Sonatrach Dampens Algerian Reform Hopes

The process of revising Algeria's hydrocarbons law is "very complex, given the large number of those involved," said state producer Sonatrach's CEO Abdelmoumen Ould Kaddour June 4.

Four consultancy firms specialised in their particular aspects of petroleum, ranging from legal to marketing, have been hired, the CEO said, according to state news agency APS. "We hope to be able to advance, and as soon as possible so that an attractive new law is drafted," he said, without giving any indication of how long that process – begun no later than autumn 2017 – might take.

Algeria has struggled to attract new investors. But it has persuaded some existing ones – such as BP/Equinor and Total/Cepsa – to remain and expand production by improving their original contractual terms.

Ould Kaddour spoke at a press briefing following the June 4 signing in Algiers of a new engineering, procurement and construction agreement between Sonatrach and Indonesian state Pertamina and partner Repsol plus Italian contractor Bonatti to increase gas re-injection capacities at the Menzel Ledjmet oil field. Pertamina and Repsol have been present upstream in Algeria for several years.

Some reports have attributed delays in the reform process to the run-up to next year's presidential elections, in which the veteran incumbent Abdelaziz Bouteflika may be asked to run despite his poor health.

Ould Kaddour also said that, under Sonatrach's new '2030 strategy', the company is trying to do all it can to optimise shale gas production. Algeria has significant shale gas reserves but has yet to produce any, and faces opposition from some communities who fear it will use up or pollute scarce water resources. The CEO went to Houston in January 2018 to drum up interest in Algeria's shale opportunities.