Algeria Oil and Gas Report Q3 2012
Business Monitor International, July 2012, Pages: 93
The Algeria Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on algeria's oil and gas industry.
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 industry – 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 segment.
The key trends and developments in Algeria’s oil & gas sector 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 sector. 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 forecasts 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 forecast to rise steadily at an average annual growth rate of 3.35% between 2011 and 2021. This is partly in line with the expected GDP growth rate, although we expect energy intensity to increase towards the end of our 10-year forecast period. We anticipate that crude consumption will rise from an estimated 402,000b/d in 2011 to 559,000b/d by 2021.
- BMI forecasts 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 forecasts average annual growth of 5.36% from 2011 to 2015, with consumption forecast 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 forecast to peak at 12.50bn barrels (bbl) in 2012-2013, 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 forecast 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 markets is an opportunity on which the country could capitalise. We forecast OPEC basket oil prices to increase from an estimated US$107.52 per barrel (bbl) in 2011 to US$111.47/bbl in 2012, thus creating upside risk to the Algerian macroeconomic outlook.
BMI Industry View 5
SWOT Analysis 7
Algeria Oil And Gas Swot 7
Global Energy Market Outlook 8
Table: Oil Production Forecasts, 2010-2016 (‘000 b/d) 8
Table: Oil Consumption Forecast, 2010-2016 (‘000 b/d) 14
Regional Energy Market Outlook 15
Algeria Energy Market Overview 19
Table: Algeria – Upstream Projects Database 21
Industry Forecast Scenario 22
Oil And Gas Reserves 22
Table: Algeria Oil & Gas – Historical Data And Forecasts, 2009-2016 24
Table: Algeria Oil & Gas – Long-Term Forecasts, 2014-2021 25
Oil Supply and Demand 26
Gas Supply And Demand 26
Export Revenues 27
Key Risks To our Forecast Scenario 28
Oil And Gas Infrastructure 30
LNG 30
Oil Refineries 30
Table: Refineries In Algeria 32
Gas Pipelines 32
Regional and Country Risk/Reward Ratings 36
Table: Upstream Risk / Reward Ratings 39
Table: 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
Competitive Landscape 42
Table: Key Players In The Algerian Energy Sector 44
Overview/State Role 45
Licensing and Regulation 45
Government Policy 46
Licensing Rounds 46
International Energy Relations 48
Table: Key Upstream Players 49
Table: Key Downstream Players 50
Company Monitor 51
Enterprise Nationale Sonatrach 51
Anadarko Algeria 54
Eni Algeria Production 56
Algeria Oil & Gas Report Q3 2012
© Business Monitor International Ltd
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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
Table: Oil Consumption Historical Data & Forecasts, 2009-2016 (‘000b/d) 76
Table: Oil Consumption Long-Term Forecasts, 2014-2021 (‘000b/d) 77
Table: Oil Production Historical Data & Forecasts, 2009-2016 (‘000b/d) 77
Table: Oil Production Long-Term Forecasts, 2014-2021 (‘000b/d) 78
Table: Refining Capacity Historical Data & Forecasts, 2009-2016 (’000b/d) 79
Table: Refining Capacity Long-Term Forecasts, 2014-2021 (‘000b/d) 80
Table: Gas Consumption Historical Data & Forecasts, 2009-2016 (bcm) 80
Table: Gas Consumption Long-Term Forecasts, 2014-2021 (bcm) 81
Table: Gas Production Historical Data & Forecasts, 2009-2016 (bcm) 82
Table: Gas Production Long-Term Forecasts, 2014-2021 (bcm) 82
LNG Net Exports Historical Data & Forecasts, 2009-2016 (bcm) 83
LNG Net Exports Long-Term Forecasts, 2014-2021 (bcm) 83
Methodology And Risks To Forecasts 84
Oil And Gas Risk/Reward Ratings Methodology 85
Ratings Overview 85
Table: Bmi’s Oil & Gas Business Environment Ratings – Structure 86
Indicators 86
Table: Bmi’s Oil & Gas Upstream Ratings – Methodology 86
Table: Bmi’s Oil & Gas Business Environment Downstream Ratings – Methodology 87
Glossary Of Terms 89
Table: Glossary Of Terms 89
BMI Methodology 91
How We Generate Our Industry Forecasts 91
Energy Industry 91
Cross checks 92
Sources 92
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