| Algeria is a member of the
Organization of Petroleum Exporting Countries (OPEC) and the world's
thirteenth largest oil producer |
According to the Oil and Gas Journal
(OGJ), Algeria held an estimated 12.2 billion barrels of proven oil
reserves as of January 2012, the third largest reserves in Africa
(behind Libya and Nigeria). Hassi Messaoud basin, located in the eastern
part of the country near the Libyan border, is the country's largest
oil basin and producing oilfield and contains up to 60 percent of
Algeria's proven oil reserves. The Berkine basin, together with the
Ourhoud fields, is the second largest in the country and has been the
source of a number of recent discoveries, which have allowed Algerian
oil production levels to rise significantly since 2003.
Organization
The Algerian national oil company is Entreprise Nationale
Sonatrach (Sonatrach), which plays a key role in all aspects of the oil
and natural gas sectors in Algeria. All foreign operators must work in
partnership with Sonatrach, which usually has majority ownership in
production-sharing agreements.
Since the late 1990s, Algeria has encouraged the expansion of
foreign investment in the oil and gas sectors. Foreign oil operators
have steadily increased their participation in exploration and
production, which has led to reserve and production growth. The largest
foreign oil producer is Anadarko, with total production capacity of more
than 500,000 bbl/d from its operation at the combined Hassi Berkine
South and Ourhoud fields. Other large foreign investors include: BP,
Conoco-Phillips, Eni, Shell, Statoil, and Total.
In November 2011, Sonatrach's fourth chief executive in two
years was appointed by the energy minister. Sonatrach continues to be
affected by the 2010 corruption investigation that resulted in the
dismissal of its chief executive and many of the company's senior
management team.
In December 2011, the Algerian energy minister announced that
changes will be made to the country's Hydrocarbon Law to boost foreign
companies' interest in exploration investments. Attempts to attract
foreign energy companies to invest in exploration projects have
foundered over the past few years. Reportedly, the frequent delays
involved in Algerian projects, stringent financial terms, and a windfall
tax on foreign oil producers whenever the price of oil exceeds $30 per
barrel have dampened international companies' interest in bidding
rounds. In March 2011, Algeria awarded only 2 out of 10 oil and gas
permits on offer in its latest licensing round. The winning bidders were
Sonatrach and Spain's Cepsa. This was the third bid round in a row to
attract lackluster interest from foreign firms.
Production and Development
Algeria produced an estimated average of 1.27 million barrels
per day (bbl/d) of crude oil in 2011, about the same as it produced in
2010. Together with 270,000 bbl/d of condensate and 340,000 bbl/d of
natural gas liquids, which are not included in its OPEC quota, Algeria
averaged 1.88 Mmbbl/d of total oil liquids production during 2011.
Algerian oilfields produce high quality light crude oil with
very low sulfur and mineral contents. The main areas for exploration
are in the east near the borders of Tunisia and Libya, and in the
central area, where large natural gas discoveries have been made.
Algeria is maintaining its oil production capacity by enhancing oil
recovery in older fields, increasing exploration, and developing new
oilfields to compensate for the decline in older fields. The
government's long-term target is to maintain crude oil production
capacity at about its current level.
Sonatrach operates the largest oil field in Algeria, Hassi
Messaoud, which is reported to have produced around 350,000 bbl/d of
crude oil in 2010, about 28 percent of Algeria's total. The government
recently awarded new contracts to increase Hassi Messaoud production by
developing new areas of the field and by adding a new LPG plant. Hassi
Berkine, a joint venture between Sonatrach and Anadarko, reportedly
produced 300,000 bbl/d in 2010, and the Ourhoud field, a joint venture
between Sonatrach and Cepsa located in the Berkine basin, produced about
250,000 bbl/d. The El Merk field, located south of Hassi Messaoud in
the Sahara desert, is expected eventually to add 100,000 bbl/d of crude
oil, 30,000 bbl/d of condensate, and 30,000 bbl/d of net gas liquids to
Algeria's oil production after coming online in the fourth quarter of
2012. El Merk is a joint venture by Sonatrach, Anadarko, Eni, and
Burlington.
Exports
In 2011, Algeria's estimated crude oil exports were 750,000
bbl/d, of which the largest portion went to North America, mainly to the
United States. In 2010, Algeria's estimated total oil exports
(including all liquids) were 1.5 million bbl/d. According to EIA
estimates, the United States imported an average of 510,000 bbl/d from
Algeria in 2010, of which 328,000 bbl/d was crude oil. The United
States was the largest single importer of Algerian crude oil in both
years.
