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Like other Opec members, Algeria is promising a major conversion to renewable power, as the realities of the global energy transition register in even the more conservative oil producers. But this won’t stop Algiers ploughing ahead with a massively delayed procurement of gas-fired power or from giving under-performing state giants even more responsibilities, write John Hamilton, Jon Marks and our Algiers correspondent  

Algeria and Nigeria were the fifth and seventh largest gas flarers in the world last year, according to the World Bank Group’s recently released 2020 Global Gas Flaring report. It is the ninth year in a row that both countries have made the top ten, which is led by Russia, Iran and Iraq.

Algeria can be a difficult jurisdiction, but Sonatrach’s termination of the Isarène E&P contract may not just be driven by aggressive resource nationalism, writes John Hamilton.

More of the long-awaited implementing decrees that will allow the revised hydrocarbons law (Law 19-13 of 11 December 2019) to be applied have been published (AE 432/17)

Sonatrach subsidiary Naftal’s liquid petroleum gas director Rachid Yaguer has said a project to build two pipelines to carry LPG from Arzew in the west to Algiers would be launched soon. The project is intended to replace transport by sea to major demand centres. Yaguer told Echourouk TV the two 400km pipelines should be built within 36 months, to supply the capital, where LPG use has been rising quickly.

There has been some respite for oil producers with crude rising above $60/bbl and Opec and its allies agreeing on 4 March to further stabilise the market by rolling over their quota regime (except for Russia and Kazakhstan, which Opec kingpin Saudi Arabia agreed could have increases while it maintained its extra 1m b/d cut). This will please price hawks who fear another slump later this year will further undermine oil producers’ economies; they are opposed by output hawks, who want to produce more oil to maximise their revenues now.

Abdelmadjid Attar has been sacked just eight months after being appointed energy minister, in a 21 February government reshuffle ordered by President Abdelmajid Tebboune. Attar has been outspoken in criticising Sonatrach’s performance and management, and delays to implementing the new hydrocarbons law.

Energy minister and Sonatrach veteran Abdelmadjid Attar is among those criticising the state energy giant for performing well below expected levels, dragging down the wider Algerian economy with it. Pressure is growing for the government to deliver an investor-friendly business environment and for Sonatrach to revise its long-term strategy and management structures, writes Jon Marks.

Energy minister Abdelmadjid Attar said on 25 January that Algiers was preparing to create a parastatal renewable energy company along the lines of state hydrocarbons giant Sonatrach. Attar told national ratio that his ministry – and apparently not the renewable energy ministry created last year – was planning a “second Sonatrach” to manage the new technologies. Meanwhile, Attar said state utility Sonelgaz was in financial crisis due to selling electricity and gas too cheaply, with its income now insufficient even to meet operating expenses.

State energy giant Sonatrach said everything was under control at the giant El Merk oil field after a fire in the central processing facility (CPF) on 21 October. The next day, Sonatrach chief Toufik Hakkar visited the unit operated by the Groupement Berkine joint venture with Occidental Petroleum Corporation, reassuring markets that output at the field, which produces 98,000 b/d of crude and 29,000 b/d of condensates, would soon return.

The 4.8bcm/yr Tinrhert phase one expansion project in the Illizi Basin is expected to be producing by year-end, Le Quotidien d’Oran reported. The daily said energy minister Abdelmadjid Attar had visited the region on 10 October. Phase one work by Petrofac to bring 29 new wells into operation will raise natural gas output in the Ohanet field to around 11bcm.

Sonatrach has settled its dispute with Spain’s Naturgy Energy Group by agreeing to revise their gas contracts while avoiding the arbitration proceedings threatened by Algeria. The Spanish utility initiated negotiations in May, and three separate contracts were renegotiated in a review of pricing, volume and duration provisions, the two companies said on 7 October. The contracts were signed by Naturgy executive chairman Francisco Reynes and Sonatrach president director- general Toufik Hakkar, during a visit to Algiers by Spanish prime minister Pedro Sánchez.

After the government surprised many observers by announcing in April that membership of the Desertec Industrial Initiative would be central to its ambitious renewable energy policy, recently appointed energy minister Abdelmadjid Attar has announced that Algeria is pulling out of the German-led scheme.

Energy minister Abdelmadjid Attar has announced a government plan to make the national hydrocarbons transport infrastructure more secure, to avoid incidents like the 3 September double oil spill in the El Oued region, which local farmers said polluted their scarce water resources.

Germany’s Wintershall Dea has become the latest upstream operator to sign a memorandum of understanding (MoU) with Sonatrach. The MoU, announced on 17 August, is intended to support talks on new joint exploration and production cooperation in Algeria and abroad, Sonatrach said in a statement.