CAPITAL: ALGIERS
MONETARY UNIT: DINAR
REFINING CAPACITY: 502,665 B/CD
OIL PRODUCTION: 800,000 B/D
OIL RESERVES: 9.2 BILLION BBL
GAS RESERVES: 159.7 TCF
Algeria moved ahead with restructuring of Sonatrach and the state utility Sonelgas in 2000.
The idea was for another government agency to assume responsibility for awarding exploration and production contracts, leaving Sonatrach free to concentrate on its own E&P operations in Algeria and abroad. Foreign firms would no longer be required to form joint ventures with Sonatrach when exploring in Algeria.
The changes would leave Sonatrach free to become a major international oil and gas company.
Sonatrach was to be divided into three different sectors: Sonatrach Exploration, Sonatrach Production, and Sonatrach Transport.
Sonatrach had already become more involved in overseas projects in 2000. The venues included India, Niger, Angola, Oman, Yemen, Peru, and the Gulf of Mexico.
OPEC News Agency reported late in the year that Sonatrach and Conoco Inc. agreed to cooperate in joint development projects in Algeria and abroad in refining, transportation, marketing, and power generation.
In eastern Niger, Sonatrach and a Canadian company were awarded a block near one being developed by ExxonMobil Corp. In case of a discovery, Sonatrach said, the firms would pool resources to build a pipeline to transport crude oil northwards to connect with an existing system in southeastern Algeria.
Some of the foreign projects would involve application of Sonatrach's considerable expertise in natural gas. The company was to strengthen ties with Gaz de France and enter the trading business.
Upstream developments
Algeria said that more than 20 international companies expressed interest in the blocks in its first licensing round and that even more were likely to bid. It put up four blocks in the Berkine basin, one in the In Salah region, and a further block in the Constantine area in the northeast.
Sonatrach said it wished to sharply reduce delays inherent in the concession negotiation process.
Anadarko Petroleum Corp. was producing 1 million bbl of oil every 14 days from its concessions in the Ghadames basin. Production was to rise to 1 million bbl every 3 days by yearend 2002.
Hassi Berkine South field, on line since May 1998, was making 70,000 b/d. The field's second stage development was to come on line in late 2001 at a further 75,000 b/d.
Hassi Berkine field started up in February 2000 at 75,000 b/d. Block 404 satellite fields were to start up in August 2002 at 75,000 b/d, and Ourhoud field was to start up in late 2002 at 230,000 b/d.
Burlington Resources Inc. and Talisman Energy Inc. submitted a development plan for MLN field in the Menzel Lejmat Block 405a in Algeria's Berkine basin.
The $150 million first phase was to yield an initial 16,000 b/d of oil by mid-2002 from the Triassic and underlying Devonian reservoirs. Phase I development was expected to cost about $150 million.
Further investment on the MLC, MLN-Phase 2, MLNW, and MLW field satellites was planned following installation of the central production facility, with production expected to increase to about 40,000 b/d by 2004 pending government approval.
BP looked toward producing first gas in 2003 from the In Salah project, a group of gas fields in central Algeria. The area's first discoveries date to 1956, but no field had been exploited because of remoteness.
Reserves were placed at 7.5 tcf in Devonian and Carboniferous reservoirs in Krechba, Teguentour, Reg, Garet el Befinat, Hassi Moumene, In Salah, and Gour Mahmoud fields. The Boutraa discovery was to be developed later. The project would deliver 9 bcm/year via a 48 in. pipeline to Hassi R'Mel.
Amerada Hess Corp. and Sonatrach formed the Sonahess joint venture to operate and rehabilitate El Gassi, El Agreb, and Zotti fields 60 miles southwest of Hassi Messaoud oil field. Combined remaining reserves were 300 million bbl. The fields through 2000 had produced more than 400 million bbl since the early 1960s.
Sonahess hoped to raise production to 45,000 b/d from 30,000 b/d by acquiring 3D seismic data, drilling 30 wells, and installing water injection and gas compression facilities.
A BP PLC group gauged 853 b/d of 40° gravity oil and 350 Mcfd of gas on a drillstem test of the upper 15 m of a 36-m TAGI sandstone at the Semhari East 1 well on the Hassi Bir Rekaiz concession in the northwestern Ghadames basin. ARCO, acquired by BP, had operated the block since 1992.
The new well was 15 km east of and appeared to have a common oil column of at least 70 m with Arco's 1996 Semhari 1 well, which flowed 1.153 b/d from Triassic and 620 b/d from Ordovician, one partner reported.
Broken Hill Pty. Co. Ltd. (BHP) signed a risk service contract to develop four natural gas and condensate reservoirs near Ohanet in the Illizi basin about 100 km west of the Libyan border. The deal required BHP and partners to invest about $1 billion.
BHP sold part of its interest to Woodside Petroleum Pty Ltd. Other partners were the Japan Ohanet Oil & Gas Co. Ltd. consortium and Petrofac Resources (Ohanet) LLC.
Production was to start in October 2003. Peak liquids production was to be 58,000 b/d. The fields were estimated to contain total proved and probable reserves of more than 3.4 tcf of pipeline-quality gas, 107 million bbl of condensate, and 116 million bbl of LPG.
Ohanet was to be the seventh wet gas field development in the area southeast of the Hassi R'Mel complex.
Sonatrach said 20 foreign oil and companies produced 25% of Algeria's hydrocarbon production. It said the figure would eventually rise above 50%.
Transportation
BP PLC, ENI, Spain's Endesa, Gaz de France, and TotalFinaElf were to participate with Sonatrach and Cepsa in a feasibility study for the third Algeria-Europe gas pipeline.
The proposed 450-km pipeline would link the port of Beni Saf in northwestern Algeria with Almeira, in southern Spain. Sonatrach and Cepsa said the project was technically feasible and economically attractive because of projected increases in European gas consumption.
Sonatrach said that, during the 1990s, the region saw gas demand rise from 135 bcm to 270 bcm.
Algeria was already linked to Europe by two other gas pipelines. The first line, on stream since 1966, provided Morocco, Spain, and Portugal with about 10 bcm/year of gas. The second, in operation since 1983, supplied about 20 bcm/year of gas to Italy via Tunisia.
Other agreements between Sonatrach and Gaz de France were designed to reinforce the existing partnership and cope with the uncertain gas market in Europe.
The companies also agreed to extend to 2013 one of four long-term contracts involving 2 bcm/year or 20% of the total 10 bcm/year contracted. The original contract was scheduled to expire in 2002; the three other contracts were to expire in 2013.
Sonatrach expressed interest in supplying gas to eastern Europe, possibly through cooperation with Germany's Ruhrgas.
Other energy
Sonelgaz called for private investors—local and foreign—to invest in the country's power production, over which it held a monopoly.
The utility said the potential investments involved construction, exploitation, and maintenance of a large number of power plants, amounting to 2,000 Mw. Interested operators would be assured of marketing opportunities in electricity production, both in Algeria and abroad, in association with Sonelgaz and its partners.
The move was within the framework of investment and promotion of activities tied to the partial privatization of Sonelgaz and to promote the country's new strategy in power generation.
Early in the year Sonelgaz and Sonatrach set up a joint venture to market electricity abroad.
Sonatrach also was to take shares in new power stations, particularly those equipped for cogeneration, which were to be built in Europe.
