of ammonia per year for DAP/MAP granu- .46 T Phosphoric Acid (P or rather
P2O5)+ ballast
lation21, to which we should add future requirements: other OCP direct 21. The ambitious 2010 DAP produc-
investments in DAP production such as 2 new granulation lines (needed: tion program aims at 3 MT which
would request 750 KT of ammonia
Amar DRISSI
13
500 KT of ammonia) plus an integrated fertilizer plant (ODI)22 requiring a
further 250 KT. All in all, we could realistically consider a 1,200 KT capac-
ity size to be set up23. Such a deal would find an easy financing since it
could already claim a firm commercial contract.
Such a partnership with a privileged access to gas (for Morocco) and a priv-
ileged access to phosphate(for Algeria) would of course have to balance
the respectively privileged prices of both materials (against international
prices) within a win-win profit-sharing scheme depending on respective
contributions of each partner. Such joint ventures have already been suc-
cessfully initiated in the past by OCP with diverse partners such as Indians
(Imacid), Pakistanis (PMP), Germans (Emaphos), Belgians (Prayon), and
most recently Brazilians (Bunge). JPH scheme could also be a possible for-
mula for such a partnership. Possible candidates here are not only Algeria
but possibly other countries in the region such as Libya, Jordan or Qatar.
Diversification and upstream integration are among the major advantages
of such partnerships in addition to the purely financial profit.
Though small by international standards, the agriculture of these coun-

tries also could be significantly enhanced in terms of productivity by
using top quality fertilizers from Morocco not to mention the access to
OCP world-class expertise and service in this field. Platforms and distribu-
tion hubs can also be considered in some countries depending on their
favorable network location.
China as the conduit to an integrated Maghreb?
China will develop Africa. China will build the Maghreb. This may sound
22. Including phosphoric acid and sul- a bit provocative but should be considered. It is easy to find fault with
phuric acid facilities certain recent Chinese economic behaviour in Africa24. Blame for eco-
23. Not to speak of future develop- nomic plundering is becoming quite common and it may be quite easy
ments: the JPH program aims at
10 granulation units which would
to pinpoint some faulty patterns here and there. However this does
fetch some 250 KT x 10= 2,500 KT not have to be an inevitable fatality. The way China treats Sub-Saharan
within a 2020 horizon Africa may not be the same as it accommodates the Maghreb. Of course
24. Mr Wen told a press conference: this will depend on the Maghreb itself. Even in Africa other voices are ris-
“There have been allegations for
a long time that China has come
ing to call for a more responsible and pro-active stance from the Africans
to Africa to plunder its resources themselves. At the China-Africa summit in Egypt held in November
and practice neo-colonialism. This 2009, Paul Kagame, president of Rwanda, said:
allegation in my view is totally
untenable”…Trade between China
and Africa jumped 45 per cent to
“The onus is on us leaders, government and the private sector
$107bn in 2008, a tenfold increa- especially to fully engage at every stage and articulate our devel-
se since 2000, and the new loans opment priorities in this partnership”
are likely to sustain the expansion.
But Beijing has drawn criticism
that Chinese finance, which comes Likewise, in the Maghreb, the onus of proof must lie with us. If we want
without political conditions, props to be on a par with Chinese ambitions, we should stretch ourselves and
up unsavoury regimes in Zimbabwe come up with creative schemes and proposals. We should devise our
and Sudan and fuels corruption.
own development plans to fully leverage China capabilities and thus
Mr Wen said eight new policy
measures were “more focused on frame a high level engagement with China as a long term strategic part-
improving people’s livelihoods” than ner. Within this framework, Europe who was too shy to go by itself could
a 2006 package, underlining what find ways to boldly engage in some kind of triangular perspective.
he called Beijing’s “selfless” enga-
gement in Africa. China pledges
$10bn in loans to Africa: Barney China is basically viewing Africa as a reservoir of natural resources (oil
Jopson, FT, November 8 2009 and minerals), a source of arable land as well as a lucrative market for

14
building and civil engineering works. Therefore, China will undoubtedly
become the # 1 commercial partner. Along this line, the Tangiers-Med
port is a natural gate to Asia as its transshipment facilities will contribute
to accelerate the flux of goods coming from the Asian factories and to
be sold on European and African markets. Proximity to Europe is bound
to make Morocco a major platform for re-export to Europe. This is a
starting point.
Against this backdrop, it may be wishful thinking to believe that China

will engage in setting up heavy manufacturing in Africa25. However,
this generic strategy may be twisted somehow depending of course
on the political and economic will and assertiveness of its Maghrebi
counterparts. As far as phosphates are concerned, China may be one
of the largest world producers but mainly for its domestic consumption.
Nobody actually knows for sure whether its resources are sufficient and
for how long. Neither do we know the exact level of its reserves. As to its
phosphates, the landscape is quiet fragmented with a lot of small play-
ers which makes it difficult to spot the right interlocutor. More intriguing
is the issue whether China behavior in Africa is just proceeding by fait
accompli or is it a well thought out strategy. Nonetheless, it makes quite
sense to try to engage China in some kind of high-level FDI and in that
case, phosphates and JPH (Jorf Phosphate Hub) could turn out to be a
robust and ambitious conduit for a Chinese-Maghrebi partnership. In any
case, whether China could turn out to be a disruptive factor in the rather
nice and quite African rent system or whether it will just cave in nicely to 25. “Chinese officials and acade-
a new neo-colonial division of labour is still largely an open question. But mics have been debating in
undoubtedly we can have a say in it. recent months proposals to use
the country’s vast foreign exchan-
ge reserves to try to stimulate
More generally, if we put things into perspective, we cannot but raise the demand in developing countries
pressing and fascinating question: The Maghreb as a Chinese hinterland? – ideas sometimes referred to as
Is a new emerging ChinAfrica in the making? “China’s Marshall Plan”…But any
plan to shift production to Africa
that goes beyond the symbolic is
likely to meet resistance. Beijing
Eastern Europe as a thriving German Neo-Maghreb has opposed growing international
pressure to appreciate its currency
partly because of fears of job los-
Eastern Europe26 was clearly the showcase of a strong German economic
ses in export industries. Provincial
integration, something which was a successful example of what the governments in the interior of
Northern Mediterranean countries clearly might and should have done China are also desperate to attract
vis à vis their Maghrebi counterpart27. jobs to their areas as labor costs
in the coastal regions increase.
Moreover, the prime motivation of
Germany boosted its own economic development by opening up to its the Chinese Marshall Plan has been
hinterland: Eastern Europe, lies quite close geographically and culturally. to find ways to create new sources
According to Eurostat, in 2006, more than 50 % of secondary school of demand for Chinese factories,
not to shift their output elsewhe-
students learn German (64 % in Poland and 72 % in Slovakia). With re“. China eyes industrial bases in
a cheap and well trained workforce, these countries offer Germany a Africa, James Lamont & Geoff Dyer,
favourable production space. By heavily investing in industrial sites in FT, December 3 2009
East, and fully leveraging its comparative advantages, Germany made it 26. It actually stretched as far as
Southern Eastern Europe and
a « verlängerte Werkbank » (a workshop extended to East), which Turkey in a lesser extent. China and
explains why German exports are faring so well. Just to give a sense of India were the main beneficiaries of
this strong economic integration, suffice it to say that the bodywork and this massive outsourcing outflow
equipment of the famous Porsche Cayenne, one of the most sold SUV 27. It would be interesting to look at
the way within NAFTA framework,
in USA originates from the Bratislava Volkswagen (VW) factory where the US chemical industry engaged
also 100% of the Touareg is manufactured. The engine of the Cayenne in any meaningful outsourcing
is manufactured in Porsche main factory in Stuttgart- Zuffenhausen and towards Mexico.
Amar DRISSI
15
then integrated in the bodywork supplied by VW within the new Leipzig
Porsche factory. It is quite clear that without the outsourcing of part of
the value-added to external entities (whether be in Germany or outside),
or the offshoring to subsidiaries outside the country, the German motor
industry would have not been able to keep its world-class positioning.
It did so by heavy direct investment: according to Eurostat, the capital
stock invested in Eastern Europe by Germany was about 29 billion Euros
in 2003 reaching by end of 2007 more than 50 billion Euros28. Germany
made an industrial and geostrategic bet: it did work and if today it can
bear the crisis better than its European counterparts, it is thanks to the
economic hinterland it built and which is helping it cushion the most
severe blows of the current economic crisis.
The case for major unifying projects

within the Maghreb
It is now well-recognized that the Barcelona process launched in 1995,

which emphasized free trade more than development, has reached its
limits. If the Barcelona process29 is dead, its postmortem itself still awaits
a rigorous evaluation. However, some lessons can already been drawn.
While security considerations have gradually become more central to the
whole exercise, it fundamentally lacked the critical masses of investment
to allow any serious attempt to take off. Not to speak of the cumber-
some and bureaucratic fund allocation and disbursement mechanisms
that slowed down the whole process. As a result, except in some lim-
ited instances in Tunisia, the economic and corporate upgrading (mise à
niveau) never materialized and development never happened. The whole
process gradually drifted and shifted away from the initial Barcelona spirit
and stayed aloof from new emerging economic realities thus making it
more and more irrelevant. Meanwhile, most countries of the region have
favoured their bilateral relations at the expense of their horizontal ones.
This trend should be reversed especially if we want the new Union pour
la Méditerranée (UPM)30, to start gaining some credibility. Major indus-
trial projects carrying mutual interest for North-African countries could
carry a lot of weight. They could be a showcase of Maghrebi regional
integration and multiply economic integrative effect. For example, uni-
fying projects in infrastructures in transportation (high speed train and
highway linking the major Maghrebi cities) and energy (electricity and
gas) could contribute to maximum impact and visibility within the region.
As far as energy is concerned, all should be done to avoid each country
going its own way: thus, a major industrial platform in refined products31
could be set up along the Mediterranean coast to supply all major North
28. Hans Brodersen: Le "modèle
allemand" à l’exportation : pour-
African cities, somehow like Rotterdam irrigating through pipelines all
quoi l’Allemagne exporte-t-elle major European cities with refined petroleum products.
tant? CERFA 57/IFRI/Robert Bosch
Foundation, November 2008
Even if these projects could take place under private financing and P/P
29. Moisseron JY: vers la fin du proces-
sus de Barcelone, Confluences, No schemes 32(BOT…), multinational entities such as the World Bank and
55, automne 2005 the European Union could provide incentives to such unifying projects
30. Set up in July 2008 under the initia- by providing feasibility studies, technical assistance and even some kind
tive of Pesident Sarkozy
of economic, financial or political “conditionality”. Their role as catalyst
31. Likewise, a steel Maghreb could
make quite sense could also be further enhanced by establishing triangular exemption
32. Concessions de service public from custom duties.

16
Conclusion
The perspective is quite clear: rise to the level of a globalized world

or collapse into irrelevance. The challenge is to make the south-south
ambition operational. Adversity is there but levers are plentiful. In 1992,
the building of a pipeline between Algeria and Spain crossing Morocco
demonstrates that at a bilateral level, things can get done without politi-
cal prerequisites having a deterrent effect. New insiders into the region
such as China could help change the rules of the rent game provided
that national economic players become more assertive and take the lead.
Coming in place of the Barcelona process that sank into purely secu-
rity considerations, UPM is facing a tough existential choice: being an
empty shell or contributing to re-think the whole Mediterranean project
with strong vision, critical cash, and credible engagement at a par with
what Germany did in its Eastern Europe hinterland. The onus lies also
on the emerging of real Maghrebian counterparts who should position
themselves as real partners able to frame counterproposals and coun-
ter projects. Some major bold CHEMICAL INITIATIVE should be taken:
for instance developing a massive HR vocational and scientific training
including a heavy R&D component. This could boost and enhance a
whole part of the chemical migration process to Northern Africa.
As Hannibal said, we will either find a way or make one. But beware:
The world is possible without us.
Amar DRISSI
17
The Western Mediterranean
region must reinvent itself
Abderrahmane Hadj Nacer
19
The Western Mediterranean region must reinvent
itself
Former Governor of the Central Bank of Algeria
M
odern history suggests that finding the means to finance wars
has never been an insurmountable problem. Even since oil
became a major means of industrialisation and transport in
the late 19th century, controlling oil fields has been the subject of intense
rivalry between major powers. When the First Lord of the Admiralty
Winston Churchill decided in 1907 to switch the British Royal Navy, then
the most powerful fleet in the world, from coal to oil, he ushered in a
phase of history which is still very much with us today.
History further suggests that finding the means to finance wars has
never been an insurmountable problem. Even since oil became a major
means of industrialisation and transport in the late 19th century, con-
trolling oil fields has been the subject of intense rivalry between major
powers. When the First Lord of the Admiralty Winston Churchill decided
in 1907 to switch the British Royal Navy, then the most powerful fleet in
the world, from coal to oil, he ushered in a phase of history which is still
very much with us today.
Access to the major sources of energy (oil and nuclear until the 1960s,
to which gas was added in the 1980s and renewable sources of energy,
notably solar, will be in the future) or control of its transport from pro-
ducer to end user define the way major powers conduct their foreign
policy. They offer a prism through which international affairs can be
clearly understood – the latest developments in Russia’s relations with
Ukraine combining as it does navy bases and gas underlines the strategic
role of energy.
The founder of Cambridge Energy Associates, Daniel Yergin, published

The Prize, the Epic Quest for Oil, Money & Power in 1993. The book
offers keys to understanding the history of the 20th century which are
even more relevant in the turbulent times we live in. The only new ele-
ment to factor in is climate change which adds to the complexity of the
overall issue. The race to control the Azerbaijan oil fields in both world
wars, the redrafting of the first map of Iraq after the First World War to
ensure the Kurdish oil fields were denied to Turkey are the stuff of his-
21
tory. We are today living with the consequences of the successful ousting
of the moderate Iranian nationalist leader Mossadegh in 1952 by a coali-
tion of American and British interests. The discovery of oil in Algeria in
the 1950s complicated the process of decolonisation from France.
What is deemed by many in the West to be the threat of Iran acquir-

ing nuclear weapons dominates the policy agenda of the major powers
today. The ambition policy pursued by China and India as they seek to
ensure reliable long term sources of oil and gas for their fast growing
economies helps shape some of the attitudes towards both countries
in the US and Europe. Recent events in Niger suggest that controlling
a major source of uranium can bring together an unlikely coalition of
Algeria, France and the United States. The advent of solar energy is
unlikely to change the behaviour of major powers and will probably fuel
further conflicts - at the least it could aggravate those which exist already
in the Sahel region of the Sahara today, which is host to any number of
semi failed states, trafficking of human being and billions of dollars
worth of illegal cocaine flows.
The question which needs to be asked is: should major sources of

energy, mineral resources and future solar power in the world in the
Western Mediterranean region be considered a commonwealth of all
neighbouring nations? This question must be set in the broader context
of relations between Europe and North Africa. What threatens Europe
today is not some unlikely though widely touted alliance of all Muslims
against the west, some Islamic Jihad dressed up in the faded finery of an
unlikely Al Quaeda Maghreb but an exacerbation of nationalist ambitions
manipulated by major powers from outside the region. Such conflicts
are easy to fuel if one considers that military expenditure in southern rim
Mediterranean countries, as a percentage of GDP, are the highest in the
world.
So long as the control of major sources of energy is deemed an essen-

tial prerequisite to great power status, the situation can only get worse
considering that we live in an ever more multipolar world, a world where
natural resources are not evenly spread across countries and regions.
Attempting to secure medium and long term supplies of different forms
of oil, gas and key mineral resources such a phosphates and uranium
will fuel more conflicts and thereby increase the list of failing or failed
states in the region and worldwide. Many smaller countries will simply
fall prey to more powerful neighbours or major outside powers. The
combination of the race for natural resources, criminal networks linked
to smuggling of weapons, human beings and drugs and terrorism is the
real challenges this region faces in the decades ahead.
Resources such as oil, gas and phosphates have fed insecurity- insecurity
among those who own them and who depend on their export to finance
their needs, insecurity among those who buy them and who are often
apprehensive that their security of supply, as they see it will, be jeop-
ardised. Figures forecasting the level of future supplies of oil and gas,
projections regarding peak oil or gas feed a growing anxiety, of even-
tual shortages in the West. Recent rumours, relayed in serious western
publications of a future shortage of phosphate rock are a case in point.
Meanwhile oil and gas producers are worried because they are incapable

