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An Unlikely Shale Frontier

Irina Slav

Algeria is eager to attract Big Oil majors such as Exxon and Chevron to its shale patch to tap its massive gas reserves, estimated to be the third-largest in the world, Bloomberg reports.

Currently, state-owned Sonatrach accounts for 90 percent of oil and gas development in the country, but it wants this to change. At this week’s World Gas Conference, the company’s chief executive Abdelmoumen Ould Kaddour said, “We need a lot more companies to come explore. We’re talking to all the big companies.”

Exxon is a favorite, it seems, for the shale patch, which contains an estimated 2,000 trillion cu ft of gas, according to Kaddour. “Exxon Mobil is Exxon Mobil. They have huge experience in that field, and they use technology that could be positive for our development,” the executive said.

Algeria’s state company is already in discussions with Exxon about its potential participation in developing Algeria’s oil and gas reserves. Negotiations started in January this year.

Earlier this year, Kaddour said Sonatrach planned to increase its revenues by US$67 billion by 2030, with half of this being reinvested in further development. However, it needs foreign help with these plans and also needs to deal with local opposition.

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The shale gas reserves of Algeria are concentrated in the south of the country, where the population is against gas exploration. Development plans for the area were already stopped by local protests, but Sonatrach’s chief is actively seeking ways to convince the local community leaders that the plans will benefit them.

The exploitation of Algeria’s shale gas reserves is not simply an attempt to boost fossil fuel revenues. Local consumption is surging because of fast population growth, and this is hurting exports, which go mainly to Europe. Last year, Algeria exported an estimated 54 billion cubic meters, down from 57 billion cubic meters in 2016.

By Irina Slav for Oilprice.com

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