LNG

May 29 (LNG) – Long-standing LNG exporter Algeria has held talks with one of the newest LNG nations Mozambique on future cooperation. Mozambique’s Minister of Economy and Finance, Ernesto Max Tonela, met in Algiers with Algerian Energy Minister Mohamed Arkab and both countries have agreed to cooperate on natural gas exploration and production issues and on LNG markets.

   “Algeria offered to share its experience in terms of the natural gas sector in addition to the development of gas fields and the production and transportation of LNG,” said Arkab. “Algeria also wishes to provide support to Mozambique from state energy company Sonatrach through training in the hydrocarbon professions as well as the transfer of Sonatrach’s know-how in international energy trading markets,” the Algerian minister added.

Baker Hughes, the US liquefied natural gas equipment-maker and energy services and technology company, was awarded a contract from Algerian state-owned oil and gas company Sonatrach for a gas-boosting project to supply Italy and the European Union.

The project is in the Hassi R’Mel gas field in Laghouat province of central Algeria, which produces and supplies over half of the North African nation’s natural gas.

The giant Hassi R’Mel field had been in long-term decline but this new venture is aimed at increasing gas volumes.

The project will also increase and stabilize feed-gas supplies to the Mediterranean Coast from the Hassi R'Mel hub to the port of Arzew where one of the nation’s two LNG exports plants is located. in Algeria.

System support

Baker Hughes is part of a consortium with Italian engineering company Maire Tecnimont that will supply Sonatrach with 20 compression trains to enhance the resilience of Algeria’s energy system.

“The agreement strengthens Italy-Algeria bilateral relations as Baker Hughes and Tecnimont will leverage their Italian industrial expertise to deliver on the project,” said a statement.

The contract is part of a broader order awarded to the consortium.

The signing ceremony for the contract took place in Algiers in the presence of the three company Chief Executives Rachid Hachichi of Sonatrach, Lorenzo Simonelli of Baker Hughes and Alessandro Bernini of the Maire Tecnimont group as well as Mohamed Arkab, Algeria’s Minister of Energy and Mines.

The part of Baker Hughes award comprises the supply of the 20 compression trains based on the US company’s Frame 5 gas turbine and BCL compressor technology, which will be installed across three gas boosting stations within the Hassi R’ Mel gas field.

The field is located 550 kilometres south of Algiers and is the largest gas field in Algeria and will a key source of energy supply for Algeria and the EU.

Key project

Baker Hughes CEO Simonelli said the agreement is part of an historic collaboration with Sonatrach for key energy projects.

“We have long believed that it is critical to increase gas within the overall global energy mix,” added Simonelli.

“This project helps to solve for energy producers the multi-faceted challenge of driving sustainable energy development as energy demand increases,” the CEO explained.

“ We are proud to support such a critical energy project in partnership with Tecnimont,” Simonelli stated.

Algeria became the second-largest gas supplier to Europe in 2023, further strengthening the country’s role in enhancing the energy security of the continent, particularly in Italy where Algeria represents the biggest single source of import.

The Hassi R’ Mel project is part of a broader strategic collaboration between Algeria and Italy, which includes recently signed agreements to foster bilateral cooperation and for Italy to provide financial support for Algeria’s gas production.

Sonatrach, the Algerian national energy company, has signed a supply contract for pipeline natural gas to be delivered to Germany via pipelines to southern European as the Germans now appear to be less enthusiastic about replacing Russian gas with LNG imports from the US and Qatar.

The pipeline gas agreement was signed during a visit to Algiers by German ministers and is with Leipzig-based VNG Handel & Vertrieb GmbH, a wholly owned subsidiary of VNG AG.

The VNG group is involved in energy trading and sales as well as natural gas and energy transportation by pipeline and gas storage. 

No details were released on the length of the supply contract nor on the volumes of natural gas Algeria would be delivering to Germany from its output of more than 100 billion cubic metres per annum.

