Algeria Oil and Gas Industry Update Quarter 2 2012

  • April 2014
  • -
  • Business Monitor International
  • -
  • 137 pages

Includes 3 FREE quarterly updates

BMI View: Despite significant potential for exploration, we believe that unless new basins (or large fields in existing basins) are discovered, reserves could very well peak this decade. Furthermore, the fall in reserves could be further exacerbated by growing oil and gas output and 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 somewhat moribund upstream sector .
The main trends and developments we highlight for Algeria’s Oil & Gas segment are as follows: ..
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, said on December 7 2011 that the country would review its energy legislation. The next version of the national hydrocarbons law is expected to improve 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 expects oil production to rise from approximately 2,083,000 barrels per day (b/d) in 2011 to 2,654,000 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 likely to rise steadily at an average 3.3% average growth rate from 2011 to 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 the decade. We anticipate that crude consumption will rise from an estimated 320,000b/d in 2011 to 444,000b/d by 2021.
.. BMI projections that gas production will increase from 85.0bn cubic metres (bcm) in 2011 to 142.4bcm 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 growth of 5.4% from 2011 to 2015 and we therefore anticipate that consumption will rise from an estimated 30.3bcm in 2011, to hit 51.2bcm by 2021.
.. Unless sizeable fields are discovered at existing basins, the country’s main basins – including Erg Occidental-Ahnet, Erg Oriental-Berkine, Illizi and In Salah, which all have substantial discovery potential – we expect reserves to peak this decade. Another alternative is that new basins may be discovered in the north or in the offshore Mediterranean. Oil reserves are projection to peak at about 12.5bn barrels (bbl) in 2012 and gas reserves are expected 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 refinery are expected to come onstream, with a rise d capacity from a proposed greenstream refinery expected towards the end of the decade.
Algeria’s dependence on oil prices leads to high volatility in the country’s export revenues. Our hypothesis s of slower growth in China, a faltering recovery in the US and uncertainty with regard to the eurozone debt crisis, clearly pose a threat to global demand. As a result, we assume OPEC basket oil prices will fall from an average of US Dollar 107.52/bbl in 2011 to US Dollar 99.38/bbl in 2012, thus creating downside to Algeria’s macroeconomic outlook.

Table Of Contents

BMI Market View 5
Industry SWOT Analysis .... 7
Algeria Oil And Gas Swot .. 7
World Energy Industry Outlook .... 8
Libya Production Update: Main Fields (As Of Jan 9) .... 9
World Oil Consumption, from 2009 to 2016 (000b/d) .... 11
World Oil Production, from 2009 to 2016 (000b/d) .. 12
Regional Energy Industry Outlook ... 13
Algeria Energy Industry Overview .... 17
Data : Algeria - Upstream Projects Database .. 19

Market Projection Scenario .. 20
Oil And Gas Reserves . 20
Data : Algeria Oil and Gas -Historical Data And Projections, from 2008 to 2016 21
Data : Algeria Oil and Gas - Long-Term Projections, 2013-2021 ... 22
Oil Supply and Demand ... 24
Gas Supply And Demand . 24
Export Revenues .... 26
Key Risks To BMI’s Projection Scenario 26
Oil And Gas Infrastructure .... 28
LNG ... 28
Oil Refineries .... 28
Data : Refineries In Algeria .. 30
Gas Pipelines .... 30
Regional and Country Risk/Reward Ratings .... 33
Upstream Risk / Reward Ratings .... 36
Downstream Risk / Reward Ratings 37

Competition Overview ... 38
Data : Key Players In The Algerian Energy Segment . 39
Overview/State Role .... 40
Licensing and Regulation . 40
Government Policy 41
Licensing Rounds ... 41
International Energy Relations .. 43
Data : Key Upstream Players .... 44
Data : Key Downstream Players 44
Company Monitor ... 45
Enterprise Nationale Sonatrach . 45
Anadarko Algeria ... 48
Eni Algeria Production .... 50
BP Algeria ... 52
Total ... 54
Repsol Argelia .. 56
BHP Petroleum (Algerie) . 58
CEPSA .... 60
Statoil Algeria ... 63
Hess - Summary 65
Maersk Oil - Summary .... 65
Royal Dutch Shell - Summary .... 65
ConocoPhillips - Summary ... 65
BG Group/Gulf Keystone Petroleum - Summary 65
Talisman Energy - Summary 66
Gazprom - Summary... 66
Others - Summary . 67
Africa - Regional Appendix .. 68
Data : Oil Consumption, (000b/d) from 2009 to 2016 .... 68
Data : Oil Consumption, (000b/d) 2014-2021 .... 68
Data : Oil Production, (000b/d) from 2009 to 2016 ... 69
Data : Oil Production, (000b/d) 2014-2021... 70
Data : Refining Capacity, (000b/d) from 2009 to 2016 ... 70
Data : Refining Capacity, (000b/d) 2014-2021 ... 71
Data : Gas Consumption, (bcm) from 2009 to 2016 .. 71
Data : Gas Consumption, (bcm) 2014-2021 .. 72
Data : Gas Production, (bcm) from 2009 to 2016 . 73
Data : Gas Production, (bcm) 2014-2021 . 73
LNG Net Exports, bcm from 2009 to 2016 .. 74
LNG Net Exports, bcm 2014-2021 .. 74
Methodology And Risks To Projections .... 75
Glossary Of Terms .. 76
Oil And Gas Risk/Reward Ratings Methodology ... 77
Ratings Overview ... 77
Data : Bmi’s Oil and Gas Business Environment Ratings - Structure . 78
Indicators 78
Data : Bmi’s Oil and Gas Upstream Ratings - Methodology .... 78
Data : Bmi’s Oil and Gas Business Environment Downstream Ratings - Methodology .... 79
BMI Methodology .... 81
How We Generate Our Market Projections .... 81
Energy Market . 81
Cross checks 82
Sources.... 82

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