Algeria awards three of ten exploration licenses

On December 20, Algeria's Energy Ministry awarded the first three out of ten exploration and production licences on offer in its latest bidding round.
According to Djilali Takherst, the head of the energy ministry's licensing committee, a consortium led by China National Offshore Oil Corporation (CNOOC) was awarded the Hassi Bir Rekaiz permit, while a consortium led by Total received the Ahnet permit, and a Repsol-YPF-led consortium was granted the South-East Illizi permit. The other partners of the consortia remain unknown.

A Total-led consortium has been awarded the Ahnet permit, which covers 17,358 sq km. The permit includes seven exploration blocks and is expected to hold huge gas reserves. The permit is being operated by state-owned Sonatrach, which is to sell a stake in the permit to the consortium.
Sonatrach is looking to secure capital expenditure of between $ 2.8-3.5bn for the initial phase of the project. The Algerian company plans to build a gas pipeline from Ahnet to Hassi Messaoud from where gas could be transported via existing gas pipelines to Hassi R'Mel, the country's main hub for export to Europe. First production from Ahnet is expected in 2014.

The South-East Illizi permit, located in the 15,208 sq km Illizi Basin, has been awarded to a Repsol-led consortium. At present, a total of 65 wells have been drilled in the basin, with 15 discoveries reported. Although the basin holds strong potential, only one out of three permits on offer in the basin has so far been awarded.

Finally, a CNOOC-led consortium was granted the Hassir Bir Rekaiz permit, which is located in the Berkine Basin that covers a total area of 20,943 sq km.

Algeria's Energy Minister Chakib Khelil, commented: "We are happy with the result, though we wished to award all the 10 permits in offer. It is possible that foreign firms are [undergoing] special circumstances linked to the global downturn and the international gas market."
However, with only three out of ten permits having been awarded, theresult seems far from successful, particularly after the previous licensing round also only resulted in the award of 4 out of 16 permits.