Algeria Oil & Gas Profile - Embassy of Canada to Algeria

April 2021

1. Overview

Algeria, a country of 44 million, is the largest and one of the wealthiest countries in Africa. It remains politically stable. The Algerian economy is heavily reliant on hydrocarbon revenues, and the sector is the backbone of the Algerian economy, accounting for roughly 60% of budget revenues, nearly 30% of GDP, and over 97% of export earnings. 

Algeria is the 18th largest oil producer in the world and the third largest in Africa. It is an important gas producer and a key supplier to Europe. Algeria is the 10th largest gas producer in the world. Most of gas volume is exported through cross-border gas pipelines to Europe. Two southern European countries (Italy and Spain) accounted for two-thirds of these exports.

Algeria is a member of the Organization of the Petroleum Exporting Countries (OPEC), and the Gas Exporting Countries Forum (GECF). 

About two-thirds of Algerian territory remains unexplored or largely underexplored. Most of these areas are in the north, the deep south and offshore.

2. Total aggregate

(Data from National Agency for Hydrocarbon Resources Valorization, ALNAFT)

2.1. Production:

Oil 1.1 Million barrels / day
Gas +124 Billion Cubic Meters / year)

2.2. Reserves:

Oil 20 Billion Barrels
Gas 6,100 Billion Cubic Meters

2.3. Unconventional Resources (in place):

3. Onshore

Most proved oil reserves are in the country’s oldest and largest oil field, Hassi Messaoud, in the eastern part of the country. Hassi Messaoud is estimated to hold 3.9 billion barrels (Bbls) of proved and probable recoverable reserves, followed by the Hassi R’Mel Field (3.7 Bbls) and the Ourhoud Field (1.9 Bbls). 

4. Offshore

Algeria has more than 1,600 km of coastline on the Mediterranean Sea where oil and gas offshore basins cover an area of 93,500 sq km. According to the National Oil Company, Sonatrach, a first seismic survey revealed promising results. The overall area of the coastal strip to be opened for exploration is estimated at 5,000 sq km.

5. Hydrocarbon infrastructure

• 21 oil pipelines with a length of 10,000 km
• 18 gas pipelines with a length of 11,000 km
• 3 international pipelines (57 BCM/year)
• Liquefaction : 56 MM m3 /year (25,2 MM Tons/year)
• 37 industrial centers (123 Processing facilities)
• 12 docked loading stations and 5 offshore loading stations of oil (2 in Arzew, 2 in Skikda and one in Bejaia)
• 5 oil refineries with a total refining capacity of 530,000 barrels per day

6. Legislation

The government is keen to relaunch international investments. Among the measures and efforts undertaken recently in this respect is the review of the country’s oil and gas legislation. In December 2019, Algeria published its new hydrocarbons law allowing shale resources development and providing for tax incentives and flexible commercial terms.

The new law maintains the 51-49% investment measure that gives majority stockholding to Sonatrach. It also reduces the tax burden by more than 20%, bringing it from 85% to 60-65%. It offers three types of contracts in exploration and production activities: a production sharing contract (PSC), a participation contract and a service contract.

The 51/49% investment rule will be applied to all extractive oil resources investment projects as confirmed by the government in the official Gazette of April 22nd, 2021.

7. Procurement

Government institutions and state-owned companies including Sonatrach buy foreign-made goods and services by way of open competitive or restricted tenders. All energy and energy-related tenders are available on Baosem (www.baosem.com/en/). This requires a subscription.

8. Opportunities

Sonatrach will invest USD 40 billion, 51% of it in the local dinar currency, over the next five year with a focus on:

• Exploration & Production (E&P): Enhanced Oil Recovery (EOR)
• Oil services
• Drilling technologies
• Refining & Petrochemicals
• Clean technologies: soil remediation
• Oil and Gas digital technologies

9. International competition

Many IOCs operate in Algeria including BP, ENI, Equinor, Total, Repsol, CEPSA, Enel, Neptune Energy and Petroceltic.

Many foreign oil services, EPC, drilling and equipment companies operate in Algeria: Schlumberger, Halliburton, Weatherford, Baker Hughes, KCA Deutag, Nabors, FMC Technologies, JGC, Petrofac, SAIPEM, etc. Most of these companies have presence in Algeria (offices).

10. Keep in mind

Algeria is not a market for quick sales. Direct sales possible but local presence is recommended - Local agent is recommended to help navigate through bureaucracy and stay close to clients. Investing time and effort in building relationships and understanding the country’s tendering system is key to the success of Canadian companies. Frequent visits to the market and face-to-face meetings can make a real difference for the success of Canadian companies.

11. Key players

• The Ministry of Energy and Mines: It oversees all activities related to the oil and gas industry and electricity in Algeria.
• The Algerian Hydrocarbon Regulatory Authority, ARH: It ensures that all Oil & Gas activities and equipment complies with ARH technical and environmental requirements. It regulates hydrocarbon pipeline transportation. It controls and regulates hydrocarbon products prices on the local market.
• The National Agency for Hydrocarbon Resources Valorization, ALNAFT: it is an independent government agency responsible for the promotion of hydrocarbon upstream investments, delivery of prospection authorizations, launch of exploration and exploitation bid rounds, allocation of research and exploitation perimeters, conclusion of research and exploitation contracts, monitoring and control of the signed contracts, approval of field development plans and hydrocarbon tax collection.
• The National Oil Company is Sonatrach: It is the largest company in Africa. Sonatrach is an integrated oil and gas company that operates in four main fields: Upstream, Downstream, Pipeline Transportation and Marketing. Sonatrach owns roughly 80%of total hydrocarbon production in Algeria, while International Oil Companies (IOCs) account for the remaining 20%.

12. Key energy events in Algeria

• North Africa Petroleum Exhibition & Conference (NAPEC): It is an annual event gathering all national and international key energy stakeholders operating in Algeria. It is the largest energy event in North Africa

Canadian Embassy, Algeria
Nasreddine Gouami
Trade Commissioner
Email : nasreddine.gouami@international.gc.ca
Internet : http://www.infoexport.gc.ca/dz

Useful Internet Sites

• Ministry of Energy and Mines: www.energy.gov.dz
• National Agency for Hydrocarbon Resources Valorization, ALNAFT: www.alnaft.gov.dz
• Hydrocarbons Regulatory Authority, ARH: www.arh.gov.dz
• National Oil Company, Sonatrach: www.sonatrach.com
• Energy Tenders, Baosem: www.baosem.com
• North Africa Petroleum Exhibition & Conference, NAPEC: www.napec-dz.com
• Guide to Investing in Algeria: https://home.kpmg/dz/fr/home/events/2019/05/guide-investir-en-algerie-20170.html

Author’s Name: Nasreddine Gouami