Algeria steps up upstream, downstream energy investments

APS : Sunday, 03 June 2018
ALGIERS- Algeria has stepped up its investments in oil and gas sectors by launching new projects as part of a strategy aimed at increasing production and developing processing industry to create added-value,
said the British company of economic research and consultancy Oxford Business Group (OBG)
In this regard, OBG underlined the entry into production, last March, of Timimoun gas field which is expected to produce 1.8bn cu meters of gas per year from 37 wells, as part of a partnership between Snatrach (51% of shares), Total (37.75%) and Cepsa (11.25%).
The launch of operations at Timimoun, after a series of delays, follows the establishment of the Reggane Nord gas field in 2017, developed by Sonatrach and European partners Repsol, DEA Deutsche Erdoel and Edison, to reach an estimated annual output of 4.5bn cu meters, said OBG.
A third project is expected to be launched in the second half of 2018: the development of Touat gas field which is a partnership between Sonatrach (35%), Engie (30%) and Neptune Energy (35%), which acquired Engie E&P International in February 2018, underlined OBG.
These three projects, which are expected to boost overall gas production by about 9bn cu meters per year, will be connected to the newly constructed 765-km GR5 pipeline which will transport gas until the processing centre of Hassi R’mel.
This increase in upstream activity comes as Sonatrach announced its willingness to invest USD56bn by 2022.
Downstream processing and renewable energies to strengthen energy sector
OBG underlined that “the Algerian authorities do not only intend to increase gas production but they are also seeking to develop downstream processing and the role of renewable energies to boost energy sector efficiency and profitability.”
Algeria has produced about 95bn cu meters in 2017, of which 55% was exported mainly to Europe, said OBG.
In order to provide a sustainable development roadmap, Sonatrach released its strategy named SH2030 Leading the Change, underlining a greater emphasis on petrochemical industry and local processing, added the source.
“Downstream has always been neglected in Algeria and is becoming an important strategic issue,” Sonatrach CEO Abdelmoumen Ould Kaddour told OBG.
“We import more than USD1 bn per year of fuel, and that doesn’t make sense. We want to create an added value to our gas and the petrochemical processing will be the most important development for Sonatrach in the current century,” he said.
Modifying law on hydrocarbons to attract foreign investments
Even if increased investments and diversification plans are set to support growth in the sector of energy, the authorities also broached the changes to the current legislation as part of a strategy aimed at attracting a greater participation of international players,” underlined OBG.
In addition to fiscal amendments, the proposals of reforming hydrocarbon code include a simplification of bureaucratic and administrative processes for investments, which should “further encourage the activities in the oil and gas sectors.”

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