Algeria has been overrun by random terrorist attacks unbated since 1992. But in the middle of chaos the hydrocarbons sector is booming
Algeria has the 11th largest oil and natural gas reserves in the world and Sonatrach, the state-owned petroleum company which has been immune to internal strife, pulled in $12.6 billion on export sales in 1996. This has placed Algeria as the second largest supplier of oil and gas for the United States, second only to Saudi Arabia.
"The hydrocarbon boom was a result of the law that was passed in 1986 which brought in foreign investment and partnerships," says Dr. Mourad Preure, the Advisor of the Director General for Sonatrach. The law made it possible for foreign companies to establish joint ventures with Sonatrach, and it was amended in 1991 which allowed foreign petroleum industries to take up to a 49 per cent share in the production of existing oil fields. Eighteen foreign companies have teamed up with Sonatrach which includes Phillips, Mobil, British Petroleum and Repsol.
The hydrocarbon reserves already discovered contain 36 billion barrels (a crude oil equivalent), but 57 per cent of the fields hold natural gas which gives Algeria the fourth largest natural gas reserves in the world. Sonatrach has taken full advantage of the country's natural gas and its geographical location: it is closer to Europe and the United States than the Gulf countries.
Thirty per cent of natural gas imported for consumption in Europe comes from Algeria. The gas is transported by two pipelines. The Transmed pipeline links Algeria to Italy, via Tunisia and through the Straights of Sicily, and has the capacity to transport 24 billion cubic meters (b.c.m.) of natural gas per year. The Magbreb pipeline travels through Morocco to reach Spain and is able to carry 7 b.c.m, of natural gas annually.
According to Dr. Preure, another advantage that Sonatrach has while catering to the European market is that their pipelines have been trustworthy. "We are a reliable source. We have supplied Europe with natural gas through the Transmed pipeline for over 4,700 days (almost 13 years) without any interruption."
Sonatrach has an agenda to expand on its operations. They have mapped out an investment plan that will cost $19.3 billion which they believe will bring their annual export earnings up to $16.2 billion by the year 2001. They want their Transmed and Maghreb pipeline capacities to reach 30 b.c.m, and 18.5 b.c.m. per year respectively which...