Algeria, a North African country, needs to exploit its shale gas resources to balance a rise in local energy consumption that is affecting vital exports, but time and far-reaching reforms at the state energy firm will be required to develop the industry.
The North African country is a key gas supplier to Europe, but exports have suffered different factors like delays to several gas projects with a sharp increase in the use of subsidized gas at home as the population has grown.
According to the state energy firm, Sonatrach, domestic gas consumption has more than tripled in the decade to 2014 and its gas exports are expected to reduce from 57 billion in 2016 to 54 billion cubic meters in 2017.
In effort to alter the fall in exports, Sonatrach has started talks with France’s Total and Italy’s ENI to exploit shale resources estimated at 22 trillion cubic meters, which is the world’s third largest. Although, the CEO of Total has said in December that his company was open to greater cooperation after Sonatrach said it would work with Total on shale gas, the foreign firms have not confirmed this.
The talks are aimed to overtake a sprawling group hit by inefficiency, delays and corruption scandals and are part of changes pursued by Sonatrach’s new chief, Abdelmoumen Ould Kaddour, a U.S.-trained engineer who took office in March.
New shale gas projects will not just happen straightaway as only limited geological survey data exists and the legislation needs to be changed to offer more attractive terms to foreign firms. Significant western firms are worried about gas supplies as Algeria’s exports drop and are also eager to break the link between what they pay for Algerian gas and the oil price, which can lead to losses if crude prices are high.