Algeria intends to invest $70bn in shale gas

12 January 2015

Sonatrach announcement to invest in shale gas comes amid public opposition

Algeria is planning to invest $70bn by 2020 developing shale gas in the country’s southern desert, according Said Sahnoun, the managing director of state-owned energy company Sonatrach.

The firm is looking to produce 20 billion cubic metres a year (cm/y) of shale gas from 200 drill sites, according to Sahnoun.

The latest announcement has been greeted with scepticism by some analysts, who point to Algeria’s track record of announcing large spending plans that fail to come to fruition.

In June 2012, Algeria announced it would invest $80bn in the natural gas and petrochemicals sectors over a five-year period.

Since that announcement, only $8.7bn in contract awards have been made for oil, gas and petrochemical capital projects, according to regional project tracking website MEED Projects

Algeria is pushing ahead with plans to develop shale gas, despite significant resistance from local populations in the Sahara region, where initial tests have been conducted.

In December, Algeria announced it had completed the testing for unconventional gas at the Ahnet Basin, saying that results were promising.

Since the test results were announced, Algeria has seen protests against developing the resources near the test site and in the city of Tamanrasset, the region’s capital.

On 6 January, 2,000 people protested outside Tamanrasset city hall carrying banners saying: “Do not endanger our environment and groundwater.”

According to the US’ Energy Information Administration (EIA), Algeria has 20 trillion cubic metres of shale gas reserves, the third-largest estimated reserves in the world after China and Argentina.

Algeria is looking to boost exploration efforts and ramp up hydrocarbon projects after a five-year decline in production.

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