Algeria Oil and Gas Industry Update Quarter 3 2012

  • June 2014
  • -
  • Business Monitor International
  • -
  • 143 pages



BMI View:
Despite significant potential for exploration, we believe that unless new basins (or large fields in existing basins) are discovered, Algeria’s oil reserves will fall from 2014 and beyond. This decline could be further exacerbated by growing oil and gas output, in addition to a lack of foreign investment in the market – a symptom of the country’s unfavourable tax regime. The mooted reform of Algeria’s hydrocarbons law is, therefore, likely to be welcomed by foreign operators and should revive the country’s moribund upstream sector .

The key trends and developments in Algeria’s oil & gas segment are:
- After three rather disappointing bidding rounds, with only nine blocks attracting winning bids out of the 36 licence areas auctioned since 2008, Algeria's energy minister, Youcef Yousfi, stated on December 7 2011 that the country is to review its energy legislation. The next version of the national hydrocarbons law is expected to enhance the regulatory environment across the oil & gas segment . According to Yousfi, the measures that are expected to be included in the coming reforms suggest that taxes will be calculated based on the profit from a project instead of turnover. However, the rule that requires state-owned Sonatrach to hold a 51% stake in all upstream projects will be retained, as will the non-deductible windfall profit tax (WPT) imposed on international investors.
- BMI projections that oil production will rise from an estimated 1.88mn barrels per day (b/d) in 2011 to 1.99mn b/d in 2021, as ambitious new projects, mostly located in the Berkine basin, come onstream. Production will be further boosted by increased output at major fields such as Hassi Messaoud, and by enhanced recovery rates. - Consumption of crude is projection to rise steadily at an average annual growth rate of 3.35% between 2011 and 2021. This is partly in line with the expected Gross Domestic Product growth rate, although we expect energy intensity to increase towards the end of our 10-year projection period. We anticipate that crude consumption will rise from an estimated 402,000b/d in 2011 to 559,000b/d by 2021.
- BMI projections that gas production will increase from an estimated 85.00bn cubic metres (bcm) in 2011 to 142.42bcm by 2021, as ambitious new projects, mostly located in the Ahnet and Illizi basins, come onstream. Production will be further boosted by increased output at major fields such as Hassi R’mel and by enhanced recovery rates at the In Salah Gas Project. - Gas demand is set to rise steadily on the back of solid economic growth.
BMI projections average annual growth of 5.36% from 2011 to 2015, with consumption projection to rise from an estimated 30.26bcm in 2011 to 51.18bcm in 2021.
- Unless sizeable fields are discovered in existing basins – including Erg Occidental-Ahnet, Erg Oriental-Berkine, Illizi and In Salah, which all have substantial discovery potential – oil reserves will fall from 2014 onwards. Another alternative is that new basins may be discovered in the north of the country or in the Mediterranean. Oil reserves are projection to peak at 12.50bn barrels (bbl) in from 2012 to 2013, with gas reserves to peak at 4.8trn cubic metres (tcm) in 2014. However, there is a substantial upside risk to recoverable gas reserves, in the form of vast untapped shale resources.
- In terms of infrastructure, several upgrades at the Skikda, Arzew and Algiers refineries are expected to come onstream, with additional capacity from a proposed greenstream refinery expected towards the end of our 10-year projection period. Algeria’s dependence on energy prices leads to high volatility in the country’s export revenues. Our anticipation of tight supply due to booming demand in emerging industry s is an opportunity on which the country could capitalise. We projection OPEC basket oil prices to increase from an estimated US Dollar 107.52 per barrel (bbl) in 2011 to US Dollar 111.47/bbl in 2012, thus creating upside risk to the Algerian macroeconomic outlook.