22
of planning the level of production and export levels needed over the
medium term. For those countries which are rich in energy resources, oil
and gas have produced a 20-21st century version of the curse of gold and
silver which blighted the Spanish economy for three centuries after the
conquest of America. This curse has modern counterparts both in Europe
- Holland and the United Kingdom, and in North Africa.
The challenge we face today is how we can turn this curse into a bless-
ing? How might we build in the Western Mediterranean a community
of nations loosely inspired by the principles which allowed the European
Coal and Steal Community to be set up over half a century ago? How
can we ensure that access to the vast energy and mineral resources
the West Mediterranean region boasts be opened up to all people - in
North Africa, in Europe and beyond. A further twist to that already dif-
ficult question has been added by the crisis of the Euro: are Europe’s
Mediterranean countries in the same economic league as Germany and
northern European states? Does the fault line in the region really run
between Muslims and Europeans? Between Islam and Christianity? Or
does it run through Europe? For the purpose of our discussion today
it maybe worth returning to the 5+ 5 framework to which we would
naturally add Germany and the United Kingdom – where energy, not
least solar and petrochemical industries, notably fertilisers are con-
cerned, these two major countries are essential players in the West
Mediterranean.
If we are to stand any chance of building stronger links in the Western

Mediterranean region, certain conditions would have to be met which
would ensure a more rational development of resources which are either
finite or very expensive to develop.
1. If we consider oil and gas, it would be to Algeria’s advantage to

ensure that the rate at which such resources are extracted is conduct-
ed in such a way as to prolong the life of these fields over as long a
period as possible. The model to follow is that of Norway, not that of
the United Kingdom.
2. The rate of extraction must imperatively take into account the pro-
ducer country’s capacity to make good use of the money it earns by
exporting its resources. In other words accumulating vast hard curren-
cy reserves is of minimal interest. The focus should be on building up
added value to manufacturing capacity in the country and providing
opportunities for skilled employment. In the case of Algeria this sug-
gests a policy of developing the upstream and downstream use of oil
and gas. Upstream includes drilling technology, downstream includes
chemical and pharmaceutical industries.
Nor must we forget that a certain number of key parameters of eco-
nomic activity are changing fast. First of all, water can be brought
to people rather than the latter having to move to water resources
– desalination has the potential to change the way whole regions,
hitherto short of water can be developed. If skilfully used, such tech-
niques offer the opportunity to put a brake on migrations. They could
also if combined with greater use of fertilizers help boost farming
in regions too dry to support major crops such a southern Algeria,
Morocco and Tunisia. Are we, in North Africa, going to allow the
Chinese to buy our land as they have in Sudan and Madagascar?

23
3. It is here that finance – and new financial tools which we have yet
to invent, come into play. Their aim would be to enhance human
resources and skills, to promote a network of small and medium size
enterprises in any number of fields – to quote but two – developing
small oil and gas wells and building small transport units etc. The aim
would be to build a series of incubators of economic activity which
would create jobs, enhance skills and help avoid the rush to the coast
which is a major threat to the political, social and environmental
future of North Africa.
It is with these factors in mind that the proposal to set up a new

Mediterranean bank can be set in context. There will never be any
shortage of funds for large projects but for the type of small ven-
tures we suggest a new framework of guarantees and support will be
required; incubators which are an even more important factor across the
world in developing a network of innovating small enterprises would
benefit from the creation of such an institution whose structures and
mandate would have to be tailored to allow it to enact such policies.
The role of such a new institution would be to lead the improvement in
skills needed in the region and promote training in North Africa itself. Its
objective would also be to encourage private and state actors, both in
North Africa, Europe and beyond to work together.
Such an ambitious policy has no chance of succeeding without some

bold initiative aimed at building confidence in a region marred by
national rivalries. One could imagine the capital of the Moroccan
Office Chérifien des Phosphates (OCP) being opened to the state oil
and gas company of Algeria, Sonatrach. The latter would be encour-
aged to acquire a minority stake in the Moroccan company. The capital
of a major Algerian bank like the Caisse Populaire d’Algérie (CPA) could
be opened to a Moroccan private bank. The capital of two or three
major European companies such Suez EDF, Enel and Gas Natural could
be opened to minority stakes from Sonatrach, OCP and the Tunisian
Phosphate company.
Libya could well be a partner is such cross shareholdings and where

solar energy is concerned, German companies might be interested,
British oil and gas companies might be solicited. Such a bold policy
would also spell greater access for European companies to North Africa’s
natural resources and a willingness on the part of Europeans to allow
some of the scientific research and the manufacturing of equipment
needed to develop these resources on the southern shores of the West
Mediterranean region. New industries will develop such as building
materials, new farming methods more respectful of the environment and
would offer ample opportunities for investors and proof to the local pop-
ulation that the Western Mediterranean can be turned into a successful
joint venture between the two rims of the mare nostrum and beyond.

24
Water desalination and
solar in the Mediterranean
Region
HOUDA BEN JANNET ALLAL
25
Water desalination and solar in the Mediterranean
Region1
Houda Ben Jannet Allal
Director Renewable Energy and Sustainable Development.

Observatoire Méditerranéen de l’Energie (OME)
Context
The Southern Mediterranean countries (from Morocco to Turkey) (SMCs)

are following the same path of production and consumption patterns as
the North Mediterranean countries. The target is to close the gap and
to join the group of industrialised countries. This, of course, leads to
increasing needs and also related expected tensions in particular as it is
taking place in a relatively difficult context, with the rise of serious con-
cerns over resources, environment and climate change.
In this context, water resources are an important issue for all

Mediterranean countries. Most countries are likely to face drinking water
shortages in the decades ahead, some already face this situation. With
the population growing quickly in the southern Mediterranean region,
natural water resources will not be sufficient to satisfy total expected
demand.
Moreover, water will always be intrinsic to economic and social

development, and water shortages may cause serious tensions in the
coming decades. On this basis, current trends do indeed look unsus-
tainable. So, the future requirements are clear: provide water for all
in a sufficient but efficient way but never forget the environmental
dimension of the question. This cannot and will not be achieved easily
and rapidly.
1. The paper is largely based on the
results of the ongoing EC-FP7
The scarcity of water in the Mediterranean region MED-CSD Project “Combined solar
power and desalination plants:
Water in the Mediterranean region is a rare and unevenly distributed techno-economic potential in
Mediterranean Partners Countries”,
resource, which makes it an important issue for all countries. Climate coordinated by OME and con-
change and decline in rainfall means that what is a difficult situation can ducted by a Euro-Mediterranean
only worsen over years. consortium of 13 partners.
27
Water demand in the region doubled in the second half of the 20th cen-
tury. The agriculture sector remains the main consumer of water, but
the municipal and industrial sectors will become important consumers
in the future due to the high population and socio-economic growth in
southern countries. In many countries in the region, water withdrawal is
approaching the limits of available resources.
Most of the countries are likely to face shortages of drinking water in the
decades ahead, some are already facing this situation, mainly due to lim-
ited resources and an increase of population and needs. For many years,
water shortages, which are cyclical or structural, have been observed.
According to the Plan Bleu, in the Mediterranean in 2025, the number of
“poor” water population (i.e. countries with less than 1,000 m3/habitant/
year2) will amount to 250 million, 80 million of whom will have “scarce”
water (i.e. countries with less than 500 m3/habitant/year). In 2008, the
Mediterranean region accounted for 60% of the population of the
world’s “water-poor” countries (Figure 1). In addition, 20 million Medi-
terranean inhabitants, mainly in rural areas, have no access to drinking
water (Plan Bleu 2008).
FIGURE 1. RENEWABLE FRESH WATER RESOURCES PER INHABITANT IN

MEDITERRANEAN ELEMENTARY RIVER BASINS (BETWEEN 1995-2005)
m3 per inhabitant/year
> 10,000 (luxury)
5,000 - 10,000 (confort)
1,700 - 5,000 (security)
1,000 - 1,700 (vulnerability)
500 - 1,000 (stress)
< 500 (scarcity)
Source: Blue plan from national resources
Water supplies are vulnerable in most of these countries for two reasons
- because of an overexploitation of the renewable groundwater and the
exploitation of non-renewable resources (fossil water). Moreover, deg-
radation and pollution by man have added to the tensions on natural
resources. These human actions alter the water system and quality, which
limits the possibilities of various uses. These stresses on water will lead to
greater health risks, conflicts of use between users, sectors, countries
and vulnerability of supplies due to increased costs (particularly for water
treatment). Alternative solutions are needed to prevent such a situation.
2. World Bank definition.
Water desalination and solar in the Mediterranean Region

28
An overview of fresh water resources in the
Mediterranean Region
Basically, the natural resources of fresh water are rainfall, rivers, lakes
and groundwater sheds. A detailed definition of the different resources is
given in “Review of World Water Resources by Country” (FAO, 2003).
There is a lot of rainfall in the north of the Middle East and North Africa
(MENA) region, with an annual precipitation of more than 300 mm/y, but
these are mainly restricted to coastal areas. According to the FAO, the
annual average precipitation in the Maghreb region is about 86 mm/y,
which equals 495 Bm3/y3, while in north-eastern Africa the annual aver-
age of rainfall is around 306 mm/y or 1,275 Bm3/y.3
In the South Mediterranean region, there are only few major perennial
rivers and lakes. More precisely, in MPCs, there are few rivers and lakes,
namely the Nile and Lake Nasser in Egypt, and small rivers in Morocco as
well as in Cyprus.
There are very large groundwater aquifers in the MENA region that are
re-charged by rainfall and by incoming rivers. However, most of the
water contained in those subterranean basins, is fossil water that is not
renewed on an annual basis (BGR, 2008).
Among the South Mediterranean countries, only two – Turkey, and to a

lesser extent, Lebanon- are not considered water-poor countries (Figure 2).
Recent MED-CSD results confirm that MPCs can still be considered to be
water-poor, except for Italy which has 3,226 m3/cap/y, but it is unevenly dis-
tributed across the land. Indeed, some regions in the south and the islands
(such as Sicily) are facing a severe shortage of water, mainly during sum-
mertime because of an increase in population during this period. Cyprus
and the Italian islands are having to confront the same problem regarding
the variability of water demand during the summer. Morocco and Cyprus,
respectively with 940 and 922 m3/cap/y, are on the verge of water poverty,
and the situation is expected to worsen. Indeed, since the 1990s, the total
renewable water per capita rapidly decreased in all countries (Figure 3).
FIGURE 2: TOTAL RENEWABLE WATER PER INHABITANT (M3/CAP/Y)

IN SMCS AND MPCs in 2007
TURKEY 2,889
SYRIA 865
PNA 215
LEBANON 1,110
JORDAN 164
ISRAEL 261
TUNISIA 450
MOROCCO 940
LIBYA 99.4
Water
EGYPT 773 poverty
limit
ALGERIA 350
0 500 1,000 1,500 2,000 2,500 3,000 3,500 3. 1 Bm3 = 1 000 000 000 m3
Source: OME based on data from FAO 2007

29
FIGURE 3: TOTAL RENEWABLE WATER PER INHABITANT (M3/CAP/Y)
IN SMCS AND MPCS, 1992-2007
3,500
3,000
2,500
2,000
1,500
Water
poverty
1,000 limit
500
0
1992 1997 2002 2007
TURKEY
LEBANON
SYRIA
MOROCCO
EGYPT
TUNISIA
ALGERIA
ISRAEL
PNA
JORDAN
LIBYA
TURKEY
LEBANON
SYRIA
MOROCCO
EGYPT
TUNISIA
ALGERIA
ISRAEL
PNA
JORDAN
LIBYA
TURKEY
LEBANON
SYRIA
MOROCCO
EGYPT
TUNISIA
ALGERIA
ISRAEL
PNA
JORDAN
LIBYA
TURKEY
LEBANON
SYRIA
MOROCCO
EGYPT
TUNISIA
ALGERIA
ISRAEL
PNA
JORDAN
LIBYA
Source: OME based on data from FAO 2007
Prospects for water demand in the Mediterranean

region: threats of deficit and tension confirmed
As part of the MED-CSD Project, and with the aim of assessing the techno-
economic potential of CSP for electricity and desalination in MPCs, OME –
with the support of DLR and the national partners of the project (Cyprus
Institute, NREA, Techint, ONEP, PEC) – conducted a prospective analysis of
water demand in the region up until 2050 by considering 3 different sce-
narios: the first assumes a ‘Business as usual’ trend, and thus relatively low
efficiency gains (LE), the second is more optimistic (MEDCSD scenario) and
4. The “Business as usual” scenar- the last takes into account extreme efficiency gains (EE). The prospective
io (BaU) uses the figures from the
exercise also considers two socio-economic scenarios: one based on Busi-
futures of global interdependence
(FUGI) global modelling system and ness as usual (BaU) the other one on closing the gap (CG)4.
from the International Monetary
Fund (IMF) for GDP forecasts until In the BaU scenario, the demand for fresh water in the South Medi-
2030. For GDP forecasts from 2030
to 2040, we made a hypothesis of
terranean is expected to grow more or less proportionally to the popu-
a lower GDP growth rate than the lation in the case of low efficiency, which could be interpreted as the
2030 level. The same hypothesis growth of population being the only driving force for water demand
has been made for the 2040-2050 development. In the case of better improvement of uses and effi-
period as compared to the period
2030-2040. The “Closing the Gap”
ciency, water demand will grow less than population (Table 1). This
scenario (CG) assumes that the rela- demonstrates the crucial role of water management and efficiency dis-
tive distance between the actual tribution and end use. However, this also shows that these measures
average (2007) of per capita GDP in alone will not be enough to cover future demand in the South Medi-
North Mediterranean countries and
the respective countries of SMCs terranean region, especially if the current demand is already over-using
will be reduced by 50% in 2050. the available natural fresh water resources. Thus, this scenario reflects
To calculate this scenario - and not the influence of enhanced water management, policies and efficien-
forecast- the average annual per
cies which are the highest priority for a sustainable water future in the
capita GDP growth rate of 1.35%
for NMCs has been used as the ref- South Mediterranean region, but which are limited by the slow eco-
erence. nomic growth within this scenario.

