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Algeria to invest $30bn to boost natural gas output

18 January 2023

Algeria’s state-owned oil and gas company Sonatrach plans to invest more than $30bn in exploration and production to boost the country’s natural gas output.

The funds will also be spent on upgrading infrastructure to export gas from liquefied natural gas (LNG) terminals and by pipelines to Europe, according to the company’s chief executive Toufik Hakkar.

The announcement regarding the investments in Algeria’s gas sector comes as European nations scramble to secure alternatives to Russian gas supplies amid the ongoing war in Ukraine.

In his 2023 policy statement, Hakkar said: “As part of Sonatrach’s five-year investment plan (2023-27), the sum of $40bn has been set aside and more than $30bn will be allocated to exploration and production with the objective of increasing production in the short and medium term, and preparing a portfolio of future projects, in particular for natural gas.”

The Sonatrach CEO said the company also planned to invest more than $7bn in refining, petrochemical and gas liquefaction projects within the framework of the investment plan.

“These projects will promote the creation of added value to Algerian resources and will strengthen our export potential,” said Hakkar.

“Nearly $1bn will be devoted to projects aimed at the company’s contribution to the energy transition.

“These include flared gas recovery projects at production sites and the LNG plants at Skikda and Arzew.”

Hakkar said that Algeria wanted to become one of the world's most important sources of natural gas through Sonatrach and its planned investments.

“Discoveries in certain gas fields will generate a significant increase in the volumes of gas available for export, both via gas pipelines and LNG carriers,” he said.

Hakkar said Sonatrach's several important gas projects are expected to be commissioned in the next two years.

These include the Hassi Mouina and Hassi Ba Hamou fields in southwest Algeria, and the Isarène and TFT Sud fields in the southeast of the country.

He added that other projects are planned for 2023 and 2024, notably in Hassi Rmel, Hamra, Ohanet and Touat.

Hakkar invited European countries to commit to long-term gas purchase agreements to guarantee their security of supplies.

Sonatrach is also investing in several associated gas recovery projects, particularly in large production sites such as Hassi Messaoud, which has reduced the flaring rate to 2 per cent, according to Hakkar.

He said: “Other gas flaring recovery projects also concern production sites and LNG complexes and will, in the medium term, achieve the set objectives of reducing gas flaring to less than 1 per cent,” said the CEO.

Sonatrach signed a contract in 2022 with two Chinese engineering companies, Sinopec Luoyang Engineering and Sinopec International Petroleum Services Corporation, for improvement work at the Skikda LNG plant.

The contracts include dismantling two 20-year-old storage tanks and constructing a new tank with a capacity of 150,000 cubic metres.

It also includes the modernisation of jetty and loading facilities to accommodate larger vessels.

Algerian gas supplies are transported to Europe through the Medgaz pipeline, which runs from Beni Saf in Algeria to Almeria in southern Spain.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10526670/main.jpg
Wil Crisp

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