WATCHING THE WORLD ALGERIA DRIVING TO EXPAND

Opening of Algeria's oil and gas industry to international companies continues to gather momentum.

After setting out first to attract foreign companies to the exploration scene and then into the crucial LNG business, Algeria's state owned Sonatrach has turned its attention to LPG.

Earlier this year Sonatrach disclosed outline proposals to double gas liquids production capacity to more than 8 million tons/year. Sonatrach now plans to invite foreign companies to participate in the gas liquids development program.

ASSISTANCE FOR BUILDUP

Algeria, like many established producers and exporters, finds it needs to invest heavily in exploration and production to prepare for the expected upturn in oil demand in the 1990s.

For smaller producers such as Algeria, with pressing demands for revenue, tapping the financial resources of foreign companies and the reservoir of technology at their disposal is becoming increasingly attractive.

Boosting gas liquids capacity makes good economic sense. Sonatrach has a 4 million ton/year LPG plant and export facilities at Arzew on the Mediterranean coast. The plant is linked to large oil and gas production complexes at Hassi R'Mel and Hassi Messaoud by two pipelines.

Sonatrach's plans call for a 500-625 mile pipeline to collect gas liquids from several fields in Southeast Algeria and link up with the existing pipeline at Hassi Messaoud. Partners for this work will be sought later in the year.

Foreign companies may also have the opportunity for a joint venture to develop gas/condensate production from fields in the Hassi Messaoud area. Plans to produce as much as 50,000 b/d of condensate are under study but are not as advanced as the gas liquids project.

Sonatrach also is feeling the benefits of improved prospects for the European gas market.

Last fall, the Italian gas company, SNAM, facing increased demand for gas in the main consuming areas of Italy, started negotiations with Sonatrach to expand capacity of the trans Mediterranean gas pipeline from Algeria through Tunisia to Italy.

The twin pipelines that make up the onshore part of the pipeline in Algeria and Tunisia have a capacity of 13-14 billion cu m/year. But there is only 12.5 billion cu m/year capacity in the subsea section. Originally, the two sides were talking about adding a fourth subsea line to boost submarine capacity by 4-6 billion cu m/year.

ITALY SEEKS MORE GAS

In the past 6 months forecasts of gas demand in Italy have increased dramatically. SNAM wants substantially higher volumes and the state electrical power company, ENEL, favors natural gas as a generating fuel ahead of coal and nuclear.

Italy could take a further 10 billion cu m/year of gas from Algeria, given the right price package. On these figures a single new subsea line might not be enough.

More compression would be needed throughout all sections of the line, requiring substantial investments.