Sonatrach, the national oil and gas company with two LNG export plants at Arzew and Skikda on the Mediterranean Coast as well as gas pipelines connected to Spain and Italy, said the deal was signed at a ceremony chaired by Algeria’s Minister of Energy and Mines Mohamed Arkab.

Green-backed gas deal

The signing of the VNG natural gas deal was also witnessed by the visiting German Vice-Chancellor and Federal Minister of Economic Affairs and Climate Action, Robert Habeck, who is a member of the left-wing Green Party in the three-party German coalition government.

Rachid Hachichi, the Chief Executive of Sonatrach and his VNG counterpart Ulf Heitmüller spoke at the signing ceremony.

“I must express my satisfaction with the strengthening of the energy partnership with Europe through this historic contract with the company VNG, which will lead to the start of natural gas deliveries to Germany,” stated Hachichi.

Ulf Heitmüller, the CEO of VNG, said he was delighted to have been able to conclude a medium-term gas supply contract with Sonatrach.

“VNG thus becomes the first German company to purchase gas via pipeline from Algeria,” Heitmüller added.

Energy partnership

“This contract lays the foundations for a relationship of trust in terms of supply, opens new perspectives and strengthens the German-Algerian energy partnership,” stated the VNG CEO.

VNG’s Heitmüller added that Algerian natural gas would now be “an essential part” of guaranteed energy security for Germany,

“The purchase of Algerian gas via pipeline to Germany constitutes an additional diversification of VNG's purchasing portfolio, thus strengthening its position as a reliable partner towards its customers and making the company an important contributor to security of supplies,” Heitmüller declared.

Algeria is preparing for more pipeline natural gas deliveries to the European Union as well as more LNG exports as new gas fields are developed amid more discoveries in the prolific gas basins of the North African nation.

The Algerian state oil and gas company Sonatrach has just appointed a new Chief Executive in Rachid Hachichi and he has just held talks with Claudio Descalzi, the CEO of Italian major Eni, the company with the most widespread interests in Algeria.

The talks between Descalzi and Hachichi in Algiers on October 12 were also attended by the Algerian Minister of Energy and Mines Mohamed Arkab.

“Eni and Sonatrach shared the joint programs for the development of Eni’s operated gas production as well as gas and LNG exports to Europe,” said Eni.

Descalzi also updated Minister Arkab on the progress of the accord signed by Eni and Sonatrach in January 2022 on upstream decarbonization, includingdetection of fugitive gas emissions in pipelines and plants and the identification of flaring-down opportunities in Sonatrach’s fields.

Eni currently has equity production of about 130,000 barrels of oil equivalent per day and is the key international energy company in terms of Algerian oil and gas operations.

Ten discoveries

Sonatrach also revealed that Algeria had made 10 new hydrocarbon discoveries in the nine months to the end of September 2023, adding to the 16 other discoveries made in 2022.

Arkab met the Eni CEO after also attending the 25th ministerial meeting of the Gas Exporting Countries Forum (GECF) held on October 10 in Malabo, the capital of  Equatorial Guinea, an LNG producer and exporter from its Punta Europa plant on Bioko Island.

The GECF ministers issued a statement declaring that it was “ill advised” to call for any halt in natural gas investments.

“Halting gas investment would curb supplies, lead to an excessive rise in prices and a potential return to coal, as happened in 2022, undermining emissions reduction targets,” said the GECF final communiqué.

Arkab noted that participants at the Malabo meeting highlighted the need for “unrestricted investment” while “strengthening transcontinental financial cooperation in this matter”.

The GECF also advocated more “equitable access” to all technologies related to the exploration, extraction and exploitation of natural gas.

Sonelgaz, the national electricity and natural gas company of Algeria, has been put in charge by Minister of Energy and Mines Mohamed Arkab of helping to manage “a gradual and responsible” energy transition backed by gas while noting Sonelgaz has run renewable integrated energy projects since the 1980s.