30
TABLE 1: POPULATION GROWTH COMPARED TO WATER DEMAND GROWTH BY 2050 IN THE BAU SCENARIO
2000 2010 2020 2030 2040 2050
Pop growth 1.8 1.7 1.3 0.9 0.7 0.5
Water demand SM CS growth rate-LE 1.4 1.7 1.2 0.9 0.8 0.6
Water demand SM CS growth rate-MEDCSD 1.0 1.4 0.9 0.7 0.5 0.3
Water demand SM CS growth rate-EE 0.5 1.0 0.6 0.4 0.3 0.1
Source : OME
In the CG scenario, the demand for freshwater in the South Mediter-

ranean is expected to grow more than in the other scenario, due to a
higher growth rate of the GDP. As a consequence, municipal and indus-
trial water demands will be higher in all scenarios and will represent an
important driving force for water demand. Water demand growth will
be higher than population growth, even with high efficiency gains (Table
2). This scenario also reflects the marked influence of enhanced water
management, policies and efficiencies, thus highlighting the importance
of making them the highest priority for a sustainable water future in the
South Mediterranean region.
TABLE 2: POPULATION GROWTH COMPARED TO WATER DEMAND GROWTH BY 2050 IN THE CG SCENARIO
2000 2010 2020 2030 2040 2050
Pop growth 1.8 1.7 1.3 0.9 0.7 0.5
Water demand SM CS growth rate-LE 1.4 2.0 1.7 1.5 1.4 1.4
Water demand SM CS growth rate-MEDCSD 1.0 1.7 1.3 1.2 1.1 1.1
Water demand SM CS growth rate-EE 0.5 1.3 1.0 0.9 0.9 0.9
Source : OME
The model shows that by 2050, water demand will be more than 200
Bm3/y in almost all scenarios and could reach 337 Bm3/y in case of high
GDP growth and low efficiency gain (Table 3). However, even with high
GDP growth rate, if policies and measures were taken in order to have
high efficiency gain this total of 337 Bm3/y could be reduced to 246
Bm3/y (-27%). With efficiency gains that are achievable within a reason-
able timeframe (i.e. MEDCSD scenario) the total demand will reach 288
Bm3/y within the Closing the Gap scenario (according to high growth of
GDP and the high growth of population in South Mediterranean region).
In all cases, such amount of freshwater demand will exert significant
pressure on the scarce water reserves of this mainly arid region.
TABLE 3: TOTAL WATER DEMAND (BM3/Y) IN SOUTH MEDITERRANEAN REGION BY 2050

Ba U 2050 GC 2050
BM3/y 2000
LE MEDCSD EE LE MEDCSD EE
Total SM Cs Demand 157 269 233 199 337 288 246
Total SWM Cs Demand 94 158 140 121 208 180 156
Total SEM Cs Demand 63 110 93 78 129 108 90
SWMCs: South West Mediterranean Countries SEMCS: South East Mediterranean Countries
Source : OME
The water demand in the South Mediterranean region in the year 2000
consists of 82 % agricultural use, 11 % municipal use and 7 % industrial
use. While the water demand of the agricultural sector will be stagnating
in the BaU scenario (tends to decrease very low), in the CG scenario it will
decrease strongly to reach less than 63%, due to the high GDP which
leads to increasing water demand in municipal and industrial sectors.

31
The model shows that in the BaU scenario, the deficit of 2050 can be
reduced from 85 Bm3/y (Low Efficiency scenario) to 63 Bm3/y (MEDCSD
scenario), and even to 41 Bm3/y under the “Extreme Efficiency” scenario.
The difference between the two extreme scenarios is approximately 50%.
Water reduction deficit is higher in the CG scenario, and could be reduced
from 125 Bm3/y to 50 Bm3/y by 2050 if measures are taken in favour of
high efficiency in water management and uses. In this scenario, even
with relatively good efficiency (as in the MEDCSD scenario), the deficit will
remain very high and will continue to be a major concern for the South
Mediterranean Countries.
The “Low Efficiency” scenario clearly indicates that a strategy following

current paths would lead to an unsustainable situation for the region, and
even the “Closing the Gap” scenario would lead to severe environmental
and socio-economical impacts. With high efficiency gains, the deficit in the
region will be reduced by 50% with relatively low growth rate of GDP, and
by 60% with high GDP growth rate.
TABLE 4: TOTAL WATER DEFICIT (BM3/Y) IN SOUTH MEDITERRANEAN REGION BY 2050

Ba U 2050 GC 2050
BM3/y 2000
LE MEDCSD EE LE MEDCSD EE
Total SMCs Deficit 19.44 85.2 63.4 41.4 124.7 83.0 49.9
Total SWMCs Deficit 19.25 73.7 57.2 40.9 102.9 71.2 46.9
Total SEMCs Deficit 0.19 11.5 6.3 0.5 21.9 11.8 3.0
Source : OME
Egypt, Libya and Syria are the countries with the largest expected deficits.
The Egyptian deficit in 2050 would amount to more than 35 Bm³/y in the
best case and about 90 Bm3/y in the worst case, which represents around
75% to 80% of the regional deficit. Egypt will be the country most seri-
ously affected by scarcity of water.
South East Mediterranean countries are not very much affected by water
scarcity, and the deficit in 2050 is expected to range between 1 and 22
Bm3/y (according to the different scenarios). Most of this deficit will be
concentrated in Syria, but in some cases Israel, Jordan and PNA will have
shortages of fresh water, in particular in case of high GDP growth and low
efficiency gain in water uses.
The MEDCSD scenario reflects a compromise between two extremes, with

efficiency gains that are achievable within a reasonable timeframe. This sce-
nario indicates that a well balanced approach of increasing efficiencies of
water extraction, distribution and end-use, improved water management
and increased seawater desalination powered by renewable energy sources
(mainly solar energy), will lead to a more sustainable path for water supply
and demand for the South Mediterranean region.
Past studies (Plan Bleu, DLR, …) and MED-CSD results show that increasing
supply, which was the main response of water policies in Mediterranean
countries, has reached its limit. In view of this situation, management of
water demand could be an effective way to reduce losses, irrational uses
(waste, etc) and to improve the efficiency of resource uses.
So far, the proposed solutions to this situation have been dominated by a

call for policies and measures such as better water management, meas-

32
ures to increase efficiency, higher and unsubsidised water tariffs, increased
accountability, re-use of wastewater and better management of groundwa-
ter. Some of the countries that possessed the energy and financial means
to do so also took into consideration seawater desalination, using for this
purpose their abundant fossil energy resources (World Bank, 2007).
However, groundwater resources are already being over-used, fuel for

desalination is becoming very expensive, and there is simply not enough
water available, no matter whether it is well-managed or not. Of course,
the above-mentioned measures make a lot of sense and should be imple-
mented as soon as possible. They will effectively stretch existing resources
and delay a possible collapse. But they will not be able to prevent a collapse
of water supply in the long term if no additional new sources for fresh
water are found and activated in time. As a consequence of scarcity, some
places in these countries have already been abandoned, and migration
induced by water scarcity is increasing, which solves nothing but instead
creates similar problems in other regions.
As a consequence, in addition to efficient water management, water desal-

ination is a second option to reduce tensions. However, desalination using
renewable energy resources is the most sustainable solution as desalination
is a heavy energy consumer. This can help to supply a share of water needs
in a sustainable manner.
These goals, compared to conventional approaches, are “win-win”: they

improve security of water supply, limit the environmental impacts, risks of
conflict and cost of access to water, and they have the potential to enhance
economic growth and stability in the region.
TABLE 5: RESULTS OF THE WATER DEMAND SCENARIO IN MEDITERRANEAN REGION (CG-MEDCSD SCENARIO)
Year 2000 2010 2020 2030 2040 2050
CG-MEDCSD
Total South West
Exploitable Water Bm³/y 81.86 81.86 81.86 81.86 81.86 81.86
Agricultural Use Bm³/y 79.69 90.65 101.47 109.65 115.32 118.26
Municipal Use Bm³/y 8.84 11.08 15.68 21.59 29.07 38.51
Industrial Use Bm³/y 5.40 6.76 9.55 13.12 17.61 23.19
Wastewater reused Bm³/y 3.08 4.76 8.22 13.33 20.64 30.85
Total Demand Bm³/y 93.93 108.50 126.70 144.36 162.00 179.96
Deficit Bm³/y 19.25 30.89 43.63 54.57 63.96 71.24
Sustainable Water Bm³/y 74.68 77.60 83.06 89.79 98.04 108.72
Total South East
Total Demand Bm³/y 63.12 72.31 81.58 90.80 99.61 108.36
Deficit Bm³/y 0.19 0.57 3.29 6.59 9.42 11.78
Total South Med
Total Demand Bm³/y 157.04 180.81 208.28 235.15 261.61 288.32
Deficit Bm³/y 19.44 31.47 46.92 61.16 73.38 83.02
Source : OME

33
Water desalination using solar technology: a green and
sustainable solution
Implementation of large-scale concentrating solar-powered desalina-

tion systems have been identified as a promising solution that addresses
water needs in an efficient and sustainable manner. In particular, the
AQUA-CSP study conducted by DLR5 highlighted the following advan-
tages of such an option, and which are still current:
• Due to energy storage and hybrid operation with (bio)fuel, con-

centrating solar power plants can provide round-the-clock reliable
capacity that is suitable for large-scale desalination either by thermal
or membrane processes.
• CSP desalination plants can be deployed in very large units, up to sev-
eral 100,000 m³/day.
• The huge solar energy potential of the South Mediterranean region
can easily produce the energy necessary to prevent the threatening
fresh water deficit that would otherwise increase, as noted in the pre-
vious section.
• Within two decades, energy from solar thermal power plants will
become the least costly option for electricity (below 4 ct/kWh) and
desalted water (below 0.4 €/m³).
• Management and efficient use of water, enhanced distribution and
irrigation systems, re-use of waste water and better accountability are
important measures for sustainability, but will only be able to prevent
about 50 % of the long-term deficit of the region.
• Combining efficient use of water and large-scale solar desalination,
and overexploitation of groundwater in the region can - and must -
be ended by around 2030.
• Advanced solar-powered desalination with horizontal drain seabed-
intake and nano-filtration will prevent most environmental impacts
from desalination occurring today.
• With support from Europe, the South Mediterranean countries should
immediately start to establish favourable political and legal frame
conditions for the market introduction of concentrating solar power
technology for electricity and seawater desalination.
As part of the MED-CSD Project, a technology review has been conduct-

ed which provides a review of the present state-of-the-art desalination
5. The AQUA-CSP study analysed the and concentrating solar power technologies, and presents the main
potential for concentrating solar options for a combination of both technologies for large-scale solar-
thermal power technology for large powered seawater desalination6.
scale seawater desalination for the
urban centres in the Middle East
and North Africa (MENA) Three different technical mainstreams were addressed (Figure 4): small-scale
6. Source: MED-CSD 2009: Trieb F., decentralised desalination plants directly powered by concentrating solar
Sharfe J., Tomasek M.L., Kern J., thermal collectors, concentrating solar power stations providing electricity for
Niesor Th., Cottret N., Glukstern
P. , Te c h n o l o g y R e v i e w a n d
reverse osmosis membrane desalination (CSP/RO), and combined generation
Selection of CSP and Desalination of electricity and heat for thermal multi-effect desalination systems (CSP/
Configurations adapted for MED). Multi-Stage Flash (MSF) desalination, although it currently provides
Application in the Southern and
the core of desalted water in the MENA region, has not been considered as
Eastern Mediterranean Region.
The full report is available at http:// a viable future option for solar-powered desalination, due to the high energy
www.med-csd-ec.eu. consumption of the MSF process.

34
FIGURE 4: DIFFERENT CONFIGURATIONS FOR DESALINATION BY CONCENTRATED
SOLAR POWER*
Heat only Power only Combined heat & power
Solar Field Storage Solar Field Storage Solar Field Storage
solar solar
head fuel head fuel
solar grid
head
Power Plant Power Plant
fuel
head
MED
RO MED
water Power water Power water Power
Source: MED-CSD, WP1

*Left: Concentrating solar collector field with thermal energy storage directly producing heat for thermal multi-effect desalination.
Center: Power generation for reverse osmosis (CSP/RO).
Right: Combined generation of electricity and heat for multi effect desalination (CSP/MED)
Two options of combining CSP with seawater desalination have been

investigated within the MED-CSD project:
Case 1: Reverse Osmosis Powered by Electricity from a CSP Plant

(CSP/RO)
The plant configuration of the ANDASOL 1 plant can be considered the sta-
tus quo of a modern CSP installation. The plant uses the modern European
parabolic trough collector design SKAL-ET and the new receiver tube Schott
Solar PTR-70 for its solar field. The heat transfer fluid used to transfer the
solar heat to the power block is synthetic oil Monsanto VP-1, operating
between 292 °C and 386 °C. The collector field has an aperture area of
510,000 m² and requires about 2 km² of land. The total outlay is about
310 million Euro.
The plant uses two large tanks containing 28,500 tonnes of molten nitrate
salts (60% NaNO3 + 40% KNO3) to store solar energy received during the
day for night-time operation of the turbine. The tanks are 14 metres high and
have a diameter of 38.5 metres. The molten salt can store an amount of heat
of 1010 MWh which is sufficient for 7.5 hours of full load operation of the
turbine, with a charging capacity of 131 MWth and a discharging capacity
of 119 MWth. The heat from the solar field is transferred to the molten salt
tanks via HTF/salt heat exchangers and from the solar field and the storage to
the power cycle via a HTF steam generator. The power cycle is comprised of a
50 MW steam turbine SST-700RH from Siemens operating with superheated
steam at a pressure of 100 bar and a temperature of 377 °C. A condenser
cooled by a wet cooling tower rejects the heat from the power cycle.

35
The plant has a gas-fired backup system (HTF Heater) to provide a maxi-
mum of 15% of the required heat when no solar energy is available. It
will be used to prevent transients from clouds and to support start-up in
the morning. Under the solar irradiation conditions given at the plant site
in Spain, Andasol 1 will produce about 180 GWh of electricity per year.
The plant was built by ACS Cobra and engineered by Grupo SENER, both
well-known Spanish companies.
The ANDASOL plant configuration is very well applicable to a CSP/RO con-

cept, producing maximum electricity during the day for RO operation and
for surplus power delivered to the grid, while during night-time the plant
will operate in part load and only serve the RO system which will be oper-
ated continuously during 24 hours. A configuration with an RO input power
capacity of about 30% of the turbine output capacity should fit well to the
ANDASOL configuration. This must still be confirmed by hourly time series
modelling of plant performance under the specific conditions for the sites
under consideration. The following pictures give some examples of the
equipment that may be used in this configuration:
FIGURE 5: COMBINED CSP DESALINATION PLANT WITH REVERSE OSMOSIS

(CSP/RO)
Energy recovery unit
Re-Header Grid
Solar
collector Membrane
field
Supermeater
Hot Tank
Pump
Generator Pre-
Turbine treatment Permeate
Storage
Evaporator Post-
treatment
Condenser
Cooling Seawater
Cold Tank Tower Product
Heat Transfer Fluid Pump Pre-Header Feed Pump

36
FIGURE 6: SKALET PARABOLIC TROUGH COLLECTOR WITH 150 METRES LENGTH
Case 2: Multi-Effect Desalination Using Heat & Power from a CSP

Plant (CSP/MED)
An appropriate concept for such a plant must still be developed. A

possible configuration could use a linear Fresnel collector field directly
generating saturated steam at 270 °C, 55 bar. An intermediate heat
transfer fluid and respective heat exchangers are not required in that
case. A saturated back-pressure steam turbine would be used for power
generation. Heat storage would consist of a concrete block with a high
temperature and a low temperature section. The high temperature sec-
tion would serve to store heat at around 270-250°C for saturated steam
generation for the turbine, while the low temperature section would
serve to store heat at around 250-75 °C for low temperature steam gen-
eration for the MED plant.
During daytime, excess steam from the oversized solar field that is not
required for the turbine is used to heat up the concrete storage. While
passing through the storage, the saturated steam entering at 270°C is
condensed in the hot section of the storage. The condensate then enters
the cold section of the storage and leaves ideally at about 73°C. The
pressure of the condensate is then reduced to the backpressure of the
steam turbine via a throttle valve. Then it is mixed with the condensate
from the MED header and returned to the solar field by the feed pump
of the power cycle.

37
FIGURE 7: CSP/MED PLANT DURING DAYTIME OPERATION
concrete storage
73ºC
55 bar
3~
G
270ºC
55 bar
solar
field
seawater
73ºC
0.35 bar
destillate
brine
73ºC 73ºC
60 bar 0.35 bar
During night-time, the solar field is by-passed and the condensate direct-
ly enters the cold end of the hot section of the concrete storage. There,
its temperature is increased to the evaporation temperature which
will be lower than at daytime of about 250 °C at a pressure of 40 bar.
During discharge, pressure may be reduced to as low as 11 bar, 185°C.
Passing through the hot section of the storage, the water evaporates
and is then used to drive the turbine. During the night, only the amount
of electricity required for the parasitic power demand of the power block
and the power for the MED pumps will be produced. Therefore, the tur-
bine will be operating in partial load, thus not generating enough steam
for the MED process. The difference will be taken from condensate
pumped through the low temperature storage section and evaporat-
ing at backpressure level, which will be added to the steam from the
turbine. For reasons of security and control, this addition will take place
through intermediate heat exchangers between the power cycle and
the desalination cycle (not displayed here for reasons of simplicity). After
condensation in the MED header, the condensate will be fed back to the
high-temperature and to the low temperature storage.

