US embassy cable - 05ALGIERS2213

UNCLAS ALGIERS 002213 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON, EINV, EIND, ETRD, BEXP, AG, Economic Reform 
SUBJECT:  Algeria Economic Highlights: 
 
 
  1.   Spanish Group to Build Desalination Plant 
2.   $15 Billion Trade Balance Surplus 
3.   New Payment System Combats Money Laundering 
4.   Draft Law on Nuclear Energy 
5.   Sonatrach to Supply LNG to U.S. firm Sampra 
 
SPANISH GROUP GEIDA SELECTED FOR DESALINATION PLANT 
--------------------------------------------- ------- 
 
1.  The Spanish group Geida (composed of Cobra-Sadyt-Abensur- 
Codessa) was awarded October 19 the project for the 
construction, exploitation and maintenance of a seawater 
desalination plant in Tlemcen (western Algeria) with a 
production capacity of 150,000 cubic meters per day. The 
$158 million plant is scheduled to be operational in 24 
months.  The group landed a similar contract for a facility 
in Skikda in May 2004 and for a facility in Beni Saf 
(province of Ain Timounchent) the same month. 
 
$15.5 BILLION SURPLUS IN TRADE BALANCE 
-------------------------------------- 
 
2.  According to the National Center for Information and 
Statistics (CNIS), Algeria's trade balance for September 
2005 recorded a $15.5 billion surplus, representing a 36% 
increase compared to the same period last year.  Overall 
exports increased by 26.3%, reflecting $31.28 billion in 
revenues.  Hydrocarbon exports due largely to high oil 
prices accounted for nearly 98% of export revenues at $30.59 
billion.  Non-hydrocarbon exports, although up by 8.5%, 
remained insignificant at just 2.2% of Algeria's global 
volume, bringing in a total of $687 million.  Imports 
increased by almost 18% at a total cost to Algeria of $15.72 
billion.  The U.S. ranked as the number one purchaser of 
Algeria's exports, officially recorded at $6.4 billion, 
followed by Italy ($4.4 billion), Spain ($3.98 billion) and 
France ($3.2 billion).  France remains Algeria's largest 
source of imports at $3.5 billion, followed by Italy ($1.12 
billion), the U.S. ($1.09 billion) and China ($977 million). 
 
NEW PAYMENT PROCEDURES TO COMBAT MONEY LAUNDERING 
--------------------------------------------- ---- 
 
3.  The Algerian government adopted an executive decree 
providing for new payment procedures aimed at combating 
money laundering. The decree stipulates that effective 
September 1, 2006, any amount equal to or greater than AD 
50,000 ($684) must be paid by check, check card, or another 
form of non-cash payment.  The GOA expects this decree to 
help curb money laundering, the underground economy, and tax 
evasion. 
 
A DRAFT LAW ON NUCLEAR ENERGY 
----------------------------- 
 
4.  The President tasked the Ministry of Higher Education 
and Scientific Research to establish a working group to 
propose a draft law on nuclear energy.  For this purpose, 
national and international experts participated in a two-day 
seminar organized by Ministry of Mines and Energy Chekib 
Khelil.   The Minister declared that the law should be in 
conformity with Algerian legislation and Algeria's 
international commitments. "Algeria would like to show in 
all transparency its good intentions for a peaceful use of 
this form of energy", declared a researcher from the Algeria 
Nuclear Research Center. He added, hinting at U.S. questions 
about Algeria's nuclear potential, that "the draft law is a 
way to protect Algeria from any media stir and fuss, as 
experienced these past years".  Algeria currently has two 
nuclear installations.  A one-megawatt reactor was 
inaugurated in cooperation with Australia in 1986 in 
Algiers, and a 15-megawatt reactor was established in 1993 
in Tamanrasset (southern Algeria) with cooperation from 
China.  The Tamanrasset facility uses radio-isotopic 
radioactive sources and uranium extraction methods to meet 
national demand. 
 
SONATRACH TO SUPPLY LNG TO SAMPRA ENERGY 
---------------------------------------- 
 
5.  The state-owned oil and gas company Sonatrach signed a 
protocol agreement October 24 with the U.S. petroleum firm 
Sampra Energy to supply liquid natural gas (LNG).  This 
agreement will enable Sampra to supply the U.S. market 
between 250 and 500 million cubic feet of LNG per day for a 
20-year period.