Algeria announces winners of 7th licensing round

Uchenna Izundu
International Editor

LONDON, Dec. 16 -- Algeria has granted exploration licenses to Eni SPA, BG Group PLC, OAO Gazprom, and E.On Ruhrgas AG under its latest licensing round. Although 74 companies prequalified, 12 of the 16 licenses offered did not attract bids. Algeria blamed the weak international economy, as conditions have deteriorated since the round was announced in July.

Eni scooped the high potential Kerzak license in the Timimoun basin. Its acreage is 400 km southwest of giant Hassi R'Mel field. The company said the block further strengthens its presence in the country and confirms the high oil potential of the Algerian sedimentary basins.

Gazprom secured the onshore area El Assel in the Berkine basin and will spend $120 million shooting 2,500 sq km of 3D seismic data and drilling four exploratory wells. "Pursuant to provisional estimates, the recoverable oil reserves in the El Assel area average 30 million tons," Gazprom said.

E.On Ruhrgas won the Rhourde Yacoub exploration permit, which has high gas potential. E.On Ruhrgas Chief Executive Bernhard Reutersberg said it could provide long-term gas or LNG supplies for its customers in Europe. Algeria's gas reserves are concentrated in the center and east.

BG Group won the Guern El Guessa license, spanning 12,166 sq km, in Algeria's southern Gourara basin. BG said it was pleased with the block, which lies next to its Hassi Ba Hamou discoveries. "This takes us another step forward in our Algerian growth strategy," BG said.

Chakib Khelil, Algeria's energy and mines minister, said the government planned to reoffer in 2010 the other zones included in the 7th licensing round.

All winners must partner with Sonatrach, which will have a minimum mandatory 51% stake under the 2006 law that stipulates this structure for every oil and gas exploration contract awarded to foreign investors.

The new National Agency for the Valorization of Hydrocarbons Resources managed the licensing round, which covered more than 143,000 sq km.

Contact Uchenna Izundu at uchennai@pennwell.com.

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