State-Owned Firm Dominate Gas Industry in Algeria

PRIVATE companies mostly foreign account for 50 per cent of oil and 20 per cent of natural gas production in Algeria where state owned conglomerate, Sonatrech has a controlling stake.

Visiting Algerian Energy and Mines Minister, Youcef Yousfi said in Dar es Salaam on Tuesday evening while responding to questions posed by 'Daily News' regarding the role of the private sector in the North African nation's oil and gas sector, that 90 per cent of all activities are done by Sonatrach.

"Sonatrach has about 100 subsidiaries and does everything from exploration, appraisal, production and supplying the markets," Mr Yousfi said as Minister for Energy and Minerals, Professor Sospter Muhongo hailed the Algerian model as conducive for a poor country like Tanzania.

Yousfi pointed out that Algeria produces 1.2 million barrels of crude petroleum per day of which 600,000 barrels are refined locally and the rest exported abroad for refining.

He said production of natural gas peaked 35 billion cubic feet in 2012 which is used locally and also exported to European countries including France, Italy and Spain.

"Some 97 per cent of our electricity is generated from natural gas while 50 per cent of our people us natural gas as source of energy for domestic consumption," he noted saying energy i.e the real engine of growth.

Established in 1962, Sonatrach is the largest oil and gas company in Africa and operates in exploration, production, pipeline transportation and marketing of hydrocarbons and by products and had a turnover nearing 56.1 billion US dollars in 2010.

The Algerian conglomerate is ranked number 12th in the world in terms of turnover, 4th world largest Liquefied Natural Gas (LNG) exporter, third world Liquefied Petroleum Gas exporter and 5th world natural gas exporter.

Hailing the Algerian model, Prof Muhongo said his vision is to take Tanzania Petroleum Development Corporation (TPDC) in the direction of Sonatrach arguing that leaving the oil and gas sector to the private sector entirely, will be wrong.

"That's what we want to do with TPDC and Tanesco which will undergo a major restructuring to improve efficiency," Prof Muhongo argued.

He noted that Tanzania has a lot to learn from Algeria which has been in the oil and gas industry for over a half a century now and managed significant development although at independence from France in 1962, Algiers and Dar es Salaam were at the same level of development.

Prof Muhongo dismissed those advocating for preferential treatment of the local private sector in oil and gas blocks allocation saying TPDC will play a key role in the field as national representative of protecting the country?s interests.

"Having TPDC will enable even the poorest to have a stake in the sector other than allocating blocks to some single family or a group of people with common interests," he argued.

The Minister who visited Algeria and his delegation last month and signed a memorandum of understanding with his peer on bilateral cooperation, argued that learning from the North African country is more convenient than developed countries.

The Algerian minister left the country yesterday afternoon after three days of talks with his host backed up by experts from the public sector.

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