38
FIGURE 8: CSP/MED PLANT DURING NIGHT TIME OPERATION
73ºC
0.35 bar
75ºC
0.35 bar
3~
G
270ºC, 40 bar
185ºC, 11 bar
seawater
73ºC
0.35 bar
destillate
brine
73ºC
40 bar
A possible advantage of this configuration is the independent control

of power generation and seawater desalination, which allows for a cer-
tain load-following of the power generator while maintaining constant
desalination capacity. Another advantage is the simplicity both of the
components and of the configuration, which may help to reduce costs of
electricity and water. There also seem to be several options for heat inte-
gration and efficiency enhancement that must still be exploited.
This must still be confirmed by a more detailed plant design and by

hourly time series modelling of plant performance under the specific
conditions for the sites under consideration. A general advantage of this
configuration is that the lower operation temperature within the solar
field will yield higher thermal collector efficiency. On the other hand, the
efficiency of power generation will be lower than in Case 1.
To conclude, CSP and desalination technology is a promising option for

the Mediterranean region particularly, and the CSP industry is develop-
ing fast. Many new stakeholders have appeared during recent years
(technology providers, project developers, industry, etc.) and the eco-
nomic conditions are quickly changing due to several factors (financial
crisis, environmental concerns, availability of resources, etc.). But several
constraints still need to be overcome in order for this option to play a
substantial role in addressing water needs in the region and in a sustain-
able manner.

39
Massive changes will be needed: “focused” Euro-
Mediterranean partnership, the win-win-win solution
Avoiding Preventing or facing tensions related to water scarcity in the

region require a transition that will involve massive changes in technol-
ogy and also in political and social awareness. Not only technology (and
solar is an option) is needed but also skills in order to redefine core com-
petencies in the coming decades to take into account these challenges
and threats. In this context, technology transfer, research and education
have a fundamental role to play. Technologies and capabilities are pre-
requisite. Adapted financial resources are of course also needed. Transfer
of technology needs to be promoted between the region’s northern and
southern shores and regional research and development programmes
need to be developed in order to accelerate the development and
deployment of adapted technologies. This must be accompanied by the
adaptation of education and capacity-building activities so that capabili-
ties and required skills will be available in the region to effectively allow
the required changes to take place and also to be sustained. What the
region is short of today is the capacity to bring resources, capital and
technology together in ways that are sustainable. This needs to be
changed.
The region has no other choice than to evolve from a region of hydrocar-
bon dependency to a combination of the use of hydrocarbon and alter-
native energies. As for water, there is no other choice than efficient use
and management of resources and promotion of sustainable water pro-
duction technologies. In this context, solar energy can play a substantial
role, considering the huge solar potential the region is endowed with.
Regional cooperation has an important role to play and the North and
South Mediterranean countries have a common interest to build togeth-
er a sustainable future in the region because of their interdependency.
This implies a strengthened euro-Mediterranean partnership primarily
devoted to the sustainable development of the region.
It is unlikely that a new paradigm for development will be developed

over the short-term, and fortunately there are many ways forward to
approach sustainable development in the Mediterranean region, though
certain parameters are clear. What is needed is foresight, followed by
action, adaptation and innovation. The response must be integrated, it
must be regional and it must be balanced in terms of social, economic
and environmental solutions.
The financial (and now economic and social) crisis, the energy crisis
(despite the very temporary fall in oil prices), concerns related to security
of supply and the need to move towards low-carbon economies to adapt
to climate change, have only served to underline the need for an inter-
est in rationalisation and the launch of complementary policies geared
towards energy efficiency and energy sobriety within the region. This
complementarity could be expanded to include intensive cooperation,
not only in respect to energy savings and renewable energy, but also to
infrastructure and issues relating to a common energy policy. The same
applies to water.

40
The Mediterranean countries are today faced with the need to jointly
forge a “green New Deal” in the Mediterranean which hinges on water
and energy sobriety, to pave the way for a radical change in modes of
consumption and production, thereby enabling all citizens within the
region to live a different and better life. Is this a utopian vision? Not at
all. It is rather the most realistic option – one which calculates the risks
not so as to acknowledge our powerlessness, but instead to tailor our
responses to the nature of the challenges which face us. The Barcelona
Process has laid the groundwork for greater dialogue and cooperation.
It must now evolve further to achieve full integration. The Euro-Mediter-
ranean partnership needs to show, through means and actions, its com-
mitment to sustainable development. This may be seen as an opportunity
for leadership and innovation. No doubt the competitive advantage will
go to those who can anticipate the pace and breadth of the changes
implied by sustainable development. Otherwise, sustainable develop-
ment raises issues which, if ignored for long enough, have the potential
to destroy development.
References
AQUA-CSP 2007: Trieb F., Schillings C., Viebahn P., Paul, C., Altowaie H.,
Sufian T., Alnaser W., Kabariti M., Shahin W., Bennouna A., Nokraschy
H., Kern J., Knies G., El Bassam N., Hasairi I., Haddouche A., Glade H.,
Aliewi A., Concentrating Solar Power for Seawater Desalination. German
Aerospace Center (DLR), Study for the German Ministry of Environment,
Nature Conversation and Nuclear Safety, Stuttgart 2007, (www.dlr.de/tt/
aquacsp)
MED-CSD 2009: Trieb F., Sharfe J., Tomasek M.L., Kern J., Niesor Th.,
Cottret N., Glukstern P., Technology Review and Selection of CSP and
Desalination Configurations adapted for Application in the Southern and
Eastern Mediterranean Region (http://www.med-csd-ec.eu)
MED-CSD 2010: Cottret N., Allal H., Trieb F. Demand Assessment Report,
Assessment of the techno-economic potential of CSP for electricity and
desalination in Mediterranean Partner Countries (http://www.med-csd-
ec.eu)

41
The importance of energy
issues in intra-Maghreb
relations and in the
relationships between the
Maghreb and Europe
MUSTAPHA K. FAID
45
The importance of energy issues in intra-Maghreb
relations and in the relationships between the
Maghreb and Europe
Mustapha K. FAID
President SPTEC Conseil
Introduction
Badly-managed imbalances and great inequalities have always been the

source of misunderstandings between partners. The case of the Western
Mediterranean area is instructive, among the Maghreb countries themselves,
or between the Maghreb and its northern coastal neighbours. If only a com-
mon approach for an integrated and interdependent regional development
could be considered, important potentialities and complementarities could
exist in many sectors. But the constraints, differences and contrasts remain
significant. They seem to be here to stay, if not getting worse - and this is
so in every field. Energy issue is no exception. Indeed, one cannot help but
notice the numerous discrepancies the region continues to face, where a
sustained dialogue, mutual understanding and cooperation could succeed
in getting rid of many constraints in the energy field.
Energy would have been not only the main factor in the integration that the
Maghreb countries set themselves as a goal more than twenty years ago,
in 1989, but also the driving force behind the economic development and
international cooperation in the area, as envisaged by the Barcelona Process,
since its inception in 1995. Some progress has certainly been made. But it
has had limited results, lacking ambition, considering the potential and the
needs in the region. In particular, it has not been the result of an approach
based on complementarities and interdependencies.
In order to appreciate the constraints it is necessary to point to some

general facts –social-economic as well as commercial – which will not
be without consequence to future energy availability and to the devel-
opment of the whole region. We will then examine the prevailing and
expected energy situation in the Maghreb countries, highlighting the
assets of the region as well as the challenges it has been facing, in terms
of needs, infrastructure, finances and regulation.
Finally, we will attempt to list a few guidelines and/or projects, which

–within the framework of a genuine and balanced cooperation – could
contribute in a major way to the construction, in term, of an economic
integrated area that is likely to meet the aspirations of the populations in
the Maghreb countries and in Southern Europe.
47
Some major facts
– Firstly, concerning demography. Unlike the North, the population in

the South is growing too fast, creating requirements in terms of devel-
opment that are so heavy that the question remains as to the Maghreb
countries’ capability to mobilize the necessary means to face them.
The population in the Maghreb will grow from about 85 million inhab-
itants today to 100 million in 2020. This important increase requires a
high-level sustainable growth.
It is undeniable that the combination of both elements (economic

growth and an increasing population) will result in more energy needs.
– The second fact concerns the highly contrasting energy situations

in Western Mediterranean, when it comes to comparing consumption
levels, availability and distribution of hydrocarbon resources or consid-
ering energy trade.
Unequal primary energy consumption underlines the insufficiencies in

the development of the Maghreb countries, either considered sepa-
rately or as a whole. Average primary energy consumption per capita
is less than 1 ton oil equivalent (toe), when in northern Mediterranean
countries it exceeds 3 toe. In other words, a northern Mediterranean
inhabitant consumes three times more energy than a Southern
Mediterranean.
While in the North, European countries are dependent on oil and gas
imports, hydrocarbon reserves in the Maghreb are very large, repre-
senting 5% of world oil reserves and more than 3% of total world gas
reserves. They are, however, unequally distributed, and are concen-
trated mainly in Algeria and Libya.
Trade among the Maghreb countries remains marginal. One is tempted

to say that these countries seem to ignore one another, in spite of the
needs, availability of the resources and the proximity of markets. The
lack of cohesion on the political, commercial and financial fronts has so
far prevented them from considering a common approach and a global
vision for development.
– The third fact concerns the economy. Although the expression may
seem somewhat strong, it could be argued that “there are two per-
fectly distinct worlds”. There are indeed important gaps, in terms of
development and revenues per capita, separating the northern and
southern Mediterranean countries. Such differences in prosperity have
affected relations between the northern and southern countries.
Far from being a prosperous area there is clearly a lack of trust between
the North and the South, as well as among the Maghreb countries them-
selves. This, combined with the uneven distribution of wealth in North
Africa, is seriously hindering development in the region.
The importance of energy issues in intra-Maghreb relations and in the relationships between
48 the Maghreb and Europe
Cooperation between northern and southern countries has often
taken the form of aid, provided by the North to the South, and of dif-
ferent dependencies, particularly commercial and technological, to the
detriment of genuine and balanced partnerships.
These relations of dependency are due to the fact that exports outside
hydrocarbons from the Maghreb countries to the European Union
are limited, even decreasing, causing this region to be structurally in
deficit. Further, these countries attract only a tiny part of the European
capital flows every year.
– Finally, on the commercial front, the first observation concerns the

persistent low levels of intra-Maghreb trade, given the fact that devel-
opment issues are dealt with from a purely national perspective.
Indeed, trade balances in the Maghreb countries differ from one coun-
try to another. While Algeria and Libya have positive balances, as a
result of their hydrocarbon exports, Morocco, Tunisia and Mauritania’s
balances are negative.
The prominent role of energy in the Maghreb countries’ trade balances

– imported by some of them and exported by others – shows the
impact of excessive dependencies.
The second point worth making is that Europe, the main commercial
partner, tends to globally consider the Maghreb countries as suppliers
of primary energy and primary products, particularly agricultural prod-
ucts, and/or separate market opportunities to export manufactured
and large consumption products and services.
It is true to say that, in order to profit from favourable cost and tax
measures in tax-free areas set up recently in the South, European
companies have delocalized parts of their activities in the Maghreb
countries over the last few years. The conditions for a genuine partner-
ship are, however, far from being met.
Energy situation and future outlook for the Maghreb
As far as energy is concerned, the Maghreb countries differ from one

another in many respects. They show important discrepancies with
regard to levels of consumption and the availability and distribution of
hydrocarbon resources.
Energy consumption
In 2006, primary energy consumption in the Maghreb countries reached

75 Mtoe. Of the five Maghreb countries, Algeria is the largest consumer
with 44% (34 Mtoe), followed by Libya with 25% (19 Mtoe), Morocco
with 17% (13 Mtoe), Tunisia with 12% (9 Mtoe) and Mauritania with
only 2% (1 Mtoe).
Mustapha K. FAID
49
PRIMARY ENERGY CONSUMPTION 2006
Population Consumption
M inhab Mtoe % /capita
Algeria 33.3 34.0 44 1.0
Libya 6.0 18.7 25 3.1
Morocco 30.5 12.6 17 0.4
Mauritania 3.1 1.3 2 0.4
Tunisia 10.1 8.9 12 0.9
Total Maghreb 83.0 75.5 100 0.9
Sources : Regulation agencies, Ministries, National companies
Average primary energy consumption per capita is 0.9 toe in the

Maghreb. In northern Mediterranean countries primary energy consump-
tion per capita is threefold more important, reaching 3.2 toe.
These levels and inequalities in terms of energy consumption underline

the importance of energy issues in the development of the Maghreb
countries, either considered separately or as a whole.
By 2020, these disparities would remain and energy consumption in the

Maghreb countries would dramatically increase, with +53 Mtoe. This
70% increase will be the result of the development of the electricity gen-
eration sector which will consume 31 Mtoe of fossil fuels (coal, oil and
natural gas), representing nearly 40% of primary energy demand in the
Maghreb region by 2020.
ENERGY CONSUMPTION FORECAST (Mtoe)

2006 2010 2020
Algeria 34.0 40.0 61.8
Libya 18.7 23.5 28.5
Morocco 12.6 16.6 20.0
Mauritania 1.2 1.4 1.7
Tunisia 8.9 12.6 16.1
Total Maghreb 75.5 94.1 128.1
Hydrocarbon consumption
Oil consumption in the Maghreb reached 37.9 Mtoe, representing half

of total primary energy consumption, whereas natural gas, with 31 Mtoe
(34 Bcm) represents 41% of total energy consumption.
HYDROCARBON CONSUMPTION 2006

Oil Natual gas Other energies
(Mt) % (Mtoe) % (Mtoe) %
Algeria 11.6 30.6 21.6 69.5 0.9 14.1
Libya 13.2 34.8 5.3 17.0 0.2 3.1
Morocco 8.1 21.4 0.5 1.6 3.9 60.9
Mauritania 1.0 2.6 - - 0.3 4.7
Tunisia 4.0 10.6 3.7 11.9 1.1 17.2
Total 37.9 100.0 31.1 100.0 6.4 100.0
According to projections for the whole Maghreb region, oil consumption
is expected to increase by 24% to reach 47 Mt by 2020.
OIL CONSUMPTION BETWEEN 2006 AND 2020 (Mt)

2006 2010 2020
Algeria 11.6 13.0 15.0
Libya 13.2 12.3 13.3
Morocco 8.1 9.4 9.5
Mauritania 1.0 1.2 1.2
Tunisia 4.0 6.8 7.6
Total Maghreb 37.9 42.6 46.6
Natural gas demand should grow dramatically by 135% between 2006

and 2020 to reach 80 Bcm. Consumption in power generation will
increase from 17 Bcm in 2006 to 34 Bcm in 2020. Algeria will remain the
largest natural gas consumer in 2020, with 50 Bcm, followed by Libya
with 16 Bcm, Tunisia with 8 Bcm and Morocco with nearly 6 Bcm.
NATURAL GAS CONSUMPTION BETWEEN 2006 AND 2020 (Bcm)

2006 2010 2020
Algeria 23.7 28.6 50.0
Libya 5.9 12.1 16.5
Morocco 0.6 1.0 5.7
Mauritania - - -
Tunisia 4.0 5.0 7.7
Total Maghreb 34.1 48 .2 79.9
Electricity
Electricity consumption in the Maghreb reached 91.5 TWh in 2006.

