HomeIndustry SectorsFinance and PolicyAlgeria fully behind Sonatrach future developments

Algeria fully behind Sonatrach future developments

In August, Algeria appointed a new management team leading to national oil and gas company, Sonatrach, to invest US$100 billion in new energy projects, The Africa Report said.

The restructuring of the team was motivated by past corruption and poor management which has been under investigation since 2010 hindered the growth of the Algerian economy, The Africa Report said.

Energy minister Youcef Yousfi and other relevant authorities will be driving Sonatrach to become a top producer of shale gas and maximise its capabilities to export enough gas to meet 20 percent of Europe’s gas demands, The Africa Report said.

The generated gas will also be used as a fuel source to power local commercial industries, contributing to positive economic growth and development.

International oil companies (IOCs) have remained sceptical about the overall security of the economy with unstable movements in government and terrorism which affected the Amenas plant in January 2013, the African Report said.

Although there is a lot of scepticism, Algeria remains optimistic of its future due to the constant interest which is shown by investors on their continuous licensing round, the African Report said.

The first round since 2011 offers land which may have unconventional gas deposits. It is estimated that 707 trillion cubic feet lie beneath the surface, making the reserves the third largest in the world, the Africa Report said.

In September, Statoil made the executive decision on to send its workers back to the Amenas plant which they co-operate with BP and Sonatrach. This decision was encouraged by the necessary security measures put in place by the government.

The Amenas plant was hit by terrorists in January 2013 forcing it to close until further notice. This interfered with the economics of the country as it supplied Europe with 2 percent of its natural gas imports, amounting to 11.5 percent of Algeria’s total output, the Africa Report said.

Knut Rostad, Statoil spokesman said that communication with Algerian security authorities had improved significantly, restoring their confidence in the system, the Africa Report said.

The trend was followed by other IOCs such as Ain Tsila field developer Petroceltic who have continued with their projects, the Africa Report said.

To support local content, new policies have been implemented one being that Algerian companies have a minimum of 51 percent share in a project. This has caused BG Group to withdraw from its involvement in Algerian projects, the Africa Report said.

Senior IOC executive said:

‘Sonatrach makes positive noises about opening up. But even if companies feel they can work within the 49% limit on equity, there are other problems getting projects to work with a company traumatised by the corruption crisis.’

The country’s 31 block bid round will be the test to see if these new policies will prove detrimental or successful going forward.

(Pic credits: wikimedia)

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.