Page 5 - AfrOil Week 16 2021

AfrOil COMMENTARY AfrOil

Ain Tsila contains about 566.4bn cubic metres leadership had decided, after consulting with
of gas in place (GIP) and may generate as much legal advisors, “to pursue all legal recourse to
as $50bn worth of budget revenue in the first 20 compensate it for the loss of its interest, which
years after it begins production. As such, offi- Sunny Hill Energy values well in excess of $1bn.”
cials in Algiers have been eager to see the project Moskov went further, saying: “We have
come to fruition, as it may help compensate for strong legal advice that this action by Sonatrach
the declining performance of the country’s oil is without legal merit. We have fully met our
and gas sector. contractual obligations, including providing our
According to Toufik Hakkar, the CEO of full share of resources required for the opera-
Sonatrach, the postponement of development tion of the joint venture with Sonatrach. We will
work has been a sticking point in relations with robustly pursue our claims, taking all actions to
Sunny Hill and Petroceltic. “We tried to do protect our interests. This will include making a
the maximum, [but we] can’t tolerate delays in claim for compensation from Sonatrach and/or
projects. It is a strategic project for Algeria and the state of Algeria well in excess of $1bn.”
Sonatrach,” he told Bloomberg in a telephone Sonatrach does
interview. First gas due in 2022
Interestingly enough, Hakkar is not the only Sonatrach has indicated that it does not expect not expect
party to remark on the slow pace of work at Ain the seizure of Petroceltic’s stake to affect its cur-
Tsila. In February 2020, Angelo Moskov, the rent plans for developing Ain Tsila. the seizure of
chairman of Sunny Hill, commented: “Ain Tsila Those plans are spelled out in the engineer-
has huge potential, and its development will ing, procurement and construction (EPC) Petroceltic’s
bring major benefits to Algeria and its people. It contract that Groupement Isarene signed stake to affect
is a project that has been delayed for too long. All with UK-based Petrofac in 2019. The contract
of us have a responsibility to ensure that we work provides for the building of a plant capable of plans for
together to deliver on time and within budget.” processing wet gas into dry gas, LPG and con-
densate for domestic consumption and export developing the
Legal action by November 2022. It is valued at around $1bn
For its part, Sunny Hill has protested over and is slated to be carried out over a period of Ain Tsila field
Sonatrach’s termination of its subsidiary’s 42 months.
minority stake in Groupement Isarene. It com- Petrofac began construction work on the
plained the NOC had taken this action without plant at Ain Tsila in June 2019. When finished,
offering recompense, even though Petroceltic the facility will be able to process up to 11.89
has already invested hundreds of millions of US mcm per day of wet gas.
dollars in the gas field. Until recently, equity in Ain Tsila was split
Moskov described Sonatrach’s seizure of Pet- 56.625% to Sonatrach, 38.5% to Petroceltic and
roceltic’s stake as “aggressive and irrational,” as 18.375% to Italy’s Enel. (The Italian company
well as unlawful. joined the project in 2011 under a farm-in deal
“Their attempted expropriation of our inter- with Petroceltic.)
est without compensation is the type of action The field is the only operating asset of Sunny
expected in Hugo Chavez’s Venezuela and not Hill, which is itself owned by London-based
from a country like Algeria that proclaims to Worldview Capital Management. The latter
respect the rule of law,” he commented. “This company is owned by Moskov, a Bulgarian
unwarranted action will be highly damaging to businessman who served as a proprietary trader
the attempts by Algeria to attract foreign invest- at Deutsche Bank until 2014. (Moskov is no
ment into the country.” stranger to controversy; Sunny Hill’s takeover of
The company also indicated that it intended Irish-based Petroceltic in 2015-2016 was a con-
to take legal action against Sonatrach. It said its tentious affair.). ™

sila in June 2019 (Photo: P
etrofac)
etrofac began building a gas processing plant at Ain T
Petrofac began building a gas processing plant at Ain Tsila in June 2019 (Photo: Petrofac)
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Week 16 21•April•2021 www. NEWSBASE .com P5