During a speech at Algeria’s 27th Energy Day held on March 4 with an event at the National Polytechnic School of Algiers, the Minister outlined the North African nation’s approach to complement its domestic energy needs while exporting more LNG and pipeline gas to Europe.

“Algeria's energy policy aims to move forward resolutely towards the realization of a progressive and responsible energy transition,” said Arkab.

“This requires the adoption of a diversified energy mix taking into consideration all the energies available, the least expensive and the cleanest while benefiting from the achievements of improving energy capacity and working to control energy consumption and to preserve natural resources for future generations,” explained Arkab.

In this regard, Arkab recalled that Algeria has worked since the 1980s, through Sonelgaz, to integrate renewable energies, by supplying 20 villages with solar energy in the South of the country with the creation of solar power stations with a total power of 344 megawatts (MW) and the launch of hybrid projects with capacity of 50 MW.

Various roles

As part of the development of the use of electric vehicles in Algeria, the Minister said that Sonelgaz would carry out experimental projects with a view to setting up 1,000 charging stations for electric vehicles.

Arkab added that natural gas flaring in Algeria was targeted to reach zero and that was the responsibility of oil and gas company Sonatrach.

The Minister also explained that similarly, Sonatrach was working with the Algerian Space Agency and in collaboration with the World Bank to carry out scientific and technological research with a view to measuring and definitively limiting methane gas emissions.

The Minister said that Algeria’s Energy Day was an important opportunity to debate and exchange views between experts, economic operators and sectors concerned with energy, scientific research and the environment.

This was an opportunity for energy experts to lead several conferences, and engineering students to present presentations on themes related to energy resources and the project of an efficient energy model by 2035 and 2050. .

Sonatrach spending

Sonatrach already plans to invest more than $30 billion in the exploration and production of hydrocarbons and to upgrade facilities to improve its position in global markets for LNG as well as pipeline gas for Europe.

As part of Sonatrach's five-year investment plan (2023-2027) the sum of $40Bln has been set aside and more than $30Bln will be allocated to exploration and production with the objective of increasing production in the short and medium term.

Nearly $1Bln will be devoted to Sonatrach’s projects aimed at the company's contribution to the energy transition. These include flared gas recovery projects at production sites and the LNG plants at Skikda and Arzew.

Sonatrach signed a contract in 2022 with two Chinese engineering companies, Sinopec Luoyang Engineering and Sinopec International Petroleum Services Corp., for improvement work at the Skikda LNG plant.

The contracts include the dismantling of two 20-year-old storage tanks and the construction of a new tank of 150,000 cubic metres capacity and the modernization of the jetty and loading facilities to accommodate larger vessels.

The European Union’s Commissioner for Energy Kadri Simson is in Algeria for two days of talks on strengthening the EU’s energy cooperation with the Algerians after the failure of an EU summit last week to agree a natural gas price cap that would have affected LNG trading.

Algerian energy company and LNG exporter Sonatrach is on track to make $50 billion record earnings this year and the North African nation also attended talks during the week on the 4,000-kilometre Trans-Saharan Gas Pipeline (TSGP) from Nigeria via Algeria to bring African natural gas to Europe.

Sonatrach, the Algerian national energy company and LNG producer, said it signed an agreement worth US$490 million with Chinese major Sinopec in the form of a production sharing contract for the Zarzaitine block in the Illizi basin of eastern Algeria.

Algeria, the largest supplier of LNG and pipeline natural gas to the neighbouring countries of the Mediterranean Basin, said it would remain a reliable supplier of gas and oil as Algerian President Abdemadjid Tebboune made a state visit to Turkey and Minister of Energy and Mines Mohamed Arkab spoke at a Southern Europe energy conference at Sorrento in Italy.

Algeria has said that it was preparing to sign a new pipeline natural gas supply agreement with Italy for around 9 billion cubic metres per annum.