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Algeria’s new president aims for more oil and gas investment
ALGERIA
ALGERIA’S government is likely to continue seeking foreign investment for oil and gas pro- jects following the election of Abdelmadjid Teb- boune as president of Algeria.
Tebboune, who served briefly as the country’s prime minister in 2017, was declared the winner of the presidential race on December 13.
His predecessor, Abdelaziz Bouteflika, stepped down from office earlier this year in response to wide-ranging street demonstrations by critics of the government.
The president-elect faces a tough uphill climb, as Algeria’s finances are strained. The country depends on oil and gas exports for about 95% of total state revenues, but sales to foreign buyers have suffered in recent years. Just since the begin- ning of 2019, export volumes have dropped by 12.5%. These declines stem partly from the oil price crash that began in mid-2014 and partly from a decline in European demand for pipe- line deliveries of natural gas. Algeria – and, by extension, its new president – has few options for restoring its income stream, so its best bet is to cultivate new deals with international oil com- panies (IOCs).
Meanwhile, the caretaker regime that took control following Bouteflika’s departure has approved new plans to smooth IOCs’ path toward investment. It has streamlined the pro- cess of establishing co-operation with Sonatrach, Algeria’s NOC, and it has approved rules that allow foreign operators to acquire majority shares in projects that do not involve so-called “strategic sector” considerations.
Additionally, it has drawn up a new hydro- carbon law.
Tebboune may have some difficulty taking advantage of these reforms. He is widely believed by Hirak, the opposition movement that has led many of this year’s protests, to have unacceptably close ties to Ahmed Gaid Salah and the other military officials that assumed control after Bouteflika quit.
As a result, if he strikes any new agreements that are widely seen as too favourable to IOCs, he is likely to be criticised harshly. At the same time, he will also have the task of reassuring potential investors that the country is now stable enough to justify significant outlays on exploration and development.™
GAS GENERATION
Nigeria LNG signs Train 7 deal
NIGERIA
NIGERIA LNG (NLNG) has signed a sale and purchase agreement (SPA) with Vitol, the inter- national commodities trading giant.
Vitol said in a statement last week that the deal covered remarketed volumes of LNG from NLNG’s first, second and third production trains. The SPA provides for Nigeria LNG to sup- ply 500,000 tonnes per year (tpy) of LNG on a delivered ex-ship basis over a period of 10 years, it explained. Shipments will begin in October 2021, it added.
As of press time, Vitol had not commented on the value of the deal. It did say, though, that the SPA would help Nigeria LNG whilst also reducing global CO2 emissions. “The agreement underscores NLNG’s drive ... to deliver LNG on a global scale in a low-carbon world where gas/ LNG will continue to be the preferred comple- mentary energy source alongside renewables,” it said.
Reuters, meanwhile, noted that the agree- ment would also help NLNG find a buyer for production from Trains 1, 2 and 3. Several of the supply contracts covering LNG from these trains
– including documents signed with Botas (Tur- key), Total (France), Naturgy (Spain) and Galp Energia (Portugal) – are due to expire next year or in 2021, it said. These deals call for NLNG to deliver 2.67mn tpy.
In related news, NLNG also said last week that it had signed agreements with three joint ventures on the procurement of natural gas supplies for the seventh production train of its gas liquefaction plant on Bonny Island. It iden- tified the ventures as Eni’s Nigerian Agip Oil Co. (NAOC), Shell Petroleum Development Co. (SPDC) and Total E&P Nigeria (TEPNG) The signing of these agreements will help NLNG meet all the conditions for making a final invest- ment decision (FID) in favour of building Train 7 at its gas liquefaction plant on Bonny Island.
Mele Kyari, the head of Nigerian National Petroleum Corp. (NNPC), stressed this point, saying: “NLNG Train 7 is of utmost significance to the country. Delivery [of] gas to Train 7 is key. Gas supply is one of the critical conditions to be delivered, and we can’t build the plant until we have confirmed gas supply.”™
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w w w . N E W S B A S E . c o m Week 50 19•December•2019