Oil and gas exporter Algeria plans $63.5 billion in investment through 2013 to boost gas exports and maintain oil output capacity, energy and mines minister Chakib Khelil said on Tuesday.
Low oil prices were not stopping the investment, Khelil said, as Algeria was expecting a longer-term price of around $70-80 a barrel, Khelil said. “And we don’t need that much for these projects to fly,” he said. “We will need $40-50.”
US oil prices stood at just under $47 a barrel on Tuesday. Producer countries worldwide have stated that lower prices will hamper investment in expanding capacity. Algeria’s investment will allow the third largest supplier of natural gas to the European Union to boost total gas exports by over 60% by 2015, Khelil told a news briefing in Vienna.
Gas exports should rise to 100 billion cubic meters per year by then, from around 62 billion now, he said. Investment in developing new oilfields will compensate decline in older fields and keep the OPEC member’s production capacity steady at around 1.4 million barrels per day (bpd), Khelil said.
Algeria had no plans to sweeten terms for foreign oil and gas companies after seeing little interest for an oil and gas bidding round in December, Khelil said. The bidding round had simply been poorly timed as the global financial system imploded and dulled appetite for risk among oil companies, he said.
“I still don’t consider it a failure if you still achieve $270 million investment in exploration,” he said. “It is better to have four big companies than 10 small companies which don’t have very deep pockets and end up in problems.”
Algeria may hold another bidding round before the end of they year, Khelil said. British Gas, ENI, E.ON AG and Gazprom won licenses in the bidding round. Algeria had discovered four new gas fields in the past two months and was working on verifying another three discoveries, he said.
Algeria has approved a $5 billion gas pipeline to link new supplies from three new remote desert projects to the country’s gas export system, he said.
Algerian officials have previously said the projects would have capacity to produce up to 10 billion cubic meters of gas per year. The $4 billion of ventures involve variously Gaz de France, Total and Repsol.
Two new 120,000 bpd oil projects will help Algeria compensate for declining output elsewhere, Khelil said. One of them, the El Merk development with ConocoPhillips and Anadarko would cost around $3 billion, he said.
The country was also going ahead with plans for a new $6 billion, 300,000 bpd refinery at Tiaret due to start up in 2013, he said. It would like foreign partners for the venture but would go ahead with it even if they cannot be found.