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Mixed Tenders' Results, Move towards Shale Gas, Offshore

Source: Algeria Times 12/24/2014, Location: Africa

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The launch of a call for tenders, the first under the new law on hydrocarbons, and the approval for shale gas exploitation have been the major developments in the energy sector in 2014 in the shadow of a plummeting in world price of crude oil.

The 4th tender for research and exploration of hydrocarbons, launched in January, i.e. three years after the previous operation, wrapped up with mixed results.

Over the 31 perimeters areas proposed by the National Agency for the Development of Hydrocarbon Resources (Alnaft), four (4) were awarded to three international groups for research and the commissioning of the perimeters of Timmissit in Eastern Erg of Sahara, Tinhert North (eastern Sahara) and M'sari Akabli (western Sahara), in addition to the perimeters of Boughezoul.

Professionals' opinions differed as for the assessment of the results of the first tender launched part of the new law on hydrocarbons, enacted in 2013, which paved the way for the exploitation of unconventional resources.

For Alnaft executives, the results obtained following this call for competition are "acceptable". However, some industry analysts found that the tender was not "attractive enough" for oil companies in particular because of fiscal, geological difficulties and increased production costs.

Green light to exploit shale gas

The other event that marked the national energy sector is the approval given by the Council of Ministers for the exploitation of clay and shale formations, a precondition for starting the required procedures towards foreign partners.

Early indications suggest "significant" national capacity in shale gas and oil as well as "promising" prospects in terms of recoverable quantities, the Council of ministers had announced.

First off-shore drilling expected late 2015

In order to strengthen the exploration efforts, Sonatrach expects to make its first offshore drilling in late 2015 in the provinces of Oran and Bejaia.

The first drilling will be carried out by Sonatrach alone or in partnership, but the decision on the preferred option depends on the strategic choices of the Ministry Department of Energy.

In Algeria, the offshore areas likely to contain hydrocarbons are located at 2,000-2,500 meter depth. The cost of the drilling operation is estimated at nearly 100 million.

Significant drop of world prices of crude oil

Furthermore, the year 2014 was characterized by drop of oil prices on world markets.

However, this setback should not have an effect on Sonatrach's planned investments as it maintains its 2015-2019 five-year development plan, worth $ 90 billion.

For more information about related Opportunities and Key Players visit Algeria Oil and Gas Projects

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