In order to attract investments in the energy sector, Sonatrach, Algeria’s state oil and gas corporation, plans to offer shares in projects for development of at least 20 Algerian oil and gas fields to international companies via direct negotiations.
As stated by a Sonatrach official, the decision to change the investment promotion method (replacing tendering proceedings with direct negotiations) is connected with the poor results of two previously held international auctions.
In the opinion of the company's representative, the blocks in question are those located in the Ouargla, Adrar and Illizi provinces near the border with Libya. At the same time, under the current legislation, Algeria shall retain the controlling interest in the aforementioned projects.
According to media sources, the Algerian government is holding talks with EU representatives about organizing an international summit in the Republic's capital this May, where Algeria's investment potential shall be discussed. Participation in oil and gas projects is also being negotiated with several international companies such as the Italian Eni and the Chinese SINOPEC and CNPC.
Amid the decline in oil prices, Algeria is facing a dramatic reduction in national income, which relies mostly on energy resource exports and saw a reduction by over 40% in 2015. During almost a decade, the volume of oil and gas production in the country has also been decreasing. In 2015, the total volume of hydrocarbons produced in Algeria amounted to nearly 195 million tonnes of oil equivalent. By 2019, the country's government plans to reach a production volume of 224 million tonnes of oil equivalent.
Algeria is a leading natural gas producer and one of the top three oil producers in Africa.
As of 2014, the country’s proved liquid hydrocarbon reserves were estimated at 12.2 billion barrels of oil equivalent (1.7 billion tonnes) and almost 6 billion barrels (840 million tonnes) of technically recoverable shale oil. Algeria’s proved natural gas reserves are estimated at approximately 4.6 trillion cubic meters, and another 1.4 trillion cubic meters are considered as undiscovered. It is also known that there could be over 20 trillion cubic meters of recoverable shale gas resources. Algeria’s main hydrocarbon reserves are concentrated in the desert, i.e. central and eastern regions of the country.
Since 2009, Gazprom International (as the operator, with a 49% share) in cooperation with Sonatrach (with a 51% share) has been carrying out a project at the El Assel licence block of the Berkine oil and gas basin, located 150 km southeast of Hassi Messaoud, the oil capital of Algeria. Over the period of joint operation, the partners have discovered four oil and gas fields in the area.