Oil and Natural Gas in Algeria

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According to Oil and Gas Journal (OGJ), Algeria contained an estimated 12.3 billion barrels of proven oil reserves as of January 2007, the third largest in Africa (behind Libya and Nigeria). Algeria’s proven reserves are primarily located in the eastern half of the country. The Hassi Messaoud basin contains 70 percent of the country’s total proven reserves, while additional reserves are located in Berkine basin. Although Algeria has produced oil since 1956, industry analysts consider the country under explored, with potential for future hydrocarbon discoveries.
Algeria produced an average of 1.37 million barrels per day (bbl/d) of crude oil in 2006. Together with 445,000 bbl/d of lease condensate and 310,000 bbl/d of natural gas liquids, Algeria averaged 2.13 million bbl/d of total oil production during 2006, up slightly from 2.09 million bbl/d in 2005 and 1.93 million bbl/d in 2004.
n March 2005, the Algerian parliament adopted the hydrocarbon reform bill. The bill encouraged international oil company (IOC) investment throughout the hydrocarbon industry, which state-owned Sonatrach previously dominated. However, 2006 amendments to the hydrocarbon bill created a windfall tax on IOC profits when oil prices top $30 per barrel. This tax reached up to 50 percent on some contracts, deflating some of the IOCs investment enthusiasm. In addition, the amendments gave Sonatrach the right to have a 51 percent or higher participation option on each newly discovered project. Aside from Sonatrach, the state regulatory agency, Alnaft, promotes oil exploration, signs upstream contracts, approves development plans, and collects royalties and taxes.

• Oil production: 1.373 million bbl/day (2005 est.)
• Oil exports: 1.127 million bbl/day (2004 est.)
• Oil proved reserves: 11 billion bbl (2006 est.)

• Natural gas production: 80.15 billion cu m (2004 est.)
• Natural gas exports: 60.87 billion cu m (2004 est.)
• Natural gas proved reserves: 4.545 trillion cu m (1 January 2005 est.)

• Sonatrach operates the largest oil field in Algeria, Hassi Messaoud. Located in the center of the country, Hassi Messaoud produced around 440,000 bbl/d of crude in 2006, and Sonatrach hopes to increase production at the field to 600,000 bbl/d over the next few years. Sonatrach also operates the Hassi R'Mel field (north of Hassi Messaoud, south of Algiers), which produces around 180,000 bbl/d of crude. Other major fields operated by Sonatrach include Tin Fouye Tabankort Ordo, Zarzaitine, Haoud Berkaoui/Ben Kahla, and Ait Kheir. Sonatrach announced on 31 December, 2007, that it had made new oil and gas finds, and that was the 20th hydrocarbon discovery in 2007 in Algeria. One of the new discoveries was made in association with a consortium of Thailand's PTT Exploration and Production PCL (PTTEP) and Vietnam's Petrovietnam at blocks 433a-416b in Amguid Messaoud basin. The second find was made by Sonatrach alone at block 438c in Oued Mya basin.
  

• Foreign oil operators have steadily increased their share of Algeria's oil production. The largest foreign oil producer is Anadarko Petroleum Corporation, with total production capacity of 500,000 bbl/d. The company operates the Hassi Berkine South and Ourhound fields in eastern Algeria, with combined output of around 450,000 bbl/d. As of the fourth quarter 2006, Anadarko netted 62,000 bbl/d of oil from the fields based on its ownership percentage in the project. Anadarko is developing seven new oil and natural gas fields in Block 208 of the Berkine Basin; first production from the fields (EKT, El Merk, El Merk N, El Merk E, El Merk C, El Kheit, and El Tessekha) is possible by 2008, with output eventually reaching 150,000-200,000 bbl/d of crude oil and condensate.
  

• Eni operates (among others) the Rhourde Oulad Djemma (ROD) project in south eastern Algeria, a series of six satellite fields that have production capacity of 80,000 bbl/d.
  

• Additional foreign investors include Amerada Hess, BHP-Billiton, BP, Repsol, Shell, Statoil and Total.

• In 2005, Algeria held its sixth licensing round for foreign development of oil and natural gas reserves. A total of 54 companies showed interest in the ten blocks being offered. Companies that won exploration rights included BP (winning three concessions), BHP-Billiton (winning two concessions), Shell (winning two concessions), and the UAE-US joint venture Gulf Keystone Petroleum Ltd (winning two concessions). In mid-2007, the Algerian government wass expected to begin the country’s seventh licensing round.