First Calgary’s Algerian gas venture continues to move forward

09 April 2008
Canada’s First Calgary Petroleums (FCP) is pushing ahead with plans for the development of its oil and gas concession in Algeria despite fears that a coming vote on the dismissal of the current vote could jeopardise the company’s operations in the country.

Four international contractors have submitted bids for the main construction contract on FCP’s $1.3bn development of its Menzel Ledjmet East (MLE) gas discovery in the east of block 405b in the southeast.

Development plans are also due to be submitted to Algiers by the end of the summer for the Central Area Field Complex (CAFC), in the west of the same block.

The bidders for the main engineering, procurement and construction contract on the MLE development are Japan’s JGC Corporation, UAE-based Petrofac International, Canada’s SNC Lavalin and Italy’s Saipem.

The contract will be carried out on a cost-reimbursable basis.

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, FCP’s Vice President Corporate Communications & Investor Relations.

“We have spoken to eight banks in total and they’ve all shown interest in the project. If all goes well we will complete the financing by the end of July.”

FCP will cover 75 per cent per cent of the costs of the project, with its partner state energy company Sonatrach covering the balance.

The Canadian company issued a convertible bond in December through which it raised $250m.

CAFC is an oil and gas prospect covering about two-thirds of block 405b. “We are in the process of finalising our development plan and if all goes to schedule we will be producing from both MLE and CAFC by 2010,” says Angel.

FCP shareholders are set to vote by 18 April on a motion to remove the current board and chairman tabled by a minority shareholder in the company, the UK’s Waterford Finance & Investment.

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