Energy

Algeria’s Sonatrach plans to invest over $30bn in hydrocarbons

By Pramod Kumar

January 9, 2023, 10:56 AM

Revenues will be deposited in an account managed by Kurdistan’s ministry of natural resources and supervised by Baghdad

Algeria’s state-owned Sonatrach has revealed plans to invest over $30 billion in exploring and producing hydrocarbons, with a particular focus on natural gas to supply to the global market.

“As part of Sonatrach’s five-year investment plan more than $30 billion will be allocated to exploration and production,” said CEO Toufik Hakkar, according to Algeria Press Service (APS).

He added the group was preparing a portfolio of future projects for the short and medium term for the natural gas in particular.

“These investments will help improve energy security and reliably supply the global market,” said Hakkar.

Sonatrach also plans to invest more than $7 billion in refining, petrochemical and gas liquefaction projects, projects that will promote the creation of value added in Algeria and will strengthen export potential.

Nearly $1 billion will be devoted to projects aimed at the company’s contribution to the energy transition.

In July last year Sonatrach announced a sizeable new gas discovery at its biggest gas field that it said could add around 3.65 billion cubic metres (bcm) to annual production starting from November, Reuters reported.

Algeria, which is Africa’s number one gas producer and number three oil producer, adopted a new hydrocarbons law in January 2020 that offers markedly better terms to IOCs.

A previous law enacted in 2005 levied high taxes and duties on exploration and production, while contract-sharing agreements with Sonatrach were ambiguous, a US government report states.

Consequently, the number of new contracts Algeria signed with foreign energy companies had dwindled. Now though, Algeria has awarded several contracts under the new law.

Algeria’s total gas exports hit a record high of 56 bcm last year, according to a report in December by Ennahar TV, citing an official from the energy ministry.

In July last year, Reuters reported that Sonatrach will provide Italy with an additional four bcm of gas in 2022, on top of the 21 bcm previously agreed, as Europe battled an energy crisis in the wake of the Ukraine war.