AFRICA OIL & GAS TODAY

New licensing round in Algeria
06/30/09, Biodun Omojola

Algeria is planning a new licensing round that will involve 10 blocks just months after another round, described as "disappointing" was held. The last licensing round was held in December 2008. Only four companies, BG Group, Eni, E.ON Ruhrgas and Gazprom, out of the pre-qualified companies showed up. The unexpected withdrawal of other companies was as a result of the sudden collapse of global oil prices. Accordingly, only four out of 16 gas prone exploration areas were awarded during the round.

Algeria is not bothered by the poor turnout. Energy Minister Chakib Khelil said, "It is better to have four big companies than 10 small companies which won't have very deep pockets and end up in trouble." The four are investing a total of $272 million. Algeria on its part says it will, from 2009 to 2013, pour billions of dollars into its energy sector to boost gas exports and maintain oil output capacity. This investment will increase Algeria's total gas exports by more than 60 percent by 2015. It is also looking forward to the new licensing round.

Algeria is the third largest supplier of natural gas to the European Union. Oil watchers say investments in the country's developing new fields will compensate for the decline in older fields and will also keep its daily production capacity steady at 1.4 million barrels. Algeria is a member of the Organisation of Petroleum exporting Countries (OPEC).