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Algeria does not benefit from the rise in LNG prices

Algeria is not benefiting from the rise in LNG (liquefied natural gas) prices on the spot market, due to the shutdown of the port of Arzew, which houses a large natural gas liquefaction complex.

According to the US media outlet Bloomberg, the oil and gas port of Arzew 30 km east of Oran, home to the liquefied natural gas (LNG) production complex, has been shut down for about ten days due to the bad weather.

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Export problems
The shutdown comes as Algeria has experienced distinct export problems since the end of the summer that have prevented it from taking advantage of rising gas prices in the spot market, according to Bloomberg.

At least two LNG transport vessels are waiting near the port of Arzew. One of them, Lalla Fatma Nโ€™Soumer, anchored near the port since December 1, said the same source.

In addition, the GL3Z LNG plant in Arzew has not exported any cargo since mid-August. Total exports from Arzew fell in November compared to the previous month. At the same time, the national oil company Sonatrach has increased flows via a gas pipeline to southern Europe.

As a sign of the delicate situation in which the company finds itself, Sonatrach has not offered any cargo of LNG on the spot market in order to take advantage of the rise in prices and the increase in winter demand. This state of affairs suggests that Sonatrach has limited volumes to sell, Bloomberg says. Contacted by the American media, Sonatrach declined to comment.

The shutdown of the port of Arzew adds to a series of incidents at Sonatrach’s oil and gas installations in recent months. Since the end of October, the El Merk field in the Berkine basin, the second largest hydrocarbon field in Algeria, has been shut down after a serious incident which devastated part of its facilities. No date has been put forward for the resumption of activity. The complex will remain closed until the damage caused by the flames is repaired. “I attach great importance to the issue of the security of the facilities. We must not rush either for its resumption with a view to resuming production “declared the Minister of Energy Abdelmadjid Attar, during an on-site visit, specifying that the production of this site will be” compensated “by other fields of exploitation.

10 billion dollars in shortfall
At the beginning of September, oil leaks on an oil pipeline passing through the wilaya of El Oued had started a fire, and on October 15, the Ministry of Energy reported oil leaks on this same pipeline at the level of the municipality. from Ghamra, 20 km from the town of Touggourt, in south-eastern Algeria.

These incidents took place against a backdrop of falling oil prices, due to the coronavirus pandemic that plagued the world economy. On Thursday, the barrel of Brent, the benchmark for Algerian oil, crossed the $ 50 mark, for the first time since May 6, after reaching a historically low level of less than $ 20 at the end of April.

The Ministry of Energy had estimated Sonatrach’s shortfall at $ 10 billion until the end of September 2020 compared to the same period in 2019 because of the coronavirus pandemic, with a 41% drop in its figure export business.

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