SIDI REZINE, Algeria (Reuters) – Algerian energy company Sonatrach will invest $3.2 billion over four years to increase pipeline capacity as natural gas output rises from new and existing fields, a top company official said on Tuesday.
OPEC member Algeria has been hurt by a 70-percent fall in oil prices since mid-2014. Its revenue from energy fell by half last year, forcing the government trim spending and freeze some infrastructure projects.
But the government, despite struggling to attract foreign oil companies in recent energy bidding rounds, is determined to increase oil and gas production to keep up exports and meet growing local demand.
“Sonatrach will invest $3.2 billion from 2016 to 2020 to boost its transport capacity, including $530 million in 2016,” Arbi Bey Slimane, Sonatrach’s vice president for pipeline transportation, told Reuters at the company’s Sidi Rezine office east of Algiers.
He said the company wanted to guarantee increased supplies to European clients. The additional transport capacity aims to deliver more volume as new fields in southeast and southwest add production soon. He did not give specifics on amounts or timing.
Algeria produces 1.1 million barrels per day of oil, and 27.44 billion cubic metres of gas, according to official figures.
Sonatrach’s CEO Amin Mazouzi has pledged a “sizeable increase in production” in 2016 as Algeria looks to end more than a decade of stagnation in energy production.
“We will build 1,650 km of pipeline, and six compression and pumping stations by 2020. Our goal is to transport output from new fields located in the south east and south west,” Slimane said.
Algeria is in talks with the European Union as the EU looks to diversify its energy sourcing away from Russia, which supplies around 30 percent of the EU’s gas.
Slimane said Algeria would remain a stable gas supplier for southern Europe.
“The volume exported in 2015 increased by 2 million tonnes equivalent oil (TEP) to reach 99 million TEP. The 2 million were delivered to southern Europe,” he said.
(By Lamine Chikhi. Editing by Patrick Markey and Jason Neely)