Page 10 - DMEA Week 50

DMEA PoliCy DMEA
Algeria’s new president seen aiming for more oil and gas investment
afriCa
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 coun- try’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 buy- ers have suffered in recent years. Just since the beginning 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 pipeline deliv- eries 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 companies (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 process of establishing co-operation with Sonatrach, Algeria’s nOC, and it has approved rules that allow foreign oper- ators to acquire majority shares in projects that do not involve so-called “strategic sector” con- siderations. Additionally, it has drawn up a new hydrocarbon 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.
Moreover, he may also focus on trying to bring outside investors into Algeria’s expand- ing shale gas sector. The north African state has estimated its shale gas reserves, which are mostly untapped, at around 277tn cubic metres.™
P10
w w w . N E W S B A S E . c o m Week 50 19•December•2019