OREANDA-NEWS. February 06, 2015. When OPEC chief Abdalla el-Badri said last month that the world should produce its low-cost oil before moving to develop higher-cost resources, he pointed to Libya as an example of a country with vast unconventional oil and gas potential.

But, he said, why would Libya begin producing shale gas and shale oil while it still has such big conventional resources, which are much cheaper to exploit. With Libya in a state of political chaos and its oil sector severely disrupted, it was perhaps not the best country for Badri -- himself Libyan -- to reference but it is clear that an array of North African nations do have some choices to make around unconventional resources.

The potential is vast. According to EIA estimates, Algeria holds the third biggest shale gas resources in the world and leads the way in North Africa with estimated recoverable reserves of more than 700 Tcf.

Libya is said to hold 122 Tcf and Egypt 100 Tcf, while Tunisia and Morocco lag with 23 Tcf and 20 Tcf, respectively.

According to Algeria's state-owned Sonatrach, the country also has some 248 billion barrels of shale oil resources, while Libya is estimated to hold 26 billion barrels.

Morocco, too, is seen having vast shale oil potential.

Protests

Both Algeria and Tunisia are optimistic they can develop major unconventional oil and gas industries, but both have already faced the kind of environmental opposition more commonly associated with Europe.

Algeria, in particular, has seen unprecedented protests in the south of the country in recent weeks near to the site of the country's initial pilot shale gas drilling at In Salah.

"Protests in Algeria are common, but what makes these unique is that they are targeting the hydrocarbons sector, which is the backbone of the Algerian economy," Geoff Porter, analyst at North Africa Risk Consulting, said last week.

The Algerian government and state-owned Sonatrach have gone to great lengths to try to convince the people that hydraulic fracturing is safe.

"People's fears are often legitimate, but I insist that what we are doing or will do later will never be harmful to people or the environment," company CEO Said Sahnoun said last week.

"No economic benefit will ever distract Sonatrach from prioritizing the protection of people's health and the preservation of the environment," he added.

Sahnoun pointed out that Sonatrach had been using fracking since 1992 and between 2006 and 2010 fracked an average of 50 wells a year at the Hassi Messaoud field.

Sonatrach, he said, has "mastered" the technology.

Narco's Porter said Algeria would not abandon plans to exploit shale gas despite the opposition.

"Algeria knows too well the destabilizing backlash of putting down protests, but it also desperately needs more hydrocarbons revenue," he said.

"Even before the recent collapse in crude prices, Algeria was facing a hydrocarbons revenue decline due to declining oil production and decreasing natural gas exports."

Tunisian regulation

Algeria has also been advising neighboring Tunisia on how to develop unconventional oil and gas and Tunis is eyeing its neighbor's recent legislative changes as a model it too could follow.

Algeria amended its hydrocarbon law in January 2013 as a way of encouraging the development of the country's unconventional resources.

It introduced tax incentives for unconventional drilling, revisions to the methodology for determining the tax rate on oil revenues and the introduction of new specific provisions to support research into and production of unconventional oil and gas.

It also set new terms for exploration licenses so that licenses will last for 30 years for developing unconventional oil and 40 years for unconventional gas.

Tunisia has consulted experts in unconventional energy from the US and from Algeria and has plans for a new hydrocarbon law to also encourage unconventional exploration.

Tunisia believes the prognosis for its unconventional oil and gas sector is good, but there has been some public discontent against the development of shale gas and shale oil in the country in recent years.

Despite the opposition, Tunisia is pushing ahead and believes the time is right to invest in the country's unconventional oil and gas sector despite the current low oil price.

Development costs have been driven down by the lower oil price, and because first production would be at least five to six years away, prices may well have recovered by then.

Elsewhere, in Morocco, a handful of companies are looking to develop the country's shale gas potential located near Tangiers, Timahdit and Tarfaya.

UK explorer San Leon Energy and Brazil's Petrobras hold rights.

Bellwether

How Algeria deals with the current wave of opposition to shale gas could influence these smaller neighbors too.

"It's important to note that shale gas exploitation is not just an Algerian issue, but is something at play in Tunisia and Morocco as well," Porter said.

"As such, the In Salah protests could serve as a bellwether for other anti-shale gas movements in the region."