Consumption for each country was as follows: 38% in Algeria (34.3
TWh), 26% in Libya (24.0 TWh), 21% in Morocco (19.2 TWh), 15% in
Tunisia (13.5 TWh) and less than 1% in Mauritania (0.4 TWh).
ELECTRICITY CONSUMPTION AND INSTALLED PRODUCTION CAPACITY (2006)

Consumption TWh Installed production capacity GW
Algeria 34.41 8.0
Libya 23.99 5.8
Morocco 19.18 5.3
Mauritania 0.40 -
Tunisia 13.47 3.2
Total Maghreb 91.45 22.3
Sources : Electricity companies
Installed electricity production capacity in the Maghreb totalled about 22

GW. Although the electrification rate exceeds now 95% in the Maghreb
countries, the needs in terms of production capacity are considerable. In
fact, in order to meet their growing needs, the Maghreb countries will have
to build an additional 23 GW production capacity over the next 10-15 years,
therefore doubling their current capacity. Such development will require
huge investments and building capacities.
Mustapha K. FAID
51
Hydrocarbon reserves and production
Hydrocarbon reserves in the Maghreb are estimated at 7 billion tons of

oil and more than 6000 Bcm of natural gas. These resources are uneven-
ly distributed and are mainly concentrated in Algeria and Libya. Those
countries possess 87% of the oil reserves and 71% of the natural gas
reserves of the Mediterranean area.
HYDROCARBON RESERVES AND PRODUCTION (2008)

Oil Natural Gas
Reserves as of 31.12.2008 Production Ratio R/P Reserves as of 31.12.2008 Production Ratio R/P
103 Mt % Med % World Mt (years) Bcm % Med % World Bcm (years)
Algeria 1.5 18.1% 1.0% 85.6 17.5 4600 53.3% 2.4% 86.5 53.2
Libya 5.7 68.7% 3.5% 86.2 66.1 1540 17.9% 0.8% 15.9 96.9
Tunisia 0.1 1.2% - 4.2 23.8 95 1.1% - 3.0 31.7
Maghreb 7.3 88.0% 4.5% 176.0 41.5 6235 72.3% 3.2% 105.4 59.2
Rest Med. 1.0 12.0% 2390 27.7%
Sources: OPEC, BP Statistical Review, Cedigaz.,APRC
Libya holds 5.7 billion tons of oil reserves, representing nearly 66 years
of production based on its current annual rhythm. Algeria has only
1.5 billion tons, representing 17 years of production based on current
annual rhythms. As for natural gas, reserves are much more important
in Algeria, with 4600 Bcm, than in Libya, with 1540 Bcm. In 2008, the
Maghreb countries produced more than 176 Mt of oil and some 105
Bcm of natural gas.
Intra-Maghreb energy trade
Energy trade among the Maghreb countries is particularly low when one
considers the needs, the resource availability and the geographical proximity.
The striking and fundamental observation is that trade in the oil sector
among these countries is insignificant. In 2005, it reached 1.8 Mt, represent-
ing only 2.6% of total marketed oil quantities in the region, some 69.6 Mt.
The amounts of oil traded among the Maghreb countries in 2005 were
as follows:
EXPORTS
Total Other Mediterranean
2005103 t Imports Algeria Libya Morocco Tunisia Rest of world TOTAL
Maghreb countries
Algeria - 0 0.03 0 0.03 402 450 852.03
Libya 0 - 0 0 0 0 29 29
Morocco 975 37 - 0 1 012 490 6 167 7 669
Mauritania 0 0 0.15 0 0.15 0 0 0.15
Tunisia 0 779 11.6 - 790.6 191 3 278 4 260
Total Maghreb 975 816 11.78 0 1 803.18
Other Med. 20 159 45 372 0 1 317 66 848 -
Rest of world 140 779 0 0 919 -
Total 21 274 46 967 11.78 1 317 69 569.78 -
Sources: IEA, CPDP, BP
Algeria exported only 1 Mt of LPG to Morocco, representing 4.6% of its
exports of oil products. Algeria does not sell oil to its neighbouring coun-
tries. Outside the small quantities of oil products imported from Algeria,
covering some 10.6% of its needs, Morocco imports 6.7 Mt from outside
the Maghreb region. As for Tunisia, it imports 0.8 Mt of oil from Libya of
a total of 4.3 Mt imported annually, representing only 18.3% of its ener-
gy imports. It exports 1.3 Mt of petroleum products to countries outside
the Maghreb region. Out of a total of nearly 47 Mt exported by Libya,
only 0.8 Mt are sold to Tunisia; that is, 1.7% of its total oil exports.
As far as natural gas is concerned, Tunisia and Morocco are transit coun-
tries. Parts of the amounts of natural gas exported to Italy and Slovenia
on one side and to Spain and Portugal on the other, are meant for
Tunisia and Morocco respectively. In 2006, their share did not exceed 1.8
Bcm, representing 2.9% of Algeria’s total gas exports.
In the electricity sector, cross-border trade in the Maghreb is shown in

the table below. One may note the very low level of exchanges, only 0.7
TWh in 2006, representing 0.7% of total electricity consumption in the
region. Although a line linking Libya to Tunisia was constructed in 2003,
the two countries have not yet started trading electricity.
2006 (GWh)
Exports
Algeria Libya Morocco Tunisia Egypt Spain Total
Algeria - - 136 135 - - 271
Libya - - - - 122.6 - 122.6
Morocco 159 - - - - 1 899 2 058
Imports Tunisia 141 - - - - - 141
Egypt - 91.2 - - - - 91.2
Spain - - 27 - - - 27
Total 300 91.2 163 135 122.6 1 899 2 710.8
Sources: COMELEC, Electricity companies
The only significant amount of electricity exchanged is between Morocco

and Spain with 1.9 TWh. A new 400kV line linking Algeria to Morocco has
been brought to service recently. It is expected to make up for some mal-
functions and make it easier for Spain to purchase electricity from Algeria.
The Maghreb countries barely trade among themselves and everything

seems to point to a lack of trust; which has always been the basis for any
trade.
2-6 Gas exports to Europe
In 2008, Algeria and Libya exported nearly 70 Bcm of gas, with 47.4 Bcm
by pipeline and 22.4 Bcm in liquefied form.
60.5 Bcm, around 87% of total sold amounts, were exported to five
Southern European countries: Spain, France, Greece, Italy and Portugal.
95% of the Maghreb’s pipeline exports are imported by these five

European countries, which also import 68% of the LNG exported by the
Maghreb.
Mustapha K. FAID
53
Exports
2008 Algeria Libya Total Maghreb Others Total
Imports Bcm % Bcm % Bcm % Bcm % Bcm %
Total 13.87 35.02 0.53 1.34 14.40 36.36 25.20 63.64 39.60 100.00
Spain Pipeline 8.97 82.52 - - 8.97 82.52 1.90 17.48 10.87 100.00
LNG 4.90 17.06 0.53 1.84 5.43 18.90 23.30 81.10 28.73 100.00
Total 7.60 9.34 - - 7.60 9.34 41.65 84.56 49.25 100.00
France Pipeline Pipeline - - - - - - 36.66 100.00 36.66 100.00
LNG 7.60 60.37 - - 7.60 60.37 4.99 39.63 12.59 100.00
Total 0.70 16.91 - - 0.70 16.91 3.44 83.09 4.14 100.00
Greece Pipeline Pipeline - - - - - - 3.20 100.00 3.20 100.00
LNG 0.70 74.47 - - 0.70 74.47 0.24 25.53 0.94 100.00
Total 26.00 33.82 9.87 12.84 35.87 46.66 41.00 53.34 76.87 100.00
Italy Pipe Pipeline 24.44 32.45 9.87 13.11 34.31 45.56 41.00 54.44 75.31 100.00
LNG 1.56 100.00 - - 1.56 100.00 - - 1.56 100.00
Total 1.93 42.32 - - 1.93 42.32 2.63 57.68 4.56 100.00
Portugal Pipeline 1.93 100.00 - - 1.93 100.00 - - 1.93 100.00
LNG - - - - - - 2.63 100.00 2.63 100.00
Total 50.10 28.73 10.40 5.96 60.50 34.69 113.92 65.31 174.42 100.00
Total 5 Pipeline 35.34 27.62 9.87 7.71 45.21 35.33 82.76 64 .67 127.97 100.00
LNG 14.76 31.78 0.53 1.14 15.29 32.92 31.16 67.08 46.45 100.00
Total 50.10 84.39 10.40 100.00 60.50 86.71

Total 5 Pipeline 35.34 94.24 9.87 100.00 45.21 95.44
LNG 14.76 67.49 0.53 100.00 15.29 68.26
Total 1.75 2.95 - - 1.75 2.51
Other Med. Pipeline 1.75 4.67 - - 1.75 3.69
LNG - - - - - -
Total 7.52 12.66 - - 7.52 10.78
Rest Pipeline 0.41 1.09 - - 0.41 0.87
LNG 7.11 32.51 - - 7.11 31.74
Total 59.37 100.00 10.40 100.00 69.77 100.00
Total Pipeline Pipeline 37.50 100.00 9.87 100.00 47.37 100.00
LNG 21.87 100.00 0.53 100.00 22.40 100.00
Sources: IEA, BP, CEDIGAZ
While the Maghreb producers are heavily dependent on their exports,

the five Southern European countries have diversified their supply
sources. Natural gas imported from Algeria and Libya represents less
than 35% of total imported gas. However, the share of gas imported
from the Maghreb varies from one country to another. With more than
50 Bcm, Algeria contributes with nearly 29% to the five European coun-
tries’ gas supplies. On the other hand, its dependency on its exports to
these countries exceeds an average of 84% (more than 94% by pipeline
and 67.5% in liquefied form). Libya exported a little more than 10 Bcm,
nearly in totality by pipeline to Italy, contributing with 13% to Italian gas
supplies. The agreement signed with the Italian ENI should help Libya
to raise by 3 Bcm/year its pipeline exports. The agreement provides for
the construction of an LNG factory to liquefy 5 Bcm/year. With the com-
ing into service in June 2010 of the MEDGAZ pipeline, which (in its first
phase) will carry 8 Bcm of Algerian gas to Spain, and the construction of
the GALSI pipeline to transport 8 Bcm to Italy via Sardinia (expected to
be completed in 2012-2013), Algerian gas supplies to the five European
countries should in term exceed 76 Bcm. More LNG volumes are expect-
ed to be exported with the boosting of the Skikda LNG factory and the
increase in the Arzew liquefaction capacity. By the end of the decade,
80 to 85 Bcm of gas will be exported from the Maghreb by tanker or
pipeline, direct and fixed links, representing a major contribution to
the supply security and a diversification of import sources for the five
Southern European countries.
Intra Maghreb co-operation
So far, the Maghreb countries have separately sought to:
• develop their exports to their main partner, the EU ; mainly primary
products (hydrocarbons and agriculture);
• attract foreign investments.
They ended up competing against one another, not only to export their
products but also to attract international capital flows. In addition, their
exports are particularly sensitive to exogenous factors: oil prices for
Algeria and Libya, the ups and downs of agriculture and the tourist trade
for Morocco and Tunisia. To illustrate the importance of these insufficien-
cies and deficits, one may cite the intra-Maghreb trade which represents
only 3% of foreign trade in the area. According to some experts, the
delay in implementing the economic integration process within the Arab
Maghreb Union’s framework costs them each 2% of their GDP yearly.
Another cooperation path would have been to promote the develop-
ment of integrated projects by Maghreb-based economic players. Such
an approach would have helped them to join forces in their trade with
the EU, to offer complementarities within their production structures and
to become fundamental partners for European companies. In the energy
sector, each of the Maghreb countries, faced with its needs, has to mobi-
lize huge funds. In the short and medium terms, such financial pressures
and the growing demand for energy may result in tensions on the supply
side and therefore in shortages.
The question one may ask is whether the Maghreb countries will be able,
separately, to raise the necessary funds given their economic situation,
the size of their markets, the low credit rating of local demand, and the
gaps in available public financing.
In order to face this huge challenge, several solutions could be envisaged.
The development of intra-Maghreb energy trade
This is vital! It holds great potential, provided that the Maghreb states
show some political will and encourage it on the commercial standpoint.
Globally, by 2020, more than 18 Mtoe could be traded among the

Maghreb countries, representing some 15% of total primary energy
demand in the region.
Among the concrete initiatives that could be envisaged in the short and
medium terms, one may mention:
Mustapha K. FAID
55
• The construction of multi-product pipelines (LPG, petrol and die-
sel oil) linking production and distribution units located near the
Algerian-Moroccan and Algerian-Tunisian borders to the neighbour-
ing markets.
• The use of natural gas, in particular in Morocco, in power generation
as well as in industrial sector. A network of pipelines could be con-
structed to link the Maghreb Europe pipeline crossing the Moroccan
territory to inland industrial zones and large cities.
• The development and optimum exploitation of cross-border electric-
ity lines. This initiative would contribute to increasing electricity trade,
reducing consequently the constraints to build new production capacity.
Implementing integrated partnership projects
It is necessary, today more than ever, to develop new paths for coop-
eration at regional level; cooperation that would allow the Maghreb
ultimately to face many challenges, particularly economic development
and demographic growth. The basic principle would be to create joint
companies gathering players from the Maghreb countries to develop
integrated projects within the framework of cross-interest partnerships.
Reforms implemented by the Maghreb countries separately over the last
few years, have contributed to liberalizing their respective markets, but
should of course be harmonized and made compatible. Further, invit-
ing other Mediterranean countries to join this cooperation programme
would make it easier to meet the criteria for financing and project imple-
mentation. As far as the Maghreb is concerned, the approach should
no more be based on “every country for itself”, a policy which has so
far been privileged. The assets of the whole region should be taken into
consideration: geo-strategy, economy, trade, finance, but also a young
workforce. Listing all the fields that offer regional integration oppor-
tunities would be impossible. However, as an illustration, it is worth
mentioning two concrete examples:
- New projects in petrochemicals are envisaged or being implemented in

Algeria, in particular to produce :
• polypropylene, plastic used to manufacture car parts as well as food

packaging;
• polyethylene terephtalate (PET), plastic used for making mineral water
bottles and polyester;
• Linear Alkyl Benzene (LAB), an intermediate in detergent production.
These projects could be developed within the framework of genuine and

multi-form Maghreb partnerships.
They would constitute an opportunity not to limit production to semi-

finished products but rather consider the manufacturing in the Maghreb
of added value products, such as car parts, packaging, plastic bottles,
polyester and detergents etc.
Another cooperation project could be envisaged in the phosphate and

nitrogen fertilizer industry. It is high time the Maghreb countries con-
sidered partnering and developing common projects instead of being in
competition against one another: Morocco and Tunisia on the phosphate
fertilizer market, Algeria and Libya on the nitrogen fertilizer market. Is it
logical for Morocco and Tunisia to continue to purchase ammonia from
distant markets, while Algeria and Libya are producing and exporting it?
All of these projects require important investments. It would be to the

advantage of the project developers to consider a regional market, large
enough to be able to cope with competing products imported from the
Middle East. Such integrated projects, requiring technological know-how
but also human, technical and financial resources, would create more
jobs. Furthermore, they would contribute not only to supplying the large
domestic market but also to exporting Maghreb-made finished and more
remunerating products.
Common sustainable development thinking
The Maghreb countries have recently initiated a few sustainable devel-

opment projects to somewhat reduce the constraints linked to the
environment and the access to energy. It is perhaps praiseworthy but clearly
insufficient given the fact that they are doing this separately. In fact, the
Maghreb countries would gain immensely by agreeing to put in place delib-
erate policies, based on energy efficiency and a better use of renewable
energies, particularly solar and wind energies. For instance, a large number
of small solar electricity production stations could be constructed in the
region. Combined with the construction of local factories to produce solar
panels and equipment, these projects would have a positive impact on the
economic and social development of rural areas, while meeting the cost cri-
teria. Such initiatives would depend on the human and technical capacities
of each Maghreb countries, gathered within the framework of an integrat-
ed common project, large enough to meet the financial criteria.
Promoting sub-contracting in the Maghreb
Existing industries in the Maghreb require sub-contracting, in particular

