Algeria’s Natural Gas Output
According to the US EIA, Algeria had proven natural gas reserves of 159 trillion cubic feet (Tcf) in 2012. At current production levels, this would provide output for another 57.7 years. More than half of these reserves are located in the Hassi R’Mel field.
Decreased gas production in recent years
Algeria’s production of marketed gas placed it in 10th position on a global basis in 2011. Algeria is also the third largest supplier of natural gas to Europe. However, after peaking in 2005, gas production has decreased over the past few years, contributing to the contraction of the hydrocarbon sector.
With relatively poor foreign investment in Algeria’s oil and gas sector in recent years, on-going projects in the Southwest region of the country are important to boost production levels in the medium-term.
Two major projects are:
- the Southwest Gas Project and
- the Menzel Ledjmet East Project.
According to the EIA, the Southwest Gas Project is currently under way in the country and is set to be on-stream by mid-2016.
Investment in shale gas has significant potential in Algeria. According to the International Energy Agency (IEA), Algeria has 231 Tcf of recoverable shale gas reserves, although the commercial viability of these reserves is yet to be determined.
In October 2012, policymakers approved a revision of the tax system in the energy sector, with the aim of attracting more foreign investment, particularly in the unconventional energy industry, while the government also announced that it would provide financial incentives to companies wishing to invest in unconventional energy resources. Various foreign companies are already exploring for shale gas resources.
Proof of commercial viability required
According to a Bloomberg report, Algeria’s marketed natural gas production could almost double to 5.7 Tcf per annum over the next two decades. However, before commercial viability can be proven, hundreds of test wells will have to be drilled over the next few years.
Sonatrach itself has extensive investment plans over the next five years to develop the sector. However, production is unlikely to start within the next decade.
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