Algeria's new discoveries may double gas output, says minister

Lin Noueihed
(Blank Headline Received)
A worker adjusts a pipe at the Zarzaitine gas field in In Amenas, 1,600 km (994 miles) southeast of Algiers January 22, 2013. REUTERS/Louafi Larbi

By Lin Noueihed

LONDON (Reuters) - Algeria expects to double its gas production in the next seven to 10 years after making a number of significant oil and gas finds in maturing and new fields, Energy and Mines Minister Youcef Yusfi said on Tuesday.

OPEC oil producer Algeria is a major supplier of gas to nearby Europe, although strict licensing terms have seen major investments freeze up in recent years and oil and gas output begin to decline.

But Yusfi said new discoveries and improved efficiencies meant Algeria was pumping crude oil at a rate of 1.2 million barrels a day and expected to increase its gas production despite falling demand from its traditional European customers.

"For the medium term, I think, our production will more than double from the existing one," Yusfi told reporters on the sidelines of the Oil and Money conference in London.

Algeria had found some 1 billion barrels of oil under the major Hassi R'mel field and made oil and gas finds under the maturing Berkine and Illiza basins in the southeast, he said.

The North African country had also made headway in evaluating the potential for unconventional technologies that have prompted a shale boom in the United States, with studies finding 300-500 trillion cubic feet of tight oil and more than 700 tcf of shale gas in Algeria, he said.

"Concerning the new regions in the south west, for the first time, this is a region that is not explored at all, two weeks ago we made a discovery of gas and oil and we are in the process of evaluation," Yusfi said.


With maturing fields and less investment, Algeria's gas for export has dropped to little more than 50 billion cubic metres from around 70 bcm in less than 10 years, U.S. Energy Information Administration data shows.

Its output of crude oil has fallen from a peak of 1.4 million bpd in 2008 to 1.2 million now. Yusfi said it hoped to continue producing at that level by optimising existing production though its Hassi Mesaoud field has peaked.

Sparse interest in the last upstream licensing round spurred the government to pass an amended hydrocarbon law in January but the changes may not be sufficient to counter the prospect of greater security costs after the attack on the In Amenas gas plant in the deep south killed 40 oil workers early this year.

Analysts say the law does not go far enough to encourage new investment or open up opportunities for shale gas production.

Yusfi said his country was working on the next round of exploration licences but did not give details about the blocks or the terms that would be on offer, though he did say that largely unexplored offshore areas could be included.

"We are concentrating on onshore... Also we are thinking of offshore. We're going to have our first drilling offshore during next year maybe," he said.

But that investment comes amid falling demand from Italy and tough competition for Asian markets from other gas producers.

"The economic crisis in Europe means some of our partners have had some difficulties..." he said.

"That is why for some countries, we have accepted reduced exports to these countries for a small period of time but in general didn't reduce our production. And we are exporting to some new markets, mainly in Asia."