in the oil, gas and electricity sectors. Manufacturing spare parts for these
industries would be entrusted to small- and medium-sized companies,
using existing Maghreb-based expertise. In fact, huge funds are dis-
bursed yearly to import spare parts for industry, while there is a potential
for sub-contracting expertise and capacities that could be strengthened
and network-structured to meet demand in the Maghreb countries.
Such dynamics would have to respond to the requirements of industrial
maintenance and engineering. This would help develop progressively the
manufacturing of technologically and technically elaborate equipment as
well as the capacities to implement projects in the Maghreb.
Maghreb-Europe co-operation
It is worth underlining the strong and pressing necessity to develop

a more ambitious cooperation between the Maghreb and Europe.
However, this cooperation would have to be based on a totally dif-
ferent logic than the one governing their relations today. Indeed, it is
Mustapha K. FAID
57
high time that these countries put in place economic policies within the
framework of an approach based on equitable and mutually profitable
regional development. This said, the question is to find a sector that
could play the role of catalyst or leverage to initiate this new partnership.
Paradoxically, it is the unevenness in energy resource distribution among
the Maghreb countries, which could be the basis for the development of
interdependencies, complementarities and solidarity. By way of an illus-
tration, one may mention the following guidelines and/or projects:
Gas relations based on supply security & market security
The first obstacle to the security of energy supply for the European
countries is clearly the constraints weighing on domestic production and
demand, resulting in uncertainties as to the level of required imports. If
the level of the reserves seems important in the Maghreb region, exploit-
ing these volumes of oil and gas is not a sure thing, given the necessary
and particularly high levels of investments required, not only for the
development of the reserves but also for transporting them to the con-
suming markets. Therefore, it is vital to integrate the set of problems
specific to the Maghreb energy suppliers into the European competi-
tion logic, by developing ambitious, stable and long-term cross-interest
industrial partnerships between northern Mediterranean companies and
southern producers. North-South cross-interest partnerships should be
considered at different levels of the energy chain, including prospecting,
production, transport, liquefaction, re-gasification, electricity produc-
tion and marketing. Such partnerships would guarantee the security of
supply for one party and security of market for the other. Today, it is
necessary to give coherence to the energy industry by dealing with the
security issue within a global perspective, from field development to con-
sumption. Besides, a coherent approach could not be envisaged without
a stable regulatory framework that would take into consideration, in an
objective way, the interests of each and every stakeholder.
Developing new gas infrastructures
Several major infrastructures have been realized within the framework of

long-term contracts, contributing to a large extent to the security of gas
supplies of the southern part of Europe.
However, a long-term visibility and a common vision would help attract

the necessary funds to develop new infrastructures, in particular:
The Trans Saharan Pipeline (Nigeria – Algeria)
The participation of European gas companies in the Nigeria – Algeria

pipeline project (particularly, Spanish, French and Italian) would be syn-
onymous of strategic and structuring partnership. The opportunity for
the European companies would be to join the Algerian Sonatrach in a
consortium to bring Nigerian gas to Hassi R’Mel field where it would be
re-injected and stored. The European companies would therefore consti-
tute reserves and tap into their shares according to their needs.
This project would have several merits:
• On the energy front, it would contribute to the long-term supply of

the southern part of Europe;
• On the financial and commercial front, it would require less
investments and would be contractually and technically easier to
implement;
• On the political front, it would help to develop the region economi-
cally and reduce the northbound migration flows of populations from
transit and neighbouring countries.
The EU could contribute with a financial support since such projects

would be of geo-strategic importance for the long-term supply of the
European market.
The MENA pipeline
This pipeline would link gas exporting countries in the Middle East to the
Maghreb region and from there to the southern part of Europe. It would
carry gas from Iraq and go through Jordan and Egypt, using the existing
Arab Gas corridor, which would be strengthened and used for reverse
supplies. The pipeline would then go through Libya to reach Hassi R’Mel
field in Algeria.
This project has several advantages:
• It would transport important Middle Eastern gas volumes to European

buyers through the Maghreb region;
• This pipeline would go through producing countries and would help
develop existing gas fields, particularly in Libya;
• It would be a means to diversify gas supplies, since Hassi R’Mel would
become a "hub" and would be used to supply LNG to consum-
ing countries in the eastern part as well as the western part of the
Mediterranean.
Developing power generation stations in partnership
Although rural electrification has made major progress in the South in

the last few years, access to electricity is not always guaranteed and so
much remains to be done. Access to electricity for populations of the
South should be as important as the security of energy supply to the
northern countries. It is an additional major stake of the new Maghreb-
Europe cooperation. The idea would be to set up in collaboration with
the Maghreb countries a global plan for the construction of electricity
production units within the framework of joint ventures. Some power
stations could be coupled to sea water desalination units; sea water
desalination being a vital sector for the future of the Maghreb. Some
stations could produce electricity for exportation.
Mustapha K. FAID
59
Sustainable development
Sustainable development offers many opportunities which, if they were

to be seized, would help initiate intersectoral collaborations and open the
door to new concepts and novel approaches for cooperation in the region.
This would require the implementation of vigorous and voluntaristic policies
based on energy efficiency and a wider use of renewable energies. Among
the many ideas for partnership, one may mention the following:
(i)- a Maghreb-scale project which would provide for the construction of

several site for the production of electricity (using photovoltaics or ther-
mal solar technology). In addition, the PV panels as well as the thermal
collectors and related equipment could be produced locally.
This integrated project would be sufficiently large to meet the criteria in

terms of costs and financing. Besides, a Maghreb-wide integrated project
would have a positive impact on the economic and social development of
rural areas: improved water pumping techniques and consequently better
irrigated agricultural fields, construction of small cold storage units and
development of tourist trade in semi-desertic areas. It would contribute to:
• helping rural populations to settle down in the South while reducing

concentrations in large towns, reducing demand for non-renewable
energy sources and the impact on the environment, favouring local
development;
• somewhat reducing migration flows to the European countries with-
out having to raise barriers or pass more stringent immigration laws.
(ii)- Another field of cooperation concerns the impact of climate change.

The Mediterranean countries will need to prepare for this environmental
metamorphosis while in the same time, and paradoxically, face an inexora-
bly growing energy consumption. To be able to cope with drought, water
needs, and generalized air conditioning systems in the building sector,
these countries will have to take action today to raise their water availabili-
ties as well as their electricity production. If nothing is done, the growing
population combined with the rural exodus will cause these countries to
experience an urbanization wave at a speed and a scale unseen in the area.
Water is another sector that presents risks. Demand continues to grow and
has already reached the limits of the renewable resources in these countries.
In an attempt to prevent the expected terrible consequences, some states
intend to launch sea water desalination projects. Therefore, using renew-
able energies in water production could be envisaged in order to avoid the
negative spiral, or at least reduce its effects. The Mediterranean region is
doomed to know tighter and tighter interactions between the water and
energy sectors. More coherent energy policies need to be introduced at
national and regional levels, including regulation and efficiency norms, in
favour of stable integrated energy services market.
Cooperation would contribute to replicating successful projects in some

countries as far as optimum and rational usage of energy is concerned.
It would also help create a Mediterranean green energy market, by intro-
ducing reforms and economic incentives (water tariffs, carbon taxes,
subsidies in favour of clean technologies, etc.) adapted to the reality of
each Mediterranean country.
Training and Research & Development
It would be fruitless to seek to establish genuine and sustainable part-

nerships without considering training and research & development as
well. It is necessary to think of creating in the southern Mediterranean
countries joint training institutes and research centres. Several regional
institutes could be built to train engineers and technicians in different
energy-related fields and sectors. Such institutes would be supported by
international Research and Development Centres, with which they would
develop programmes for applied research in areas of mutual interests.
Conclusions
To conclude, I would say that energy could play a major role: firstly, as
a gathering factor in the Intra-Maghreb relations; secondly, as a driving
force in the implementation of a regional Maghreb-Europe balanced and
interdependent cooperation. Two necessary conditions need to be met:
a political understanding and a common approach to meet the chal-
lenges the region will be faced with. Maghreb’s main commercial partner
is Southern Europe. It is therefore legitimate to think that the European
countries should also be involved in projects related to the development
of the Maghreb. This would be considered a step toward establishing
balanced relations between the two zones, with the ultimate goal of
integrating the Maghreb region. Given the existing imbalance between
the North and the South, the huge funds that will have to be invested,
and the human and technical means that will be required in the future,
the energy sector is one of the fields where privileged cooperation can
only be positive. Indeed, it is clear that the current geopolitical remodel-
ling, the still-rampant economic crisis and the hectic pace of globalization
require the Maghreb and European countries to make the right choices
now; be they strategic, economic or political.
Mustapha K. FAID
61
Solar Energy and the
Maghreb region
DR. TILL STENZEL
63
Solar Energy and the Maghreb region
Dr. Till Stenzel
Chief Operating Officer, Nur Energie, London
Introduction
The Maghreb is a resource rich region. For many decades, mining, min-
erals extraction and the exploitation of oil and gas fields have played
an essential part of the economic landscape along the entire Southern
Mediterranean coast from Egypt to Morocco. Libya and Algeria
together account for about 50% of Africa’s proven oil reserves, while
Algeria, Egypt and Libya together hold 56% of total proven African
natural gas reserves. Morocco is the world’s largest phosphate export-
er, while phosphates and other mining activity account for nearly 50%
of Tunisia’s export earnings.
However, there is one natural resource, which so far has received

scant attention, despite an abundance that has few parallels around
the world: Solar Energy. Calculations by the Institute of Technical
Thermodynamics at the German Aerospace Center (DLR) show that
just 0.3% of North Africa’s desert surface area would be required
to serve the electricity and desalinated water needs of the entire
Middle-East-North-Africa (MENA)-EU region. Even a small fraction
of this would already be sufficient to meet a significant percentage
of growing local electricity needs, while providing significant export
opportunities for sales into Europe’s electricity market.
It is this abundance of solar potential, which, unlike fossil resources, is

inexhaustible and without polluting and toxic side effects that makes
solar energy an attractive option for the Maghreb to develop a new
pillar in its resource exploitation and processing industry. If it were
to be utilised as a resource both for domestic energy supply as well
as electricity exports, it could furthermore increase the wealth of the
Maghreb’s nations, and contribute to a decarbonised electricity supply.
65
Solar Technologies Overview
There are two principal solar energy technology options for the Maghreb
region – Photovoltaic (PV) modules, which are scalable from small house-
hold-level applications to larger scale “solar-farms” and concentrating
solar power (CSP) technologies, which are suitable for power plants from
ca. 50MW to utility-scale sizes of several hundred MW.
These different scales, as well as the different states of technology devel-

opment, call for a differentiated analysis of the options for development
in the Maghreb. With regard to technology development, it is important
to recognize recent analysis undertaken by the World Bank, compar-
ing cumulative total global investments into different renewable energy
technologies to-date.
GLOBAL CUMULATIVE INVESTMENT TO-DATE

Wind Energy $200bn
Solar PV $100bn
Solar CSP $2.5bn
This article will focus on solar CSP technology, but will first briefly review
the status of solar PV, to put the subsequent discussion into perspective.
Recent Developments in Solar PV
The world-bank figures highlight that both wind energy and solar PV
have already grown into sizeable industries, while CSP is still at the
beginning of its learning curve. In fact, the solar PV industry installed
over 7GW of modules in 2009, which equates to approximately €25-
30bn market turnover. Industrial-scale manufacturing plants have been
established over the past years in Asia, most notably China, as well as
Germany and the USA due to favourable national support programmes.
Competition in the industry is fierce and prices have been cut almost in
half over the past 18 months due to falling raw-material prices and the
scaling up of manufacturing plants in low-cost jurisdictions.
In this context, the aim of establishing a competitive and sizeable PV manu-

facturing industry in the Maghreb appears very challenging. The minimum
size for competitive factories is now measured in gigawatts (GW) rather
than MW, and capital expenditure is in the order of >€1bn for a vertically
integrated wafer-cell-module plant of such scale or its thin-film technology
equivalent. Most aspects of the technology are underpinned by patent pro-
tection, adding another layer of competitive hurdles for establishing a new
industry in the Maghreb with little track-record of research and development
so far. While not impossible, it would take significant investment, both of
resources and management capabilities, as well as political commitment to
succeed along this pathway. However, there is substantial scope for small-
scale (below 1MW) installations of PV modules in the off-grid as well as the
residential and commercial rooftop market. As President Barack Obama fre-
quently remarks in his speeches, these are “jobs that cannot be outsourced
overseas”, while adding value at home and provide a basis of new skilled
service jobs that can underpin a country’s expansion of its infrastructure
development.

66
Several Maghreb countries, including Tunisia, Algeria and Morocco,
have now launched dedicated support policies for the nascent solar PV
installation sector. However, resources for these policies have so far been
limited and large-scale support programmes, such as European-style
“feed-in tariffs” that guarantee a premium price for the electricity from
solar PV over the plants’ lifetime, have been rejected as too expensive to
implement. However, expected cost reductions of solar PV installations
to the target range of the PV industry of below €2/Wp by 2012 for a full
system are likely to bring the cost of electricity production close to that
of household electricity price in many Maghreb countries.
Solar CSP industry and market developments
Figure 1: Conservative and “upside” scenario of growth in the CSP industry

(Deutsche Bank 2009) OBAL
20,000
18,000
16,000
14,000
MW installed
12,000
Upside case scenario
10,000
8,000
6,000 Base case scenario
4,000
2,000
0
2005 2005 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source : Deutsche Bank estimates based on current projects as announced by end of 2008.
*This chart assumes that all knon projects as of 2008 come on stream
Turning to CSP technology, technological advances are in a less mature

stage of development. Investments into CSP peaked in the late 1980s
and early 1990s with the development of 350MW of plants in the
Mojave Desert in the USA, but then flatlined for nearly
two decades as oil prices plummeted and dedicated incentive schemes

were not renewed. Only when Spain and the USA opened their markets
again with specific support policies for CSP did new project development
start, which is now expected to deliver several GW of operating power
plants in the coming decade.
The long dearth of projects and only recent resurgence of activity sug-
gests that the learning and innovation rate of CSP will be high in the
coming years and costs will follow a steep reduction curve, as the
installed base is low and each doubling of capacity can be achieved
in relatively small increments. However, it also implies that important
decisions are currently taken about the major manufacturing locations
for CSP components and the centres of learning and innovation in the
industry.
Deutsche Bank, in a recent industry review (2009), forecast annual

installation to expand more than tenfold to ca. 11GW of CSP plants
Dr. Till Stenzel

