A Review of the Nigerian Energy Industry

New finds to double Algeria’s gas output

Statoil platform02 October 2013, News Wires – Several significant oil and gas discoveries made in Algeria’s maturing and new fields are expected to double the country’s gas production in the next seven to 10 years, Energy & Mines Minister Youcef Yusfi said on Tuesday.

The Opec oil producer is a major supplier of gas to nearby Europe, although strict licensing terms have seen major investments freeze up in recent years and oil and gas output has started to decline, Reuters reported.

Yet, new discoveries and improved efficiencies have resulted in Algeria pumping crude at a rate of 1.2 million barrels per day and Yusfi said the country’s gas production was expected to increase despite falling demand from its traditional European customers.

“For the medium term, I think, our production will more than double from the existing one,” Reuters quoted Yusfi as saying on the sidelines of the Oil & Money conference in London.

Algeria found about 1 billion barrels of oil at the major Hassi R’mel field and made oil and gas finds in the maturing Berkine and Illiza basins in the southeast, he said.

The North African country also made headway in evaluating the potential for unconventional technologies that have prompted a shale boom in the US, with studies finding 300 trillion to 500 trillion cubic feet of tight oil and more than 700 tcf of shale gas in Algeria.

“Concerning the new regions in the south west, for the first time – this is a region that is not explored at all – two weeks ago we made a discovery of gas and oil and we are in the process of evaluation,” Yusfi said.

With maturing fields and less investment, Algeria’s gas for export has dropped to around 50 billion cubic metres from around 70 bcm in less than a decade, US Energy Information Administration data showed.

Its output of crude oil has fallen from a peak of 1.4 million bpd in 2008 to its current rate of 1.2 million bpd. Yusfi said it hoped to continue producing at that level by optimising existing production, although the Hassi Mesaoud field had peaked.

The government passed an amended hydrocarbon law in January following sparse interest in the last upstream licensing round, but the changes may not be sufficient to counter the prospect of greater security costs after the attack on the In Amenas gas plant in the deep south killed 40 oil workers early this year.

According to Reuters, analysts said the law does not go far enough to encourage new investment or open up opportunities for shale gas production.

Yusfi said Algeria was working on the next round of exploration licences but did not give details about the blocks or the terms that would be on offer. However, he did say that largely unexplored offshore areas could be included.

“We are concentrating on onshore… Also we are thinking of offshore. We’re going to have our first drilling offshore during next year, maybe,” he said.

Yet that investment comes amid falling demand from Italy and tough competition for Asian markets from other gas producers.

“The economic crisis in Europe means some of our partners have had some difficulties,” Yusfi said.

“That is why for some countries, we have accepted reduced exports to these countries for a small period of time but in general didn’t reduce our production. And we are exporting to some new markets, mainly in Asia.”

– Upstream

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