Ensuring the diversification of gas supplies has become an important task for Europe since the outbreak of the conflict in Ukraine. Russian energy resources are subject to discriminatory trade policies. In these circumstances, Algeria’s role as one of the key gas suppliers to Europe is increasing. Simultaneously, the issue of the need to increase the share of renewable energy sources in the Algerian economy is frequently being raised. However, increased revenues from oil and gas exports may negatively affect the government’s desire to invest significant budget funds in the development of energy infrastructure for renewable energy sources. This article examines the strategic dilemma faced by the Algerian Government, choosing between maximizing the short-term benefits of exporting gas and oil and striving to switch to renewable energy sources. Based on up-to-date data, an assessment was made of the potential for reforms and barriers within the country to implement plans to diversify the energy sector. The article concludes that the current situation creates a historic opportunity for Algeria to carry out economic reforms aimed at diversifying the energy sector; however, to realize this opportunity, a high level of budgetary discipline will be required to make large-scale investments in new energy sources.