67
per annum by 2020, in a conservative scenario. This growth trajectory
follows a classic “S-Curve” shape of innovation diffusion, with techno-
logical breakthroughs leading to a period of rapid technology take-up
and market penetration, creating substantial new industries in its wake.
This is a substantial opportunity for the Maghreb, both in projects that

emerge in the region, providing scope for engineering, construction and
product development opportunities, as well as in the establishment of
new industries. As experience from the solar PV and wind energy indus-
try shows, substantial local markets attract companies to set up R&D as
well as equipment manufacturing facilities. Analysing the components
that form a standard CSP plant, there is a substantial amount of stand-
ardized manufacturing, which can be adapted to the existing light- and
medium-sized manufacturing industry already operating in the region.
Developing the solar CSP industry in the Maghreb can generate at least
three major benefits:
1. Making electricity production independent from fossil fuel price

swings and generating significant export revenues from electricity
sales in Europe
2. Developing a sustainable local industry with substantial opportunities
for creating local value add in manufacturing and engineering serv-
ices both in the Maghreb region and for export markets
3. Catalysing the integration of the Maghreb electricity markets to facili-
tate electricity trades “East-West”, as well as serving as the backbone
for electricity exports into Europe “South-North”.
An Opportunity for Industrial Development
The starting point for these developments are concrete CSP project
opportunities in the Maghreb. It is important to note that conception-
ally, these are similar in their requirements and operation to hydrocarbon
projects. Hence, institutional as well as engineering know-how and expe-
rience for such projects has already been accumulated in the Maghreb
region and can readily be applied to this new technology.
CSP projects require land in the sunniest parts of the Maghreb, often
away from the coast, on which the technology can be installed. In the
Sahara desert, this land currently has few alternative uses and hence the
economic opportunity costs of utilizing it for CSP projects are low. Once
installed, mirrors and solar receivers capture the solar energy and trans-
form it into heat, and finally into electrical energy, which then needs to
be transported to the electricity demand centres through high-voltage
electricity cables. This is akin to the gas or oil extraction projects that
work on land concessions and are connected to pipelines that transport
energy to the major demand centres at home and abroad. The only dif-
ference being that the solar energy potential does not diminish with the
maturity of the plants and “solar exploitation projects” have theoretically
infinite lifetimes.
However, the most important short-term hurdle for the development

and implementation of CSP projects are the high costs relative to power

68
plants based on fossil fuels, primarily oil and natural gas. While these
cost dynamics fluctuate with global commodity markets, and peaks of
oil prices of $150/barrel make CSP plants competitive, long development
cycles for new projects mean that short-term price swings in themselves
are currently not sufficient to make new long-term solar CSP projects
economic on a pure commercial basis.
However, this dilemma resembles a classic “catch-22” problem of mar-

ket coordination. Detailed bottom-up engineering analyses, such as
Sargent and Lundy (2003) demonstrate the potential for significant cost-
reductions of CSP technologies once the industry scales up, yet current
market hurdles prevent the technology from being widely diffused in the
first place.
Policy Options to foster technological innovation and

cost reductions
Faced with the same “catch-22” challenge in wind energy and solar PV
technology, many countries offered various forms of support schemes to
create market niches for renewable energy to grow and become more
cost competitive. As the figures from the World Bank above bear out,
these policies have been successful in creating a viable global industry,
which has been capable of successively lowering costs of electricity pro-
duction and thus lowering the burden of required support to the point
where it is no longer needed.
In the context of the EU-MENA region, this offers the opportunity of a

grand “bargain” between the European and Maghreb countries, creating
a win-win situation for the countries on both sides of the Mediterranean.
EU countries have just signed up to ambitious targets of 20% renew-
able energy by 2020. The new EU Renewable Energy Directive 2009/28/
EC now allows the physical import of renewable electricity from non-EU
member states to count towards that target, subject to certain condi-
tions. EU member countries can even implement joint-initiatives for the
import of renewable electricity and share the costs.
At the same time, both the physical solar potential, as well as the
resultant cost of electricity production from CSP technology, are signifi-
cantly more advantageous in the Maghreb. This provides the incentive to
connect the Maghrebian and European electricity networks, so that elec-
tricity from CSP plants on the Southern side of the Mediterranean can be
exported to the countries on the Northern Shores.
There are several ways in which EU member countries can make use of
the new provisions under the EU Renewable Energy Directive. Individual
states can open their national renewable energy support policies to
imports of renewable electricity either on a unilateral or multilateral
basis. In principle, domestic policy could simply be extended to the
imported amount, whether this is based on “feed-in tariffs”, tradable
“green certificates” or auctions, which are the most prevalent policy
mechanisms currently in use. However, if several countries decide to pool
the efforts to open their markets for imported electricity, novel policy
options can be considered.
Dr. Till Stenzel

69
For example, an EU power purchasing agency can be considered, whose
objective is to purchase renewable electricity from North Africa and offer it
on European markets. This model has recently been proposed by ESTELA,
the European solar thermal industry association. The advantage for member
states would be that they could pool their resources to obtain best prices
from CSP power plant operators in the Maghreb, for example through
regular tenders or auctions. The advantage for power plant operators is
to have a bankable electricity off-taker that can provide long-term power
purchase commitments, which are essential for obtaining finance for the
construction of CSP plants. The difference between initial electricity prices
and the costs of electricity production from CSP would be covered by the
EU member states in the same way in which renewable electricity is sup-
ported today. This difference is expected to diminish over time as CSP costs
are reduced. Should fossil fuel prices continue to rise above historic levels,
cost convergence could be further accelerated.
Benefits of policy support for solar export projects
Whichever mechanism is chosen, these incentive schemes for renewable

electricity provide for premium prices of electricity for a defined period,
directly supporting the growth of CSP plants in the Maghreb. Crucially,
in this way, electricity production is not only supported for the export
markets in Europe but also, indirectly, for domestic supply as well. This is
for two reasons: Firstly, EU premium prices indirectly support a portion of
the domestic markets, as some of the premium obtained can be used to
subsidize a percentage of each CSP plant’s production for domestic sup-
ply. Secondly, and more importantly in the long-run, the scale-up of the
industry in the Maghreb and the resultant cost reductions and innovation
are accumulated locally and, once established, are available for any sub-
sequent development.
In this way, European countries can meet their renewable energy target
at a lower cost than if they would have to support the marginal renew-
able energy technology at home to meet the 20% target. The European
incentive schemes to bridge the cost differential between conventional
and CSP technologies can be considered an “innovation and learning
investment” that will support the scale-up of a new industry and have
long-term benefits from lower-cost sustainable electricity production.
At the same time, industrial development is supported in the Maghreb

countries. This goes beyond traditional commodity or agricultural
exports, where value-add is often only created post-exports. For CSP
projects, up to 60% of total value-add is expected to be created locally.
Technological and Industrial development

in the Maghreb
CSP projects are made of a series of industrial components, many of which

are standardised and benefit from economies of scale at large production
volumes. Yet, while Spain and the US have recently seen significant pick-
up in project activity, CSP component production has not yet expanded
to a global level with significant economies of scale. Furthermore, to use

70
the jargon of the “technological innovation” literature, no single “tech-
nological paradigm” has yet emerged in the CSP industry. If anything, the
traditionally dominant design of “trough” technology is increasingly being
challenged by the emerging “tower” technology. This presents a substan-
tial opportunity for Maghreb countries to establish themselves as “poles”
for these new applications as they emerge.
Tower technology holds several advantages. In order to understand the

differences between the two, a short technical background is required:
trough technology is installed in long rows of round-shaped (parabolic)
mirrors, which reflect sun-light onto a tube in the centre of the mirrors.
This heats a “heat-transfer-fluid” (HTF), often oil, which runs through
the tubes, collecting the heat and delivering it to a heat-exchanger in an
adjacent power block, which transforms the heat into steam, thus driv-
ing a conventional steam turbine. These configurations currently have
performance characteristics of 400C heat and 100bar pressured steam,
with conversion efficiencies from solar to electricity of between 12-14%.
In contrast, solar towers produce steam directly, by reflecting sunlight

onto a single receiver area at the top of a tower, which is surrounded
by a field of thousands of mirrors. This removes the need for HTFs, as
a solar boiler, placed at the top of the tower, absorbs directly the heat
from the receiver area and heats the water inside to generate steam.
This is fed into the turbine situated at the foot of the tower, further
removing the need for kilometers of piping and reducing the losses and
parasitic power consumption associated with this. BrightSource Energy,
a solar tower technology provider with several advanced CSP projects
in the USA, consequently aims for operating temperatures of 550C and
140-160bar pressures, thus vastly increasing the operating efficiency of
the whole plant to >20%. Together with the reduced need for specialist
components and piping, this is set to deliver a step-change in costs.
Another major advantage of tower technology is that the higher operat-

ing temperature allows the plants to switch to a dry-cooling approach of
the power block, which reduces water requirements by 90% compared
to the water-cooled standard in trough technology. This is particularly
pertinent for solar export projects in the desert environments of North
Africa where water is a major bottleneck.
Models show that utilizing tower technology in the North-African deserts

and assuming moderate learning curves will deliver levelized costs of elec-
tricity (LCOE) that will be cost competitive with European wholesale prices
in a timeframe towards 2020, which is the current reference point for the
EU’s renewable energy, as well as various carbon reduction targets.
Solar electricity exports as an opportunity for

cooperation within the Maghreb and with Europe
Studies of technical potential and solar resource availability demonstrate

that even with multi-gigawatt-scale solar export projects, it would still be
feasible to utilise solar technology for large shares of domestic electricity
supply in the Maghreb countries. Moreover, scale up of these projects
provides the opportunity to strengthen the linkages between electricity
Dr. Till Stenzel

71
networks in the Maghreb. Although physical interconnections between
the national electricity grids have been in existence for several years,
cross-border flow of electricity has so far been minimal.
As electricity projects expand, strengthening electricity networks and

interconnections becomes more pertinent. Common security standards
require electricity networks to withstand the unexpected and sudden
removal of the largest generating unit, or largest single transportation
cable, without creating black-outs or destabilizing the grid. This is known
as the n-1 standard. Current installed electricity generating capacity
ranges between 20GW in Egypt, over 6GW in Algeria and Libya, 5GW
in Morocco to 3GW in Tunisia. The opportunity for electricity exports to
Europe can quickly exceed the capacity of a single country. For example,
Italy’s installed electricity capacity is over 80GW, and annual electricity
consumption in 2020 is expected to reach 400TWh. To source just 2% of
Italy’s electricity consumption from solar export projects in the Maghreb
would require the production of 8TWh, which equals close to 2GW of
CSP plants and including thermal storage to extend operating hours of
the solar plants into the night.
Such a capacity represents two thirds of the total capacity installed in

Tunisia and about one third of the capacity installed in neighbouring
Algeria and Libya. Managing such large volumes of electricity production
in a secure manner would require closer cooperation between neigh-
bouring grid operators to ensure maintenance of security standards,
serving alternative electricity transport routes in case of outages and
failures, as well as developing a diverse network of export links that are
already being proposed between the Maghreb and Europe.
Simultaneous development of industrial scale CSP plants across the

Maghreb would call for a grid solution that equally matches the scale
and ambition of solar export projects. Already, high-voltage transmission
lines link several Maghreb countries, but this would need to be expand-
ed to a true high-voltage electricity highway from Morocco to Egypt in
order to facilitate the expansion of solar energy. The development of an
HVDC Highway along the Southern shore of the Mediterranean could
be a further catalyst to electricity market integration among Maghreb
countries and facilitate the expansion of CSP projects. Both the Maghreb
countries as well as the European Union would have an interest in such a
development and financing could hence be shared on both sides of the
Mediterranean.
Through such high-voltage electricity exchanges, the market is not just

developed for the export of solar electricity to Europe, but also for inter-
Maghreb trade of electricity. Most countries in the Maghreb still consider
electricity supply a public good, but private tenders and private operators
have recently been introduced into the construction and management
of power plants, and this could evolve further along the value chain to
electricity trade and supply. Hence, solar export projects could become a
driving force for the integration of electricity markets in the Maghreb, as
much as for the development of new energy infrastructure links between
the Maghreb and Europe. Ultimately, consumers on both sides of the
Mediterranean would benefit from the gains of trade through lower pro-
duction costs of electricity and the meeting of renewable energy targets

72
Policy Requirements and remaining challenges
So what is holding back the advent of large solar export projects? The
major regulatory and policy contributions that could enable the imple-
mentation of the first concrete project opportunities is described below.
As much as banks become familiar with the financing of CSP technology

and costs are becoming more competitive, solar export projects would
be placed into a novel regulatory environment, which does not exist
today. Special treaties and laws, both within the exporting and import-
ing nations, as well as between them, have typically regulated gas export
pipelines. No treaties exist for electricity export cables between North
Africa and Europe today.
While the EU has given priority to energy infrastructure investments and

operates a neighbourhood investment programme with Northern Africa,
no attempts have yet been made to formalize an investment frame-
work that would govern the installation of numerous electricity cables
across the Mediterranean, either on a merchant-basis or in cooperation
between national grid operators. However, a first interconnection project
between Italy and Tunisia has now commenced with agreements on a
bilateral basis.
Furthermore, besides novel South-North electricity cables, an expanding

base of large-scale solar plants in Northern Africa will require reinforce-
ments of electricity links between Northern African countries as well.
Such links could be an important co-benefit of increased South-North
electricity trade and promote the integration of electricity markets in
the Maghreb and form the basis for further expansions of solar export
projects.
A second set of regulatory challenges is the creation of a market for

imported renewable electricity in Europe. Given the requirement to
bridge the cost gap between renewable energy and fossil fuels, as well
as the “first-of-a-kind” risk of placing solar power plants into such a
novel operating environment (both regulatory and physically), there is a
need for dedicated support policies to foster the development of the first
set of solar export projects. The Desertec Industrial Initiative (Dii) of large
European and North African industrial companies is an expression of the
recognition of these complexities, with no one member firm willing to
explore a solar export project on its own.
As discussed above, a dedicated solar export purchasing agency could

pool the resources of those European countries that are willing to import
renewable electricity from North Africa. Furthermore, EU member states
can open their national renewable energy support policies, such as feed-
in tariffs or tradable green certificates, to North African imports on a
bilateral basis.
The participation of major financing institutions in the Dii, as well

as recent programmes launched by the World Bank and European
Investment Bank indicate that the arrangement of project finance will not
be a major hurdle for solar export projects. CSP technologies have been
project financed in the past and lending into Northern African countries
Dr. Till Stenzel

73
frequently occurs, often in syndications with multi-lateral financing insti-
tutions or development banks. The off-take in a mature electricity market
such as the European adds to create a stable investment framework.
Conclusions
Market opening in Europe coupled with infrastructure investments in

cross-Maghreb, as well as cross-Mediterranean cable links will create the
conditions for large-scale private investments into solar export projects.
This creates a win-win situation for countries on both sides of the
Mediterranean, as the EU can meet its renewable energy targets more
cheaply and effectively, while the Maghreb can develop a novel pillar in
its traditional energy and resource exploitation industry.
As described at the outset, just 0.3% of the North African deserts’

surface area would theoretically be required to serve the electricity and
desalinated water needs of the entire MENA-EU region. This is the back-
drop to the energy devoted by many policy-makers, private companies
and academics to making South-North export projects a reality, not in
the distant future, but much sooner than many sceptics might think.

