Algeria Trumpets Increased Oil and Gas Investment
Algerian Oil Minister Chakib Khelil said on November 17th that his country intends to boost output capacity by 500,000 b/d by 2004 through increased foreign investment. Khelil said that: “Algeria is back in business.
We’ve got 20 companies already investing in Algeria and we aim to double that number in five years.” Algeria currently produces 852,000 b/d, with a production capacity of about 900,000 b/d. The North African country, which derives 95 percent of its foreign revenues from energy sales, would like to see its capacity raised to 1.4 million b/d over the next four years.
Algeria has seen a dip in foreign investment since the mid-1990’s due to red tape hassles and unfavorable investment terms offered by state oil company Sonatrach. On October 24th, the oil ministry and Sonatrach jointly launched auctions for oil and gas licenses in six areas described as containing “high petroleum resources.”
A data room opened in Algiers on November 9th, with 19 foreign oil firms present and many more expected to attend a week-long presentation of contract details and data on November 19th. The bidding process is to run from December 1st to February 14th, with winning bidders announced on the closing day.
Khelil said that the country’s production sharing contract (PSC) could be amended to introduce easier terms. “We are not deciding what the terms are going to be. We will let the market decide on the best terms,” he said.
Khelil also indicated that Sonatrach will undergo reforms in 2001. The firm is currently in charge of contract negotiations and awards, but will be relieved of those duties after a revised hydrocarbons law is passed next year.
Under the new law, the state will establish two agencies to handle all aspects of oil and gas contracts. Khelil also said that he would soon begin discussions concerning a gas pipeline from Nigeria to Algeria and then on to Europe.