Algeria pulls back on LNG as pipelines to Europe take priority along with gas for industry

Wednesday, 03 July 2019
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Algeria, the North African liquefied natural gas producer, has agreed a renewed deal with Tunisia and Italian energy company Eni for the pipeline transportation of more natural gas to southern Europe as the Algerians also prepared to direct new gas finds into industry rather than LNG exports.

Algerian LNG exports have been falling and last year they dropped by 18.2 percent to 10.10 million tonnes compared with 12.34MT the previous year at its two liquefaction plants at Skikda and Arzew on the Mediterranean Coast.

Tunisian Industry Minister Slim Feriani and Eni Chief Executive Claudio Descalzi signed the new agreement to transport Algerian natural gas by pipeline through Tunisia.

The agreement follows another reached with Algerian state energy company Sonatrach in May in relation to the purchase of gas and transport across the Strait of Sicily and completes the contractual framework that allows Eni to import Algerian gas into Italy.

With this agreement, Eni said it was undertaking to operate the Algeria-Tunisia-Italy pipeline for the next 10 years, through its subsidiary Trans-Tunisian Pipeline Company (TTPC), ensuring the necessary reinvestment for modernising infrastructure and taking advantage of the exclusive rights to the entire transport capacity.

Built in the early 1980s and strengthened subsequently over several phases, the trans-Tunisian pipeline consists of two lines, 48 inches wide and around 370km long, from the Algerian-Tunisian border near Oued Saf to the Cap Bon headland. It also has five compression stations.

“With a transport capacity of approximately 34 billion cubic metres per annum, it plays a key role in Italian and Tunisian energy supply and will continue to do so,” stated Eni.

The Italians added that the pipeline contributed to the diversification of sources and to the energy transition in the Italian market.

“The agreement represents a further confirmation of Eni's long-standing commitment to North African countries, not only in hydrocarbon exploration and production, but also in managing transport infrastructure,” added Eni.

Sonatrach Chief Executive Rachid Hachichi also met with Eni counterpart Descalzi to review progress on boosting natural gas output in the North African nation.

Sonatrach reported in early 2019 that several petrochemical joint ventures were under negotiation to monetise its natural gas through channels other than pipeline and LNG exports.

Industry is therefore expected to remain the main driver of natural gas consumption growth in Algeria in the near future.

Residential and commercial demand is set to remain stable, with limited consumption growth owing to gas already having high market penetration in Algeria.

Sonatrach and Eni confirmed the intention to accelerate the development of new oil and gas projects in the North Berkine basin in the Algerian desert that will lead to a significant increase in national production.

The project is composed of two phases. The first is related to oil development and has started up.

The second one, a natural gas project, is scheduled to come on stream by the end of September 2019 with a 180-kilometres pipeline being completed.

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