Downstream
In January 2012, Algeria had total crude oil refining
capacity of 450,000 bbl/d at four refineries, according to the Oil and
Gas Journal. Sonatrach aims to upgrade and expand its existing
refineries at Arzew, Algiers, and Skikda. The country is in need of
increased refining capacity as rising demand for gasoline and diesel has
resulted in rising imports of refined products.
The Skikda refinery, at 300,000 bbl/d, produces about 67
percent of Algeria's refined products. It is being modernized and
expanded to more than double its current capacity by the end of 2012.
The expansion will include a liquefied natural gas (LNG) plant as well
as three liquefied petroleum gas (LPG) facilities.
The 60,000-bbl/d Algiers refinery, which processes crude
from Hassi Messaoud, is being upgraded to produce an additional 20,000
bbl/d in 2014 and will provide gasoline and other products to European
specifications.
The 60,000-bbl/d Arzew refinery produces products for both
domestic consumption and export. A contract was awarded in 2008 to
rehabilitate this refinery and increase its production by 30,000 bbl/d
by mid-2012.
The 30,000-bbl/d Hassi Messaoud refinery supplies products to
southern Algeria. A Sonatrach project to build three additional LPG
trains was awarded to Saipem in 2010, but has been delayed.
Pipelines and Export Terminals
Algeria uses seven coastal terminals to export crude oil,
refined products, LPG, and natural gas liquids (NGL). These facilities
are located at Arzew, Skikda, Algiers, Annaba, Oran, Bejaia, and La
Skhirra in Tunisia. Arzew handles about 40 percent of Algeria's total
hydrocarbon exports, including all of its NGL, LPG, and oil condensate
exports. Arzew and Skikda are also the shipping points for LNG.
Algeria's domestic pipeline network facilitates the transfer
of oil from interior production fields to the export terminals.
Sonatrach operates over 2,400 miles of oil pipelines in the country. The
most important pipelines carry crude oil from the Hassi Messaoud field
to refineries and export terminals. Algeria's major crude oil export
pipelines are: the two parallel 500-mile Haoud el Hamra to Arzew
pipelines, the 415-mile Haoud el Hamra to Bejaia line, the 400-mile
Haoud el Hamra to Skikda pipeline, and the border-crossing 482-mile
pipeline from In Amenas to La Skhirra, Tunisia. Sonatrach also operates
oil condensate and LPG pipeline networks that link Hassi R'Mel and other
fields to Arzew.
|
| Algeria is the third largest exporter of natural gas to Europe |
According to The Oil and Gas Journal (OGJ),
as of January 2012, Algeria had 159 trillion cubic feet (Tcf) of
proven natural gas reserves, the tenth largest natural gas reserves in
the world and the second largest in Africa after Nigeria. Algeria's
largest natural gas field is Hassi R'Mel, discovered in 1956. Located
in the eastern part of the country, it holds proven reserves of about
85 Tcf, more than half of Algeria's total proven natural gas reserves.
The remainder of Algeria's natural gas reserves come from associated
(they occur alongside crude oil reserves) and non-associated fields in
the south and southeast regions of the country.
Production
Algeria's gross natural gas production in 2010 was 6.8 Tcf
compared with 6.9 Tcf in 2009. Of this amount, 3.2 Tcf was reinjected
for enhanced oil recovery, 3.5 Tcf was marketed, while 0.2 Tcf was
vented/flared.
Algeria is in the process of developing its Southwest Gas
Project, which includes the Repsol-led 102 billion cubic feet per year
(Bcf/y) Reggane Nord fields, the 56 Bcf/y Timimoun project led by
Total, and GDF Suez's 159 Bcf/y Touat project. Final approval of the
Reggane Nord project occurred in November 2011. The project includes
the construction of gas gathering facilities, a gas treatment plant,
and pipeline to Hassi R'Mel gas hub. Repsol holds a 29.25 percent stake
in partnership with Sonatrach, at 40 percent, RWE Dea, at 19.5
percent, and Edison, at 11.25 percent. The project is slated to come
online in mid-2016, 2 years later than originally estimated. Reggane
Nord will open up the wider development of Algeria's southwest gas
fields, including the Timimoun and Touat projects. The Timimoun project
is projected to come onstream in 2014, and the Touat project is also
expected to be given the green light soon, according to Algeria's state
news agency in February 2012.
