Algeria wants to increase its production and exports of oil and gas. This requires better knowledge of reserves and the implementation of new production models.
A vast operation in this direction has just been initiated by Sonatrach, confirming the latter’s tendency not to turn away from fossil fuels.
The launch of the “ 3D Seismic ” project took place on Tuesday, September 5 at the Hassi Messaoud and Hassi Bahamou fields, near Timimoun, in the presence of the group’s management, headed by CEO Toufik Hakkar. The operation will cover an area of 500,000 km².
This is a ” high intensity and high resolution ” technique that makes it possible to better understand the deposits and to strengthen production models through the appropriate use of digital technologies, according to the explanations provided by the Algerian gas giant.
The operation, entrusted to Sonatrach’s subsidiary, Enageo, aims to ” increase the country’s hydrocarbon reserves and the level of production “, and to ” preserve Sonatrach’s position as an important supplier and major player on the global hydrocarbon markets,” according to the press release from the Algerian public company.
The use of new technologies will make it possible to “ increase the recovery factors of reserves to a level greater than 30% ”, underlines Sonatrach.
Despite a certain interest in renewable energies, Sonatrach confirms its orientation towards strengthening its oil and gas production capacities.
Since the outbreak of war in Ukraine in February 2022, Algeria has been in great demand to increase its gas deliveries to Europe, which is seeking to reduce its dependence on Russian hydrocarbons. Increasing production, hampered for several years by a lack of foreign investment, was an objective prior to this request.
At the end of 2019, a new law on hydrocarbons, supposed to boost foreign investment in the sector, was adopted urgently. On February 24, 2022, the President of the Republic, Abdelmadjid Tebboune, announced the investment of $39 billion over four years in the hydrocarbon sector.
In December 2022, the Head of State expressed his wish to see Algerian gas production double to reserve 100,000 m3 for export. Currently, Algeria produces 100,000 m3 of gas and exports half and the rest is intended for local consumption.
Algeria invests more in oil and gas
In recent years, the trend among large global firms has been to redirect part of their investments towards renewable energies. This is one of the reasons put forward to explain the weakness of investments in Algerian oil and gas. However, Algeria and Sonatrach firmly believe in the future of these fossil fuels.
Last July, at the presentation of the group’s balance sheet, Toufik Hakkar made unequivocal statements on this subject. He estimated that demand will be increasingly strong in the years to come for oil and gas and that it is therefore important to invest more in these energies.
The world still particularly needs gas, a clean energy, according to the CEO of Sonatrach who cited many of his colleagues from major global firms and the conclusions of international firms.
Sonatrach does not completely neglect the energy transition. On the same occasion, Hakkar reported investments in renewable energies, particularly photovoltaics. The second gas pipeline (Galsi) which should connect Algeria to Italy will also transport green hydrogen and electricity, it was indicated when its relaunch was announced last January, on the occasion of the visit to Algeria of the President of the Italian Council, Giorgia Meloni.
However the main trend at Sonatrach remains the orientation of efforts towards the development of reserves and production capacities of oil and gas, the main source of foreign currency income for Algeria.
In 2022, contracts worth a total of $6 billion were signed with several international companies. The most important, worth 4 billion dollars, was concluded with ENI, Occidenta and Total Energies and aims to develop fields intended to increase the quantities of gas delivered to Italy. In 2023, contract announcements continued, including one for $800 million with Spain’s Repsol and Indonesia’s Pertamina.
The efforts made are followed by a constant increase in production and exports. During the first five months of 2023, Sonatrach’s production amounted to 68 million tonnes of oil equivalent (TOE), up 2% compared to the same period of 2022.
Exports reached 73 million TOE and revenues reached $21 billion. In 2022, production had also increased by 2% compared to 2021 (from 185.2 to 188.6 million TOE). Sonatrach had exported during this financial year for 60 billion dollars.
