ALGIERS: Algeria is preparing a new auction for foreign energy firms, an official said yesterday, after the North African country awarded four out of 31 oil and gas field blocks last month in the first attempt to lure investors since 2011.
Algerian officials described last month’s result as acceptable but analysts said the Opec member needed to do more to improve conditions and attract more foreign oil operators.
“We are preparing a new bidding round. It will be launched within weeks,” Sid Ali Beta, head of hydrocarbons agency ALNAFT which oversaw the bidding, told reporters at the signing of contracts with the winners of the September 30 auction.
He gave no details. One of the winners, Italy’s Enel, plans to invest $700m at its four oil and gas blocks in Algeria in the next 5-6 years, Marco Arcelli, the company’s executive vice president for upstream gas, said at the signing ceremony.
The Italian utility’s consortium with Dragon Oil won two new blocks, adding to two already existing ones. Beta said the first phase of operations at the four blocks will include drilling around 11 wells at an estimated cost of $150m.
He said around $270m will be invested in the second phase to drill 15 wells. Said Sahnoun, interim chief of state-owned energy firm Sonatrach, said he is looking forward to “profitable results” from the contracts.
“This is the beginning of a new adventure that I hope will be fruitful. This partnership is based on sharing of know-how and risks,” he said.
Spain’s Repsol in partnership with Royal Dutch Shell won the Boughezoul area in the north of the country, while Shell and Norway’s Statoil won the Timissit area in the east.
“It’s a challenge to start this project. We will begin a new phase. We will start working tomorrow,” Gabino Lalinde, Repsol’s head of affairs unit for Algeria, said.
Algeria supplies a fifth of Europe’s gas needs, but it relies on mature fields for most of its energy output and looks to foreign explorers to help develop new reserves and increase flagging production.
Foreign oil executives have in the past complained about Algeria’s tough contract terms, often difficult business environment and security worries, especially after a 2013 attack on the Amenas gas plant killed 39 foreign contractors.
Reuters
