Algeria's energy industry to keep growing despite security concerns

Published March 19th, 2013 - 11:04 GMT
The terrorist threat in southern Algeria will have no impact on national energy production, Algerian Energy Minister
The terrorist threat in southern Algeria will have no impact on national energy production, Algerian Energy Minister

The In Amenas terror attack will not slow down Algeria's energy sector, officials and investors agree.

Hundreds of international gas and oil companies looking for investment opportunities in Algeria's energy sector converged this month in Ourgla for the Hassi Messaoud Expo.

"This will create a new dynamics that will reflect positively on the economic activity in the region,"Sonatrach regional manager Harfouche Benarar said at the event on March 8th.

The terrorist threat in southern Algeria will have no impact on national energy production, and the country's hydrocarbon and oil production will continue "for many years to come", Algerian Energy Minister Youcef Yousfi told French monthly magazine Arabies.

Noting the desire of terror groups to target energy installations, the minister confirmed that the government had made "appropriate adjustments" with regard to the security of strategic sites.

Algeria's energy reserves and potential spurred the country's partners, including major oil companies such as Statoil and British Petroleum (BP), which were directly affected by the attack inTiguentourine, to continue operating in the country.

The In Amenas terrorist attack was a "heavy blow" but also represented a "new type of risk", former Sonatrach CEO Abdelmadjid Attar said.

"The situation will get back to normal and improvements will be made in terms of the security of oil and gas installations," he told the press on February 26th.

However, Attar expressed his concern about the pace that future projects would be implemented.

"It is the continuation of the development projects currently under way which is expected to be adversely affected," he said.

In his view, these projects would be "delayed for a while", which he estimated at several months.

He also anticipated that there would be "additional costs that Sonatrach and its partners would have to negotiate on". "The behaviour of foreign companies will depend on the Algerian government's capacity to guarantee security at oil and gas sites," expert Amin Yahia told Magharebia.

"Algeria, which was able to shield its oil and gas sites from terrorist attacks over the last two decades, is now aware of the risks on the ground in the wake of the attack at Tiguentourine," economist Mohamed Toualbi told Magharebia.

Toualbi argued that the Algerian government would be able to come up with the necessary responses to protect its sites.

"Hydrocarbons account for most of Algeria's exports. It is no exaggeration to say that the country's economy and its finances are wholly dependent on oil revenues. Insecurity is a threat to the energy industry first and foremost, but it could be fatal for the country's economy," he said.

Expert Fatah Mekideche agreed that the terrorist threat faced by energy sites was real.

"The terrorist groups that are operating in the south will want to put pressure on the Algerian government by attacking the national economy", he told Magharebia.

"Even though the risk remains real, the chances that these groups will be able to attack oil or gas sites are tiny," he said.

The potential of the Algeria hydrocarbon sector is of great interest to oil companies, the minister said, adding that the companies were "also operating in other regions that carry far greater risks than Algeria".

Algeria has a huge sedimentary basin that is "relatively unexploited" and a large offshore region, which is "completely unexplored", the energy minister said during the interview.

"In Algeria, we are aware of the importance of exploration", he said, noting the new legal provisions on the issue adopted by both chambers of parliament.

The energy and mining sector will see a "large investment programme" in the future, a large part of which will be devoted to exploration, he added.

© Magharebia. All rights reserved.

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