74
Building Trust can take the
form of Investment.
Some ideas to add to
a faster growth in the
Maghreb
FRANCIS GHILÈS
75
Building Trust can take the form of Investment.
Some ideas to add to a faster growth in the
Maghreb
Francis Ghilès
Senior Research Fellow, CIDOB
L
ast July, under the title Energy & Regional Integration in the
Western Mediterranean, a seminar brought together in Barcelona
30 senior managers, bankers and academics, many of whom have
held senior positions in state and private companies on both sides of the
Mediterranean and in international organisations. The seminar discussed
the 5 papers included in this publication: the result was a lively debate
on the key role Energy could play in the political and economic agenda
of the region. The driving idea, from the very beginning, was to look at
what role North African countries might play in a world where the bal-
ance of economic and political power has, over the past decade, and is
shifting in a manner which few in the west had envisaged and many still
refuse to acknowledge. Because this shift is forcing Europe and North
America to take account of the views of countries which simply did not
matter, economically speaking a generation ago, the process is a painful
one. Some in Europe have chosen to bury their heads in the sand and
continue to put forward arguments which make little sense in 2010,
other are fearful of the loss as they see it of three centuries of supremacy
of western economic interests.
If Western Mediterranean countries on both shores are able to

take an unsentimental approach, new industries and many new
jobs could be created which would add value to production
in North Africa while European technology could be seriously
transferred to North Africa. Such changes would in turn build com-
petitiveness into the region’s industry and insert the Maghreb into the
new added value chain emerging across the globe, which is tilting so
decisively towards Asia.
The Process of Barcelona, launched in 1995, has run its course but it
is far from obvious that the Union for the Mediterranean, launched in
2008, will deliver on its ambitious projects.
One can argue that the Barcelona Process has always lacked the criti-
cal mass of investment needed to allow any serious economic take off
and that the much vaunted corporate upgrading (mise à niveau) never
77
really materialised except in a limited way in Tunisia. As to the European
Union’s Neighbourhood Policy, it can be described as a “cache misère
politique”. Most countries have continued to favour their traditional
bilateral relations with European countries at the expense of their hori-
zontal North African ones: in other words everybody has been indulging
in multilateral bilateralism.
The broader regional context has of course not helped: to a deepen-

ing crisis in the Middle East and unresolved questions of frontiers in
the Maghreb must be added the growing reluctance of the European
Union (EU) to accept Turkey as a future member. Enlargement fatigue
characterises the EU’s attitude towards all its neighbours. Even before
that fatigue set in we can concede it is doubtful whether the EU was
interested in a devious long term strategy of promoting greater flows of
energy exchange with North Africa. That said, everybody could agree it is
up to North African political leaders to act as they had done in the mid
1980s when the GME project was initiated by the Algerian head of state,
Chadli Bendjedid and King Hassan II of Morocco.
Investment projects beyond gas pipelines, in certain energy and min-

eral sectors, notably phosphates and renewable energy ‐ particularly
solar power, offer win win opportunities for all involved: North African
and European companies but also American, Australian, and Chinese
firms, both private and state run. Natural gas and phosphate rock in
particular offer rich opportunities: if combined they could boost
the production of fertiliser, a commodity whose potential world
market is huge. North Africa – which boasts phosphate rock, gas,
ammonia and sulphur in abundance, offers a very cost effective
base to manufacture fertiliser. Demand for fertiliser is expected to
grow exponentially for decades to come as food requirements across
the world and standards of living in China and other fast rising countries
increase dramatically. The Chinese factor is key here as much of China’s
arable land is poor. The increase in the price of fertilisers, which reached
a peak along with most agricultural commodities in 2008, gave a taste of
the money to be made by feeding the world. The recent flurry of takeo-
vers in the fertiliser industry worldwide points to strong growth in this
sector in the years to come.
Manufacturing certain types of plastics, an increasingly versatile input

for the packaging, building and the transport industries also offers
many opportunities. With a fast growing and young population, both
the housing and the food processing sectors offer many opportunities
in North Africa. In both instances – fertiliser and plastics, medium and
smaller private entrepreneurs could work downstream from major state
and private companies, thus helping to enlarge the pool of skilled labour,
know how and inter sector trade between countries. These factors
strongly suggest
that the idea of a Chemical Maghreb, well beyond fertilisers and plastics,
is worth pursuing – modelled on the way Germany developed an Eastern
Europe hinterland for its car industry after 1989.
Looking to 2030, the prospect of gas pipelines which would feed

Nigerian gas into the Algerian depleting gas fields of Hassi R’Mel or/

78 Some ideas to add to a faster growth in the Maghreb
and Iraqi gas to Europe via Egypt and Libya may sound bold, even fanci-
ful today but who is to say that such long term scenarios are not worth
looking at? The
European Commission has expressed interest in the idea of a Trans

Saharan pipeline from Nigeria but the flexibility and ever lower costs
incurred in moving gas in the form of Liquefied Natural Gas (LNG) sug-
gests shipping gas from Nigeria could well remain an attractive option.
What will not change is the fact that planning energy supplies will
continue to require long term thinking. The history of the 20th cen-
tury, notably in the Middle East bears ample witness to that. Another
tantalising prospect is that of concentration of solar power both
to generate electricity and desalinate water in a region where
water stress is growing fast and the broader environment is under
considerable threat. Yet it boasts in the Sahara huge resources of
renewable energy sources.
Furthermore, by using their renewable energy sources to generate elec-

tricity, North African countries would not only meet their growing needs
in electricity and at the same time but make more oil and gas available
for exports. The links between conventional energy projects, most
notably natural gas, could be reinforced because the long track record
mentioned with regard to the delivery of natural gas bodes well for any
future electricity links supporting solar power projects in the Sahara.
Joint shareholdings by European and North African partners in such
solar export projects can make perfect sense. However, unless the policy
framework for renewable energy is not skewed towards helping the
development of renewable energy (price subsidies etc) both in Europe
and the Maghreb, it is not obvious that Maghreb producers would gain
more export income which could contribute to overall economic output.
An adequate legal framework – in the case of solar exports these are
needed on both sides of the Mediterranean, could be used to drive a
dynamic quid pro quo of institutional adaptation ie the Europeans could
open their markets and support pioneer solar projects in return for ade-
quate investment frameworks for such projects.
Today of course, the imbalances in the region are what most strike the
observer – in the age pyramid of the populations on both shores, in the
level of consumption of energy, in the production of oil and gas. These
are described in detail in one of the papers included in this publication
and, if leveraged within the framework of a medium term plan could
improve the
region’s economic standing in the world, encourage the building of new

industries and help transfer technology ‐ more jobs, more skills and more
trade in the Maghreb would feed a greater sense of security, a diminish-
ing sense of threat on both shores.
Some in Europe fear to depend for their gas supplies too much on
Algeria – for more than 40%-, while conveniently ignoring the uncer-
tainty the producing countries face in developing their resources when
they do not know how much gas in particular Europe will need in 20
years time; some Europeans also quite fail to appreciate that countries
Francis Ghilès
79
which import much of their basic foodstuffs also feel at risk. Another
perception however points out that markets are by their very nature
uncertain and North Africa, particularly Algeria have to become more
nimble operators, as countries like China have proved to be. In a
broader sense the fear of the “Other” transpires from many percep-
tions, a fear reinforced by Europe’s abdication of any independent
policy towards the Middle East and the difficulties it has encountered in
securing its gas supplies from Russia.
These difficulties are projected by some in Europe onto Maghreb

producers despite the fact that the complex relationship which
exists between Russia and Ukraine and Belarus has no equivalent
in the Maghreb and that Algeria’s record as a reliable supplier has
been without blemish for nearly half a century. A key challenge in
North Africa today is how to promote joint industrial ventures
between Moroccan and Algerian state and private companies.
Some ideas have been brought up: Sonatrach, the Algerian
state energy company and Office Chérifien des Phosphates, the
kingdom’s state phosphate company should buy into each
other’s capital; two leading Moroccan and Algerian banks
should do the same. Both Moroccans and Algerians are at one on
this interesting idea. However, bearing in mind the difficult political
relations between the two countries, triangulation offers an avenue
worth exploring as a way of soothing fears felt on both sides of
the Algerian‐Moroccan border. In other words encourage leading
Tunisian, Spanish, French, Italian, German and British companies to
take a stake in some new joint Maghreb ventures. After all the Enrico
Mattei and, a decade later the Duran Farell pipelines were successfully
completed by this very means: not only were European funds involved
but Italy and Spain/Portugal joined in the respective projects as key
stakeholders.
To come to concrete proposals (after too many words and very lit-
tle results in the process of integration of the Maghreb) two realistic
projects could be imagined: an ammonia and a plastics plant. Both make
a lot of sense if one were to develop the Maghreb: the first would help
to enlarge on existing Moroccan fertiliser plants and offer the most com-
petitive cost base in the world for producing certain types of fertilisers;
the second would help boost a sector which manufactures key inputs
for a broad range of industrial sectors at very competitive prices. Both
would encourage private investment downstream and offer qualified
jobs in the region. Such projects could well call upon investment from
leading Spanish and other European fertiliser groups and from Tunisian
companies. Such cross shareholding would help lay to rest the fears of
“energy security” or whatever other form of security which seems to
haunt a number of people on both shores. Building trust can take the
form of investment. Likewise leading North African companies should be
allowed – encouraged-, to buy into the capital of pipelines and plants in
Europe. The situation BP is confronted with today is an example of this:
why could Algeria, through a sovereign fund, not express an interest
in injecting capital into a major oil and gas company which already had
a stake in Algeria ? That would meet he need of BP for more capital in
a difficult moment and encourage the transfer of technology. In such a
case Algeria would state that it does not

wish to influence BP’s policy. Securitising Europe cannot simply take
the form of tight visa policies and cooperation on counter terrorism.
It has to come in the form of greater industrial cooperation. Such a
policy ties in well with the idea of the Maghreb as a “reservoir de
croissance” for Europe – indeed a faster growing and very young popula-
tion offer ample opportunity for faster growth compared with Europe-. The
flying geese theory, in which a more developed country or group of coun-
tries encourages its industries to climb up the value chain and encourages
neighbouring states to do the same from a more modest start, initiated after
1945 by Japan can well be a source of inspiration, yet many Europeans are
still very reluctant to consider Maghreb countries as partners: fear seems to
stalk their vision or maybe it is simply a deep reluctance to look upon people
who were not so very long ago “colonial subjects” as equals.
This brings us back to the fall out of the Barcelona Process. Preaching
democracy is all well and fine but the EU and the US have so often prac-
tised the contrary of what they preach that, in the Middle East and North
Africa such exhortations fall on deaf ears. Yet this state of affairs in no way
detracts from the urgent need for all North African countries to show
greater respect for the rule of law, offer more transparent legal procedures
and allow greater freedom of expression and information. Despite being
run by a single ruling party, China is changing fast on these fronts: why can
North African states not take a leaf out of the book of such a successful
economy? Why are their elites blind to the advantages, in economic terms
at the very least, of such an evolution? When combined with fear of ter-
rorism, Islam and the “Other” the consequence is that too many
outsiders, not least among big international investors, have a

vision of the Maghreb which is too bleak and detrimental to
what are mutual economic interests. Contrary to what many think in
Europe, the Maghreb is prospering in a number of ways – the Chinese
would not be there in ever
growing numbers if the region were of no interest, they would not be buy-
ing ports in southern Italy and companies in Piraeus – China has a strategy
for the Mediterranean, of which the Maghreb is but one component. How
will the Europeans and the North Africans react when they wake up to
China’s fast growing influence in the region? As China becomes a key
stakeholder in what Europeans like to think of as their backyard, the latter
will discover the Asian giant works according to its very own interests. By
then any role the Western Mediterranean might aspire to
will have evaporated before it even took shape. One could do worse at
this stage to quote the title of the brilliant book by the chief economist
of one of the world’s largest banks, HSBC – Stephen King: “Losing con-
trol: The Emerging Threats to Western Prosperity.”
Old habits are difficult to eradicate. Old networks of complicity between

political and security elites on both shores of the Western Mediterranean
lead too many senior European politicians whose main concern is to
ensure stability in North Africa to support the current rent seeking politi-
cal elites which hold sway in the Maghreb. This support comes at a price
however as
Francis Ghilès
81
these very same Europeans appear blind to the rise of a younger gen-
eration of state and private Maghreb entrepreneurs who are increasingly
frustrated by the incompetence and lack of vision of their own political
elites. These younger technocrats, often educated in Europe and
America’s best universities perceive the European political elites as conde-

scending and caught in an economic time warp. The past few years have
damaged western economies but also destroyed western prestige.
The political rulers of North Africa are still beholden to certain

European rulers but the new technocratic elite well understands
that never again will the west, and Europe, have the last word.
The deep fault lines the crisis has revealed in European economies
suggests it is high time European political leaders took another
look at how to manage their economic relations with their imme-
diate neighbours to the south. A growing number of European
economic elites understand this as the economic ground has already
shifted decisively in favour of Asia – might not the Maghreb be next in
line, as Turkey already is?
European political elites should concentrate on economic projects which

make sense in today’s fast changing world – in other words, given the
right legal framework set up projects which could attract private invest-
ment from all over the world – and would be of mutual benefit. After all
the two pipelines which carry gas from Algeria to Europe have been both
reliable and have
reduced the risk of armed conflict in North Africa. Why not enlarge on
such success stories? Lack of bold leadership is not just a North African
characteristic today but a European one. Europe spends a lot of time
attempting, with limited success, to influence the internal politics of
Latin American or Asian countries: would it not be better advised to be
more active in a region which lies on its doorstep and which is so rich in
mineral, qualified people and historical ties not all of
which are negative? The disunity of North Africa is not only the result of
local feuds, it is the result of the Cold War and of Europe’s reluctance or
maybe lack of interest, at least until recently, to countenance a less frac-
tious Maghreb. Unlike Turkey, whose elites no longer do the bidding of
the US or the EU when called upon to do so, North African leaders seem
unable or unwilling to imagine a long term future for the Maghreb, let
alone build one and promote those entrepreneurs whose way of think-
ing and appreciation of how the world is moving is way ahead of their
political
leaders, stuck in a narrow nationalist time warp which makes no sense in

economic and industrial terms.
In spite of all this complexities, there are some ideas which are worth
exploring and which offer ample opportunity for faster growth in the
region – faster growth which would enhance mutual security. The four
projects that might be worth promoting include:

1. Cross shareholding between Sonatrach and Office Chérifien des
Phosphates
2. Cross shareholding between two leading Moroccan and Algerian
banks
3. A joint ammonia plant
4. A joint plastics plant
Such projects could – indeed should, involve international investors

and companies from the Maghreb, Europe, North America and Asia.
Such bold thinking would signal that the Western Mediterranean was
no longer suffering from a “crisis of ideas, of analysis, of perception.”
There is no shortage of capital and if capital is fleeing the region it
is precisely because the regional leaders – in the Maghreb but also
in southern Europe, seem unable to think out of a box which still
favours clichés about the other, about aid and democracy. Now is
the time to practice a little economic realpolitik, discuss some really new
ideas, face up to the role energy and other minerals could play as facili-
tators or basis enablers in helping to anchor the Western Mediterranean
firmly in the new world economic map
Francis Ghilès
83

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Building trust can take

the form of investment

Barcelona, october 2010

JORDI VAQUER I FANÉS & MOHAMMED BELMAHI 5

Phosphates, energy and the rest: The alchemy of the Maghreb

ABDERRAHMANE HADJ NACER 19

The Western Mediterranean region must reinvent itself

HOUDA BEN JANNET ALLAL 25

Water desalination and solar in the Mediterranean region

The importance of energy issues in intra-Maghreb relations and in the

DR. TILL STENZEL 63

Solar energy and the Maghreb region

Jordi Vaquer i Fanés

The research program, carried out in partnership with OCP Foundation in

With the final purpose of building a comprehensive understanding of

If we are earnestly committed to looking ahead to 2030 with a degree of

Executive Director, Office Chérifien des Phosphates (OCP)1

“If we don’t do the impossible,

There is a powerful economic trend which has been with us for

As far as petrochemicals are concerned, they will go through several

• Continued focus on social prioritization: Middle East is likely to add

PHOSPHATES, ENERGY AND THE REST: THE ALCHEMY OF THE MAGHREB

The whole traditional European chemical landscape is vanishing, and is in

• “Seek low cost feedstocks in ME, Russia, or other stranded locations.

With regard to this process, it is clear that Northern Africa (Algeria,

a. Significant additional mining capacity by 2015 (+26m tons/year main-

• 10 new fertilizer manufacturing plants by 2020, with each a produc-

Energy for industry: a win-win scenario in Maghreb

Gas capacity and availability is present. A major gas pipeline built in

PHOSPHATES, ENERGY AND THE REST: THE ALCHEMY OF THE MAGHREB

Such a commercial rerouting make many of industrial projects profitable

Case for a chemical Maghreb

Algeria is a major producer of gas and Morocco is a major producer of

Though small by international standards, the agriculture of these coun-

China as the conduit to an integrated Maghreb?

PHOSPHATES, ENERGY AND THE REST: THE ALCHEMY OF THE MAGHREB

Against this backdrop, it may be wishful thinking to believe that China

The case for major unifying projects

It is now well-recognized that the Barcelona process launched in 1995,

PHOSPHATES, ENERGY AND THE REST: THE ALCHEMY OF THE MAGHREB

The perspective is quite clear: rise to the level of a globalized world

Abderrahmane Hadj Nacer

Abderrahmane Hadj Nacer

Former Governor of the Central Bank of Algeria

The founder of Cambridge Energy Associates, Daniel Yergin, published

What is deemed by many in the West to be the threat of Iran acquir-

The question which needs to be asked is: should major sources of

So long as the control of major sources of energy is deemed an essen-

The Western Mediterranean region must reinvent itself

If we are to stand any chance of building stronger links in the Western

1. If we consider oil and gas, it would be to Algeria’s advantage to

Abderrahmane Hadj Nacer

It is with these factors in mind that the proposal to set up a new

Such an ambitious policy has no chance of succeeding without some

Libya could well be a partner is such cross shareholdings and where

The Western Mediterranean region must reinvent itself

HOUDA BEN JANNET ALLAL

Houda Ben Jannet Allal

Director Renewable Energy and Sustainable Development.