Algeria’s Sonatrach to spend $100 bln over 5 years to boost oil, gas

ALGIERS (Reuters) – Algerian state energy group Sonatrach has approved a $100 billion investment plan for 2014-2018 to increase oil and gas output and also aims to start producing shale gas in 2020, the official APS news agency reported.

Sonatrach.svg-Biznews.comOPEC member Algeria, a major gas supplier to Europe, has been struggling to raise energy output, on which it relies heavily for state funds to finance development and social programmes.

Oil and gas production has been stagnating since 2010 due to a fall in exploration activity and a lack of investment from foreign companies, which have been wary of Algeria’s contract terms and security since a 2013 militant attack on a gas plant.

But energy officials are hopeful things will improve in the medium term through higher spending in the sector.

The $100 billion spending for the five-year period through 2018 will be aimed at boosting reserves and increasing oil and gas production, APS said, citing an unidentified source at Sonatrach late on Saturday.

The plan allocates $42 billion to help develop oil and gas fields from now through 2018. That figure includes $22 billion for natural gas development.

Officials have said Sonatrach is planning to start production at six gas fields with a total capacity of 74 million cubic metres per day in the next three years.

The investment plan was reported as Algeria prepares to open bids for a new oil and gas round, with 31 fields on offer in September this year.

For the first time, the bidding includes blocks for unconventional resources, with tax incentives for foreign companies interested in investing in shale gas and shale oil.

Energy officials are optimistic that Algeria’s shale gas potential is significant and that Sonatrach will start producing it in 2020, with initial output of around 30 billion cubic metres per year, ABS reported, citing the Sonatrach source.

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