\


World

 

 

Mexico

Bolivia

Peru

Trinidad &
Tobago

Venezuela






Very usefull links



Institutional
links

 




Services
& Products



Welcome back on
26 -29 August,
ONS 2008

Bridging the energy gap
is ONS 2006 theme,
from 22-25 August,
in Stavanger, Norway


Petroleumworld
Business
Partners
:





 


 

 





Centre for
Global Energy
Studies

 

 

Lagniappe

 

 

IHS Global Insight :Licensing round disappointment in Algeria to be reversed by aggressive projects launch

 

Middle East Energy Briefing

Algeria's Energy Ministry, its regulatory body ALNAFT, and state-owned Sonatrach are now looking to speed up several project-approval decisions in order to spur development in the wake of the disappointing seventh licensing round.

IHS Global Insight Perspective

Significance     The highly disappointing seventh licensing round, in which most of the blocks remaining unbid, is likely to result in a shortage of oil and gas development projects in a few years' time; hence Algeria is now looking to speed up development decisions for several other projects to fill the gap.

Implications
    Swift action is expected to try to force critical development permissions through the country's reticent bureaucracy so as not to lose the momentum in its oil and gas industry. However, with the licensing round having been severely delayed in the first place, Algeria could still witness a marked project slowdown, especially in the current economic climate, before the round is retendered in 2010 .

Outlook      The aim to clear a handful of large upstream developments for progress within three to four months is a good one, but red tape could still cause delay. There will still be a lack of breadth in projects that do move ahead before a planned 2010 retendering—which would need serious reform to be successful—making it likely that Algerian development will slow down anyway.

Look over Here

News at the weekend about the outcome of Algeria's long-delayed seventh licensing round was quickly accompanied by comments from the authorities that swift approval for several of the country's long-planned upstream projects, which have been meandering their way through the country's notoriously slow and inflexible bureaucracy, would be given. The announcement was quite obviously a measure to try to detract focus from the failed round—where 11 out of 16 permits offered received no bids at all and the most promising centre-point of the round, the Ahnet permit, was withdrawn after a lack of sufficiently high bids—in order to keep the notion of Algeria's promising opportunities alive among investors.

Algeria is also wary of being seen as a stagnant play in Europe in general. The core gas supplier to Europe, Algeria is positioning itself as a growth prospect and fears losing some of its strategic leverage should it increasingly be seen as having reached a plateau in its gas development. State-owned oil and gas giant Sonatrach is pursuing a range of upstream developments on its own, but the vast investments needed just to support its oil production levels over the coming decade have made it increasingly reliant on private partners to supply investment into the most virgin—as well as challenging—tracts, where the technological edge of IOCs is often necessary to reach commerciality.

Sonatrach on Sunday (14 December) arranged a visit for the media to Algeria 's advanced In Salah gas field and carbon-capture project, which is operated by a consortium of BP, StatoilHydro, and Sonatrach, demonstrating the advanced stage of the country's industry. While In Salah is a successful project in its own right, the tour also succeeded in directing the coverage of the mainstream media, at least, away from the failed licensing round and its possible negative implications for future Algerian development. Moreover, news that authorities aim to finalise permissions for several large-scale developments within the coming months was also published and received maximum publicity, suggesting that Algeria would not slow down the pace of its upstream progress.

Gas Projects in the Offing

Said Sahnoun, head of the associations division at Sonatrach, told Reuters that three large-scale gas projects totalling US$4 billion, expected to come onstream in 2013 and add around 10 bcm/y of additional production capacity, would receive development approval within three to four months. The projects mentioned are Total's US$1-billion Timimoun project, reaching an estimated production capacity of 1.5–2 bcm/y, Repsol-YPF's US$1.5-billion Reggane Nord development with an estimated capacity of 4 bcm/y, and GDF Suez's US$1.5-billion Touat project, aiming for production of 4 bcm/y.

The progress approval on the three projects is very good and necessary news, as it means that Sonatrach will go ahead with the south west Hassi R'Mel gas pipeline, making gas production possible in the Reggane, Touat, and Timimoun areas, despite the licensing round's failure to find investors to the highly promising Ahnet permit (which lies between In Salah and the other projects). Given that the projected pipeline will have been planned with Ahnet output in mind, there have been fears that the failure to tender Ahnet would lead Sonatrach—which will carry the investment in full—to redraw the project.