Another major project in the area, the Menzel Ledjmet East
(MLE) project led by Eni, is projected to start production of 116
Bcf/y in mid-2012, along with associated gas liquids and oil. The
projects in the southwest are co-dependent, as they will all rely on
the construction of a new gas pipeline linking them to Hassi R'Mel.
Following a recent decline in upstream licensing activity, the
development of gas from the southwest has taken on greater importance
for Algeria's capacity to meet contracted gas exports and increasing
domestic demand in the medium term.
.
Domestic Pipelines
Algeria's more than 4,000-mile domestic natural gas pipeline
system centers on the Hassi R'Mel natural gas field, which is owned by
Sonatrach. The pipelines collect and distribute more than 10 Bcf/d. The
largest pipeline systems connect Hassi R'Mel to the export pipelines
to Europe and liquefied natural gas (LNG) terminals along the
Mediterranean Sea. Since Hassi R'Mel is the hub of Algeria's entire
natural gas transport network, all of the country's natural
gas-producing regions are connected to it by pipelines.
Pipeline Exports
According to Cedigaz estimates, Algeria's natural gas exports
totaled 1.97 Tcf in 2010, up from 1.86 Tcf in 2009. About 65 percent
of Algeria's total natural gas exports, or 1.29 Tcf, moved through the
natural gas pipelines connecting Algeria with Italy and Spain, while
35 percent, or 0.682 Tcf, was exported by tanker in the form of LNG.
Algeria was the third largest natural gas supplier to Europe after
Russia and Norway in 2010.
After a number of delays, the $1.2 billion Medgaz undersea
pipeline came online in March, 2011. The 403 Bcf/y-capacity, 120-mile
Medgaz undersea line links Beni Saf, Algeria to Almeria, Spain.
Sonatrach owns 36 percent, Spain's Iberdrola and Cepsa each own 20
percent, and Endesa and Gaz de France hold 12 percent each.
Interconnecting pipelines from Spain to France, which would make France
and the rest of Europe potential outlets for Spain's surplus gas, are
in the planning stages, and could become operational in the 2013-2015
time frame.
The 1,370-mile Trans-Mediterranean (Transmed, also called
Enrico Mattei) line runs from Hassi R'Mel, via Tunisia and Sicily, to
mainland Italy, with an extension running to Slovenia. It was completed
in 1983 and doubled in capacity in 1994 to 847 Bcf/y. A third line
was opened in February 2010, further expanding total apacity to 1,059
Bcf/y.
The 1,000-mile, 424 Bcf/y capacity Maghreb-Europe Gas pipeline
(MEG, also called Pedro Duran Farell), was completed in 1996 for $2.3
billion. It connects Hassi R'Mel via Morocco with Cordoba, Spain,
where it ties into the Spanish and Portuguese natural gas transmission
networks. Natural gas from Algeria is provided to Spain, Portugal, and
Morocco. An international consortium, led by Spain's Enagas, Morocco's
SNPP, Portugal's Transgas and Sonatrach, operates this line.
The Galsi natural gas pipeline, which would link Annaba on
the Algerian coast with Piombino in mainland Italy via Sardinia, is
still in the planning stages. It would be the deepest underwater
pipeline ever built, running 9,265 feet underwater at its deepest
point. The expected initial capacity is 282 Bcf/year and it has been
projected to come on stream in 2014.
Liquefied Natural Gas
In 2010, Algeria was the world's seventh largest exporter of
LNG, exporting about 7 percent of the world's total LNG exports.
Primary customers were France, Spain, Turkey, Italy, and the U.K.
Cedigaz estimates that a total of 682 Bcf of LNG was exported in 2010,
comprising 35 percent of the country's total natural gas exports.
With the start-up of the LNG plant at Arzew in
1964, Algeria became the world's first producer of LNG. The Arzew plant
had three trains until February 2011, when the oldest was closed down,
being considered too dilapidated and dangerous to operate. This
deprived Algeria of around 53 Bcf/y of LNG. A new LNG plant with
capacity of 218 Bcf/y is under construction and due to open in 2013. Gas
supplies will be coming from the Gassi Touil fields.
Algeria’s Skikda LNG plant, built in 1972, was partly
destroyed by an explosion in 2004. Three of the six trains were
repaired but the other three are being replaced by one new train with a
250 Bcf/y capacity, expected to come online in 2013.
The National Shipping Company, a Sonatrach subsidiary,
operates 28 LNG, crude, and product tankers and has reportedly
commissioned a further 10 vessels for delivery by 2013.
|