Table Of Contents

BMI Market View ... 5
Industry SWOT Analysis 7
Algeria Oil And Gas Swot . 7
World Energy Industry Outlook 8
Data : Oil Production Projections, from 2010 to 2016 (‘000 b/d) ... 8
Data : Oil Consumption Projection, from 2010 to 2016 (‘000 b/d) ... 14
Regional Energy Industry Outlook .. 15
Algeria Energy Industry Overview .. 19
Data : Algeria - Upstream Projects Database .. 21

Market Projection Scenario ... 22
Oil And Gas Reserves .. 22
Data : Algeria Oil and Gas - Historical Data And Projections, from 2009 to 2016 . 24
Data : Algeria Oil and Gas - Long-Term Projections, 2014-2021 ... 25
Oil Supply and Demand ... 26
Gas Supply And Demand . 26
Export Revenues .. 27
Key Risks To BMI’s Projection Scenario 28
Oil And Gas Infrastructure 30
LNG . 30
Oil Refineries ... 30
Data : Refineries In Algeria 32
Gas Pipelines ... 32
Regional and Country Risk/Reward Ratings ... 36
Data : Upstream Risk / Reward Ratings . 39
Data : Downstream Risk / Reward Ratings. 39
Algeria Upstream Rating - Overview . 40
Algeria Upstream Rating - Rewards .. 40
Algeria Upstream Rating - Risks 40
Algeria Downstream Rating - Overview . 40
Algeria Downstream Rating - Rewards .. 41
Algeria Downstream Rating - Risks ... 41

Competition Overview 42
Data : Key Players In The Algerian Energy Segment 44
Overview/State Role .. 45
Licensing and Regulation ... 45
Government Policy . 46
Licensing Rounds 46
International Energy Relations ... 48
Data : Key Upstream Players . 49
Data : Key Downstream Players 50
Company Monitor .. 51
Enterprise Nationale Sonatrach .. 51
Anadarko Algeria 54
Eni Algeria Production ... 56
Algeria Oil and Gas Report Q3 2012
© Business Monitor International Ltd Page 4
BP Algeria .. 59
Total ... 61
Repsol Algeria 63
BHP Petroleum (Algerie) 65
CEPSA 67
Statoil Algeria . 70
Hess - Summary . 72
Maersk Oil - Summary ... 72
Royal Dutch Shell - Summary 72
ConocoPhillips - Summary . 72
BG Group/Gulf Keystone Petroleum - Summary 72
Talisman Energy - Summary .. 73
Gazprom - Summary .. 74
Others - Summary .. 74
Africa Regional Appendix. 76
Data : Oil Consumption Historical Data and Projections, from 2009 to 2016 (‘000b/d) .. 76
Data : Oil Consumption Long-Term Projections, 2014-2021 (‘000b/d) . 77
Data : Oil Production Historical Data and Projections, from 2009 to 2016 (‘000b/d) . 77
Data : Oil Production Long-Term Projections, 2014-2021 (‘000b/d) 78
Data : Refining Capacity Historical Data and Projections, from 2009 to 2016 (’000b/d) 79
Data : Refining Capacity Long-Term Projections, 2014-2021 (‘000b/d) ... 80
Data : Gas Consumption Historical Data and Projections, from 2009 to 2016 (bcm) .. 80
Data : Gas Consumption Long-Term Projections, 2014-2021 (bcm) . 81
Data : Gas Production Historical Data and Projections, from 2009 to 2016 (bcm) . 82
Data : Gas Production Long-Term Projections, 2014-2021 (bcm) 82
LNG Net Exports Historical Data and Projections, from 2009 to 2016 (bcm) .. 83
LNG Net Exports Long-Term Projections, 2014-2021 (bcm) 83
Methodology And Risks To Projections . 84
Oil And Gas Risk/Reward Ratings Methodology 85
Ratings Overview . 85
Data : Bmi’s Oil and Gas Business Environment Ratings - Structure 86
Indicators . 86
Data : Bmi’s Oil and Gas Upstream Ratings - Methodology 86
Data : Bmi’s Oil and Gas Business Environment Downstream Ratings - Methodology. 87
Glossary Of Terms 89
Data : Glossary Of Terms ... 89
BMI Methodology .. 91
How We Generate Our Market Projections .. 91
Energy Market ... 91
Cross checks 92
Sources 92

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