Algerias oil and gas projects market is likely to gain momentum over the next five years as new capital schemes are announced, according to Indian engineering, procurement, and construction (EPC) company Dodsal.
We have high expectations of activity in the oil and gas projects market in Algeria, says Maher Hussein, the companys executive director of business development. We have had success there in the past and I believe we will continue to build on this.
In July 2014, Algeria announced it was going to invest $100bn in its hydrocarbons sector in an effort to boost production, which has been declining for the past five years.
The announcement was greeted with scepticism from some quarters due to the countrys track record of failing to successfully implement investment plans.
In June 2012, Algiers said 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 petrochemicals capital projects, according to regional projects tracker MEED Projects.
This time around, a significant injection of capital into oil and gas projects will be easier to facilitate than it has been in the past, says Hussein. The government has prioritised oil and gas development. They have a plan and I think they will succeed.
Algerias government revenues have been hit hard by the recent collapse in oil prices, but Hussein says the strategic importance of increasing gas production makes severe cuts to spending on oil and gas schemes unlikely.
The impact on oil and gas projects from low energy prices will be minimal, he says. Algeria needs to ramp up production irrespective of the prices. The country depends on oil and gas for more than 95 per cent of its exports and it has an eye on the long term.
Algeria has proven crude reserves of 12.2 billion barrels and gas reserves of 4,500 billion cubic metres.
Oil has seen a 60 per cent price drop since June 2014, while liquefied natural gas (LNG) export prices into Asia have declined from a peak of more than $20 a million BTUs in late February 2014 to less than $10 a million BTUs.
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