Saying that the three projects were economically viable with oil prices around US$30/b, Sahnoun told Reuters that carbon-capture and storage (CCS)—as at In Salah—would be required at the three other projects, as well as at the now-Sonatrach-operated Gassi Touil scheme in the east of the country. The cost of the CCS at In Salah was also said to be US$14–15/tonne of CO2, significantly below the levels for carbon credits of around US$25–27/tonne of CO2 that are being discussed.

Oil, Condensates Push

Sahnoun also told media that projects adding around 200,000 boe/d of production—of which 100,000 b/d would be crude oil—were going to receive the go-ahead within months, compensating for declines at other fields as they come onstream between 2012 and 2013.

The 40,000–50,0000 b/d Birsbaa project led by Petrovietnam was close to receiving approval for its development plan, Sahnoun said, adding that Rosneft's 50,000–60,000-b/d Takouazet project had already been cleared and would come onstream in 2012, according to Reuters. ConocoPhillips's and Anadarko's US$2-billion El Merk development was also cleared to proceed, he said, and will produce 100,000 boe/d of crude and wet gas from 2012.

Outlook and Implications

Algeria needs to clear those projects that are closest to being approved to maintain some kind of momentum, although the truth is that most of them by now are long overdue. While assurances from high-level officials—and to some extent from the Energy Minister Chakib Khelil himself—go a long way to raising expectations that no more waiting will be required, the ponderous Algerian bureaucracy has proven impervious to high-level pressure before. Further delays to the country's development schedule—which has already suffered heavily given the over-two-year delay in the ultimately disappointing licensing round—cannot be ruled out.

The momentum for Algeria 's development could have been so much greater at this time, were it not for these delays. While the likely launch of these projects means that it will not come to an actual standstill, it has not attracted the necessary investment over the past years to keep up with ambitious plans, and with the last round failed miserably to come anywhere near its targets. This will naturally mean a dearth in investment in a few years' time, as the pipeline set to be built past those projects that hope for clearance during the first quarter of 2009 now looks set to be smaller and smaller—only four new permits were signed up for exploration—by Eni, BG Group, Gazprom, and E.ON Ruhrgas. Even if Algeria retenders the remaining permits successfully in 2010 (late 2009 looks overly optimistic), it will need to reform its fiscal terms radically to get a very different result. Such a task would take more time than it has available in that scenario, and this could possibly result in few IOC-led projects—if any—being started at all between 2010 and 2012.

 

 

IHS Global is a global leader in economic and financial analysis, forecastin and market intelligence for more than 40 years. Petroleumworld does not necessarily share these view.

Recent accolades from USA Today , Reuters , and The Wall Street Journal confirm what third-party evaluations have shown again and again over the years: GLOBAL INSIGHT has the most consistently accurate forecasts. For details regarding our world-renowned accuracy visit:
www.globalinsight.com/accolades

Editor's Note: All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website.

All comments are posted and published without liability to Petroleumworld. Fair use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.

We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107.

For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator.

Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law.

If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.Internet web links to http://www.petroleumworld.com are appreciated

Petroleumworld welcomes your feedback and comments: editor@petroleumworld.com.

By using this link, you agree to allow PW to publish your comments on our letters page.

Petroleumworld News 12/17/08

Copyright© 2008 respective author or news agency. All rights reserved.


We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.


Send this story to a friend
Your feedback is important to us!
Readers' comments: share your thoughts on this article.

We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com

Any question or suggestions, please write to:
editor@petroleumworld.com

Best Viewed with IE 5.01+
Windows NT 4.0, '95, '98 and ME +/ 800x600 pixels

 


TOP

Contact:editor@petroleumworld.com/phones:(58 412) 996 3730 or 952 5301
www.petroleumworld.com-Editor:Elio Ohep /
Publisher-Producer:Elio Ohep.
Contact Email:
editor@petroleumworld.com
Legal
Information. CopyRight © 1999-2006, Elio Ohep.- All rights reserved

Fair use notice of copyrighted material:
This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.