Canada’s First Calgary Petroleums is pushing ahead with plans to develop an oil and gas concession in Algeria with state energy company Sonatrach, despite fears a shareholder dispute could jeopardise its operations in the country.
The company has received four bids for the main construction contract on the $1.3bn development of the Menzel Ledjmet East (MLE) field in the southeast of the country, and is in talks to agree financing for the project.
The move comes at a time when the minority shareholder in First Calgary, the UK’s Waterford Finance & Investment, has tabled a motion to oust the company’s board at a meeting on 18 April.
Algeria’s Energy & Mines Minister Chakib Khelil has warned this would damage First Calgary’s position on the project.
“I would look negatively at any changes at this critical time,” said Khelil in a letter to First Calgary chairman Garfield Emerson on 6 April. “Any delays to the development of the project would be harmful to the Sonatrach-FCP relationship.”
“It is about as blunt a letter as Khelil could possibly write,” says a senior source at a contractor bidding for the contract. “He is saying that if you remove the chief executive, I will remove your permit.”
The bidders for the MLE field contract are Japan’s JGC Corporation, UAE-based Petrofac International, Canada’s SNC Lavalin and Italy’s Saipem.
Negotiations on the financing of the project are also under way. “We have been in extensive talks with Citibank in London and a number of other financial institutions to arrange the $750m debt financing,” says Jeff Angel, a spokesman for First Calgary. “If all goes well, we will complete the financing by the end of July.”
The Canadian company is also planning to submit development plans to Algiers this year for an oil and gas area known as the Central Area Field Complex.
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.