BP’s flagship project is the In Salah gas development, which is scheduled to produce 9 billion cubic metres a year of gas from 2005. In a first for the country, BP has joined forces with state energy company Sonatrachto market the gas.

BP acquired its two other developments – In Amenas and the Rhourde el-Baguel enhanced oil recovery project – as a result of its takeover of the US companies Amoco Corporationand Arcorespectively. While the company is pressing ahead with the In Amenas development, results at Rhourde el-Baguel, its only producing asset, have been disappointing. The project was one of six exploration and production developments which necessitated a total write-down by BP of $1,091 million in 2002. ‘The Algerians drive a hard bargain and as a result the rate of return for Rhourde el-Baguel is not as high as some of our producing fields elsewhere,’ says a BP source.

While BP is unlikely to withdraw from Algeria altogether, there remains the possibility that the company will seek to lay off the risk and costs of some of its assets there as part of a strategic move to improve profitability. The company has sold off a number of assets since the start of 2003, including its stake in Venezuela’s Boqueron field – another development to be accorded a lower value following the reassessment of future investment opportunities.