Algeria Oil and Gas Downstream Market - Growth, Trends, and Forecasts (2020-2025)

The Algeria oil and gas downstream market is expected to grow at a CAGR of less than 2.33% during the forecast period of 2020-2025. Factors such as increasing demand for oil and natural gas and rising investment in refineries are expected to boost the demand for the Algeria oil and gas downstream market during the forecast period. However, decreasing production of oil and gas is expected to impede the growth in the market.

• Algeria has only a few refineries in the country, in 2019, and therefore it is pushing for rapid expansion in the refinery business to reduce its dependence on refined oil imports. Thereby increasing the refining capacity of the country.
• Sizeable natural gas discoveries have been made, in 2019, in southwestern Algeria that is expected to have a capacity to produce some 275 cubic meters of gas and approximately 300 liters of condensate per hour. This could become an opportunity for the new refineries that are expected to process the heavy crude oil.
• Increasing investment in the oil and gas downstream sector, through restoration, expansion and construction of refineries is expected to boost demand in the sector.

Key Market Trends

Refining Capacity to Witness Growth

• Algerian oil fields produce high quality, light crude oil with very low sulfur content. The quality of oil increases the demand for the oil as it does not require specific refinery to refine the oil.
• In Algeria, the capacity refineries had increased from 651 Thousand barrels daily (kb/d), in 2015, to 657 kb/d, in 2018. The refinery throughput grew 4.5% from 573 kb/d in 2017 to 598 kb/d in 2018. An increase in the throughput indicates the government's focus on reducing the imports of refined oil.
• South Korea’s Samsung Engineering and Spain’s Técnicas Reunidas joint venture won a USD 3.7 billion contract for the Sonatrach Hassi Messaoud (HMD) refinery project in Algeria. One hundred thousand barrels per day of refining capacity is expected from the refinery when fully completed.
• Production of gas in Algeria decreased by 0.7%, year on year, to 79.4 Million tonnes oil equivalent, in 2018 from 79.9 Million tonnes oil equivalent, in 2015. Consumption of natural gas increased in the country, by 9.9%, year on year, from 36.7 million tonnes oil equivalent, in 2018 from 33.4 million tonnes oil equivalent, in 2017. Increasing production increases the profits earned by the company
• Hence, refining capacity is expected to increase slightly in the forecast period due to increase in investment.

Increase in Investments to Drive the Market

• The rapid increase in the consumption of oil and gas in the country has prompted the government to invest more in the oil and gas sector, with substantial emphasis on the oil and gas downstream sector. The government-owned Sonatrach is the bearer for most of the activity in the country.
• Production of oil in the country decreased, by 2.0%, to 66.6 million tonnes, in 2018 from 65.3 million tonnes, in 2017. The consumption of oil in the country increased, by 1.2%, to 19.6 million tonnes, in 2018 from 19.4 Million tonnes, in 2017. Increasing consumption is expected to provide a boost to the market.
• The national oil company Sonatrach and Chinese group China Petroleum Engineering and Construction (CPECC) have signed a contract for the restoration of Sidi R’zine Refinery in Baraki, in 2018. The refinery is expected to increase its gas and oil production capacity from 737,000 tons to 1.18 million tons and the capacity of super gasoline is also expected to increase.
• Hence, Algeria oil and gas downstream market is expected to increase slightly due to increase in consumption of oil and gas and increase in investment in the sector.

Competitive Landscape

The Algeria oil and gas downstream market is consolidated. The major companies include Sonatrach SA, Total S.A., China National Petroleum Corporation, Tecnicas Reunidas S.A., and Samsung Engineering Co., Ltd.

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