EU Energy Firms in Algiers for Talks
A senior European Commission official is in Algiers May 23-24 to open the first EU-Algeria Business Forum dedicated to energy alongside the country’s energy minister Saleh Khebri.
The forum will gather more than 100 European and Algerian energy companies and industrial and financial associations to discuss ways to facilitate much-needed investment in Algerian gas exploration and production, renewable energy, and energy efficiency, said the commission May 23.
It is a fruit of the EU-Algeria Political Dialogue on Energy launched in May 2015 by EU energy and climate change commissioner Miguel Arias Canete. He is the senior EC official now in Algiers.
Commissioner Arias Cañete - Source: European Commission
"This first-ever business forum is an important first step in opening up new possibilities for European and Algerian companies to create constructive business partnerships and transform investment plans into reality. At this event, we will discuss ways to remove regulatory barriers to investment in the Algerian energy sector with our Algerian partners," said Arias Canete who comes from Spain – a country reliant for about half its gas on Algeria.
The commissioner said the EU would "use all its foreign policy instruments to establish strategic energy partnerships with increasingly important producing and transit countries or regions including Algeria” in line with the EU’s Energy Union policy and its revitalised EU energy/climate diplomacy.
In March Reuters, citing an unnamed Sonatrach source, said the government would switch to offering foreign firms direct negotiations for licence stakes, rather than focusing on licensing rounds, adding that Sonatrach was already in such talks with Eni and several other firms. In April Eni CEO Claudio Descalzi met Khebri and Sonatrach CEO Amine Mazouzi in Algiers, but direct talks were not publicly mentioned afterwards.
Algerian gas production has stagnated, with more consumed by the domestic market, and this – together with the fall in oil and gas prices -- has accelerated the decline in export revenues. As one illustration of this, gross imports by pipe from Algeria to Italy in 2012 were 20.82bn m3 making Italy Sonatrach’s biggest gas export market, but by 2014 these slumped to 6.77bn m3 and grew only slightly in 2015 to 7.24bn m3 in 2015, according to Italian gas grid operator Snam. Only a fraction of that decline was offset by Algerian LNG exports to places like Asia and South America.
A month ago, Algeria and its state oil and gas producer Sonatrach and state energy distributor Sonelgaz signaled they are open to international financing, as the country suffers a halving in oil and gas export revenues, and hosted a visit by the African Development Bank.
Khebri on April 14 told Algeria's parliament that national oil and gas production would steadily rise to 4.82mn boe/d in 2020, thanks to a forecast "$73.5bn of investment in 2016-20". But there are doubts whether such a massive investment can be mobilised, as upstream firms have shied away from Algeria's licensing rounds in recent years.
However some 500 firms from Algeria and the UK gathered in Algiers for a second Algeria-UK Business Forum on May 22-23, opened by industry and mines minister Abdessalam Bouchouareb, according to state news agency APS. Khebri, also present, called for investment in Algeria’s renewables sector. Finance minister Abderrahmane Benkhalfa told the same forum that oil and gas’s share of GDP had fallen to 33%, from 50% a few years ago; one of his officials said that UK firms had invested $1bn in Algeria’s petroleum sector over the past five years.
Mark Smedley