Sonatrach: Europe most dynamic gas market
Europe is the world's most dynamic market for gas.
It also is the market facing the most uncertainties in terms of supply sources.
This is the view of Abdelmadjid Attar, CEO of Algeria's state firm Sonatrach, who told the recent Offshore Northern Europe conference in Aberdeen that Europe's gas players must be both creative and daring.
Sonatrach view
Attar said worldwide gas production grew 4.9% in 1996, and demand is expected to continue growing, largely driven by gas-fired power generation.
Europe's gas is increasingly being produced in remote areas, Attar noted, and after 2000, gas supplies from outside the European Community are expected to dominate: "(European) gas dependency could reach 55% in 2010 and 70% in 2020."
European gas demand is expected to reach 450 billion cu m in 2010, of which power generation will account for 25%, compared with 346 billion cu m in 1995.
Attar said, "Demand will be largely covered by the three traditional suppliers-Algeria, Russia, and Norway-until 2010. Beyond this, quite a number of uncertainties appear.
"Demand from Algeria is rising and could reach 90 billion cu m in 2010. Algeria has export capacity of 60 billion cu m, through liquefaction units, recently upgraded, and two transcontinental pipelines."
He said the two pipelines have combined capacity to deliver 15 billion cu m/year of gas to southern Europe. Sonatrach is looking to expand their capacity with some investment from foreign firms.
Expansions eyed
By 2000, Sonatrach plans to expand capacity of the Trans-Med pipeline to 24 billion cu m/year, with longer term potential to raise it to 30 billion cu m/year.Similarly, capacity of the Trans-Maghreb pipeline will be expanded to 8 billion cu m/year by 2000 with potential to expand capacity to 17 billion cu m/year.
Liquefied natural gas export capacity is 28 billion cu m/year, and no further expansions of current plants are planned.
Attar said, "Most of the Algerian natural gas comes from the supergiant Hassi R'Mel field. In the future, gas fields rich in condensate and located southeast of Hassi R'Mel will supplement it, and this will allow a greater flexibility.
"The same is true for the large fields in the area of In Salah, in Southwest Algeria, development of which is to be undertaken under a partnership contract with British Petroleum.
"Sonatrach's development activities will translate into an investment of $19.3 billion over the next 5 years, of which more than 60% will be spent on the gas chain."
Investments sought
Sonatrach plans to use investment by foreign firms as a lever to expand downstream gas, natural gas, and liquefied petroleum gas operations.The company also plans to become involved in international upstream projects.
Attar said, "Gas expansion can push Sonatrach towards a greater downstream international integration.
"We consider that natural gas producers should be able to have access to consumer markets and, under alliances with oil companies or distributors, find new diversification opportunities, either in the distribution systems or in power generation.
"Partnerships, similar to the one we concluded with BP, can be considered to this effect. One has, though, to move a little further than that and envision real strategic alliances in which the companies of producing countries, in consideration of the opening of their national upstream through a contract with an international company, benefit by real strategic opportunities both in the consuming counties downstream and in the international upstream.
"Besides, such alliances have to be combined with a technological cooperation, which we greatly value."
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