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Sonatrach Maps out Energy Output Expansion

Source: Reuters 12/7/2014, Location: Africa

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Algerian state energy company Sonatrach said it will intensify its exploration efforts by drilling 125 wells a year and expanding its transportation network to help boost production over five years.

The North African OPEC state's crude oil and gas production has stagnated in recent years, stymied by a lack of foreign investors because of bureaucracy and security concerns, but neither Sonatrach nor the energy ministry provided details on incentives for potential oil partners.

Sonatrach 's plans are crucial for a country that relies heavily on energy exports to pay for social programmes that have helped to maintain stability in an often volatile region. Domestic energy consumption is also growing.

Speaking at a North Africa oil and gas conference in Algiers, Sonatrach 's interim chief Said Sahnoun said the company would invest about $80 billion by 2019 to boost production to 225 million tonnes of oil equivalent, adding that he does not expect lower oil prices to affect spending plans.

Last year Algeria's total production was 192 million tonnes of oil equivalent, including 121 million tonnes from natural gas, 54.5 million tonnes from crude oil and 9.5 million tonnes from condensate.

"I remain optimistic about our energy output for the coming years and we are ready to work with all of our partners," Sahnoun said.

The Sonatrach head said development plans included building up transportation network and a focus on less mature fields around Illizi, Berkine, Hassi Messaoud and Hassi R'mel areas, the APS state news agency said.

However, there was no indication on what measures will be taken to attract investors that largely shied away from Algeria's previous energy bidding round.

Sid Ali Betata, head of Algeria's hydrocarbons agency, said a new round was still being studied, with no date or further details available as yet.

"There will be no new bidding round before we change the legal framework," said one senior Sonatrach source who asked not to be identified.

Only four of 31 areas on offer were taken by foreign consortiums that included Spain's Repsol, Royal Dutch Shell and Norway's Statoil in Algeria's first attempt to draw investors since a disappointing 2011 round.

Algeria expects to start production at six gasfields in the next three years. The Amenas plant, which produced about 11.5 percent of Algeria's gas before an attack by Islamist militants nearly two years ago, is also close to a return to full production.

Gabino Lalinde, a Repsol director, said the Spanish company and its partners will invest $2 billion between May 2015 and May 2017 to begin production at the Reggane gasfield.

"We expect production to start in 2017 with a capacity of 8 million cubic meters per day," he told Reuters.

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