Oil and gas sector plays vital role in Tunisia’s economy
The oil and gas sector is playing a vital role in Tunisia’s economic success story. Rather than being a major
export earner in its own right, Tunisian gas is proving to be an increasingly important power sector feedstock,
providing the basis for the country¹s growing manufacturing exports. At the same time, Tunisia's limited oil
output is helping minimise expensive oil imports.
The Tunisian government is particularly keen to secure access to cheap and plentiful electricity in order to help domestic companies make the most of opportunities offered by the European Union (EU). Under the Euro-Mediterranean Partnership (EMP) of 1995, all trade barriers between Tunisia and the EU are due to be lifted by 2008. Tunisian power tariffs are currently lower than those in almost all EU member states and the country's thriving manufacturing sector is preparing for 2008 with great enthusiasm.
The Tunisian economy was hit by a fall in visitor numbers as a result of the murder of German tourists at the Djerba
synagogue in April 2002 but the government is confident rising exports can keep the economy on track. With exports
for the first half of 2003 15 % up on the previous year and annual growth predicted to remain a steady 5 %, the
outlook for the Tunisian economy and for consumer and energy demand remains good. High growth is vital if the economy
is to absorb the increasing number of young people entering the labour market.
The latest IMF report on Tunisia praised its "well coordinated macroeconomic, structural and social policies" but urged further economic reforms. The government, however, remains sensitive to domestic attitude to rapid change and looks set to maintain its gradual reform policy at a controlled pace.
Most oil production comes from just two fields: the Ashtart complex and ENI-Agip's El Borma field, close to the
Algerian border. The two account for around 75 % of national output and contain around 250 mm barrels of oil between
them. The remaining quarter of production is concentratedon the Al Manzah and Sidi El Killani fields. Production rose
in tandem with consumption during the 1980s and peaked at 114,000 bpd in 1992, but falling output on the El Borma
field has seen production fall to around 75,000 bpd currently and the country has become a net importer.
In an effort to maintain output, the government has improved the investment environment and has managed to encourage the development of marginal fields.
State owned Entreprise Tunisienne d'Activites Petrolieres (ETAP) continues to be active in the sector, but small
foreign independents have taken up a number of fields which ETAP previously believed to be uneconomic. Taxes on oil
and gas production have been cut from 75 % to 50 % and acreage is offered to interested independents on condition
that ETAP is allowed to farm in, if and when discoveries are made.
A joint Algerian-Tunisian company, Numhyd, has been set up to explore acreage along their common borderlands, both on and offshore. An agreement setting up the new company was signed in Tunis in July by Algerian energy and mining minister Chakib Khelil and Tunisian industry and energy Minister Moncef Ben Abdallah.
Algerian energy parastatal Sonatrach and ETAP each hold 50 % stakes in the new venture, which looks to set to expand
its remit next year by exploring acreage away from the border, in the Kaboudia area around 200 km east of Tunis. The
company has also won a contract to explore Algerian blocks 220A and 220B in the province of Illizi.
But while oil output has gradually fallen, the gas sector has flourished in recent years. British gas specialist BG and EuroGas Corporation of Canada both hold a number of permits. BG has held a contract to develop the Ulysse permit since 1997 and plans further seismic and drilling on the block, but the company's biggest project in the country is the Miskar Field on the Gulf of Gabes Miskar Concession.
The 1.5 tcf field has supplied 205 mm cfpd of natural gas to the Rades cogeneration plant since May 2002. The 471 MW
plant-- Tunisia's first independent power producer (IPP) -- was built at a cost of $ 260 mm under a 20 year build own
operate transfer (BOOT) contract by the Carthage Power Consortium of PSEG of the US and Japan's Marubeni.
Thanks to a positive reappraisal of the field by BG that boosted estimated reserves by 50 %, Miskar will also supply the Hannibal gas processing installation for use in the new Barca power plant. Barca's first 500 MW phase is scheduled to come on stream in 2005, while the second 500 MW phase should be completed four years later. Other BG fields listed for development are the nearby Hasdrubal and Jurgurtha complexes.
Other firms continue to invest. Petro Canada took a 72.5 % stake in the Mellita permit, which is being developed by
fellow Canadian company Centurion Energy in August. The newcomer is to provide all of the $ 13.5 mm investment
required to fund a 2-D seismic survey of the area, plus the drilling of two exploration wells: one offshore and one
on the island of Djerba. However, ETAP has the right to take a 50 % stake in the venture should the two companies
prove successful, providing it can compensate the Canadian firms for their investment.
Centurion has already developed its Ezzaouia and El Biban concessions for use in power generation. The company has set up a joint venture with a consortium of North American investors for the development of the 27 MW Societe d'Electricite d'El Bibane (SEEB) plant near Zarsis. The $ 30 mm project is the first of a string of planned projects to be developed under new legislation which enables smaller foreign independents to make the most of marginal gas fields for use in domestic power production.
Societe Tunisienne de d’Electricite et du Gaz (STEG) is to purchase the power produced by the project over a
period of about 20 years. Centurion has had less success on its Grombalia and Jorf permits, although its Al Manzah
field continues to pump a modest 2,000 bpd.
The combined effect of all these combined gas and power projects, from the 471 MW Rades scheme to the 27 MW SEEB plant, will be to boost Tunisia's installed generating capacity from 2,385 MW to 3,540 MW by 2006. This should satisfy both residential and industrial demand, although the rapid growth in residential consumption recorded over the past decade is likely to slow, thanks to near completion of the electrification campaign. Just 8 % of rural homes remain unconnected to the national or local grids.
In addition, the new plants could enable Tunisia to develop a power export sector. The 225 kV interconnector linking
Tunisia and Libya should now be operational, completing one of the last links in the North African Power Pool.
Tunisian electricity could therefore be sold anywhere in North Africa, with the potential for future exports to the
rest of the Middle East and even the EU.
Given the wealth of oil and gas reserves elsewhere in the region, it is remarkable that the government is able to entice IPPs seeking wider markets to set up plants in the country. Such initiative should enable Tunisia to make the most of the opportunities apparent in EMP.