OBG talks to Abdelhamid Zerguine, CEO, Sonatrach

Interview: Abdelhamid Zerguine

In what way will the new hydrocarbons law encourage foreign partnerships?

ABDELHAMID ZERGUINE: The amendments to the hydrocarbons law will potentially boost foreign investment, in particular exploration activities, as new incentives and synergies will be introduced to the sector. The public authorities aim to strengthen exploration activities while increasing the country’s reserves, through efforts to boost unconventional resources. We plan to intensify investment, exploration and operations in upstream activities by investing $12bn between 2012 and 2016. This will be supported and strengthened through partnerships with several large companies. Cooperation agreements in the field of unconventional gas continue to progress, and have show encouraging early results. Attracting strategic partners will invariably benefit the sector by improving collaboration and securing the transfer of know-how, especially in the fields of management and technical expertise.

How do you assess the current performance of the petrochemicals industry, and how can it improve?

ZERGUINE: The existing government is strengthening the national industrial base by integrating the petrochemicals sector into Algeria’s growth strategy and stimulating downstream investment. Given the abundance of natural resources, opportunities to develop the industry are numerous. Sonatrach is steadily exploring the architecture to optimise these, including the availability of basic raw materials, the proximity of large consumer markets for products stemming from the industry and increasing global demand. Our current objectives are directed toward: meeting domestic demand for fertilisers; identifying relevant materials to develop the agriculture sector; reducing the import bill; acquiring and capitalising on technological know-how; strengthening downstream small and medium-sized enterprises and small and medium-sized industries involved in petrochemicals projects; and valuing hydrocarbons resources to maximise the added value.

How can unconventional deposits of hydrocarbons and offshore areas be explored, and what is the potential for developing renewable energy?

ZERGUINE: We have launched several studies on measuring the potential of shale gas, in addition to forging cooperation agreements with a number of foreign companies. These agreements are structured according to data availability to identify the areas with the greatest potential, the drilling of vertical or horizontal wells for the acquisition of data and information, and the possibility of an experimental project should the economic conditions be met. The same approach is being adopted for the exploration in offshore areas.

With respect to renewable energy, the government has approved an ambitious programme aimed at developing energy efficiencies. Plans are geared toward generating 22,000 MW of renewable energy between 2011 and 2030, of which 10,000 MW could be exported. On our side, we intend to produce 40% of energy from renewable sources before 2030. Significant challenges must ultimately be overcome to realise this goal, particularly in research and development. Other issues to address include improving the economical feasibility of renewable projects, developing efficient production techniques and creating the required infrastructure to better interconnect with Europe. The partnership is therefore a strategic priority.

What improvements can be made to strengthen production and transport of hydrocarbons?

ZERGUINE: Pipeline transport is one area that will optimise services for partners, specifically by improving the transport capacities of southern and northern production areas. This is together with expanding storage capacity and improving the treatment and transport of hydrocarbons. A significant overhaul of the development programme has been planned and will bring transport capacity up to 402 tonnes of oil equivalent (toe) per year in 2017 from 362 toe per year expected at the end of 2012, an 11 % year-on-year increase.