Sonatrach to boost investment by 41 %

Sonatrach, the Algerian energy group and Europe's second-largest gas provider, has increased its domestic and international investment programme by 41 % in anticipation of a recovery in demand for oil and gas. The company has boosted its investment to $ 63.5 bn for the five years from 2009 to 2013. This compares with a previously announced five-year investment programme of $ 45 bn for 2008-2012.
"In the long term, everybody knows the major supply of energy will come from oil and gas," Chakib Khelil, Algeria's energy minister, said. "If you don't believe that, you don't believe in anything."

Algeria expects to boost its exports of natural gas to 100bn cm by 2015, up from 62 bn today. That target does not include the trans-Saharan gas pipeline that Algeria and Nigeria are in early stages of developing.
Algeria's ambitious investment programme -- which includes petrochemical plants and refineries as well as oilfield expansion aimed at maintaining the country's output capacity at about 1.4m bpd -- comes in spite of the collapse in oil and gas prices over recent months and Algeria's OPEC commitment to boost oil prices by temporarily cutting production.

Oil prices have fallen by about $ 100 a barrel since they reached a high of $ 147 a barrel last July. This has already led to the delay or cancellation of 35 out of 150 OPEC-member oil projects, Sonatrach said.
But Mr Khelil said the resolve of the group of 20 developed countries to stimulate the global economy, would help push oil prices to $ 60 a barrel this year.

OPEC decided against a new round of cuts in oil production. But the cartel said it would remove another 800,000 bpd from the market as its members moved to fulfil pledges already made to cut production by 4.2 mm bpd.
Mr Khelil said: "All the declarations we made are based on the assumption that the G20 will come up with a good package. Based on that, things will get better and that will help the oil price."

Sonatrach needed an oil price of $ 40-50 a barrel for its investments to pay off, he said. Mr Khelil was also confident prices would recover to the $ 70-80 a barrel level needed to allow expensive investments, such as those in the deep waters off Brazil and in the Canadian oil sands, to be profitable.
Such a price was also needed to persuade consumers to use energy efficiently and so alternative energies, such as solar, can be developed, he said.