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Algeria: The Saharan Promise

Algeria: The Saharan Promise. US - Algeria Energy Forum, Washington DC May 14, 2007. Agenda. Trends in North Africa gas projects Future success factors BP’s operations in Algeria. Trends in North African Gas Projects. Strong competition for project tenders

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Algeria: The Saharan Promise

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  1. Algeria: The Saharan Promise US - Algeria Energy Forum, Washington DC May 14, 2007

  2. Agenda • Trends in North Africa gas projects • Future success factors • BP’s operations in Algeria

  3. Trends in North African Gas Projects • Strong competition for project tenders • Still few integrated full value chain projects • Gas export infrastructure promoted by both upstream resource holders and gas marketers • NOC’s desire to extend along the entire gas value chain • Infrastructure reaching capacity • Increasingly challenging fiscal terms • Rising global demand for gas and LNG

  4. Rising global demand for gas & LNG

  5. US gas and LNG demand: also on the rise Rise in US LNG imports will create opportunities for North Africa

  6. BUT…few major gas projects under development

  7. Alignment along the Gas Value Chain: the key to success Downstream Midstream Upstream Pipeline Power LNG Production Liquefaction Regasification Industry/Other

  8. Future Success Factors • Find cost competitive gas • Significant yet-to-find resources but increasingly difficult to extract • Advantaged cost structure and access to markets are key to a sustainable business • Reductions in long lead times for big gas projects • Application of worldclass technology

  9. Application of technology Onshore gas pipelines - high strength materials, dense phase flow Advanced seismic acquisition and data processing Tight gas expertise

  10. Future Success Factors • Competitive gas pricing to the power sector relative to coal and nuclear • Flexible contracts • Stable fiscal terms • Sensitive to the environment • Access and development of skilled workforce • Ability to manage complex projects

  11. BP in Algeria: Background • Entered Algeria in 1950s. Exploration, service stations and lubricants • Continued operations after independence • Exited in late 1960s and sold its assets • Returned to Algeria in early 1990s • Signed two major gas deals (In Salah and In Amenas) in mid-1990s • Today, largest foreign investor in Algeria: over $4bn to date • A team of 250 BP staff and 2,000 contractors • A long-term partner of Sonatrach

  12. Operations in Algeria • Gas: Two of the largest JVs • In Salah • In Amenas • Oil: Rhourde el Baguel JV • 3 new exploration blocks • LNG JV: Isle of Grain (UK) • Lubricants (BP & Castrol) • Solar • Purchase/trading of crude oil products

  13. Environmental leadership In Salah • One of the world’s largest Carbon Capture & Storage projects • A joint effort between BP, Sonatrach and Statoil • 1 million te/yr of produced CO2 compressed & re-injected back into the reservoir • Impact of this project is equivalent to taking 250,000 cars off the road every year • Flagship project to validate CC&S feasibility

  14. Investing in education & training • Vocational training • Establishing five vocational centers in the Sahara to help Algerians develop practical work skills • Enterprise development • Providing training for young Algerian entrepreneurs • Setting up and managing small businesses, with a focus on the environment • Algerian Petroleum Institute • Establishing a partnership to provide practical work experience and technical workshops conducted by BP specialists

  15. Conclusions Opportunities: • Algeria remains rich in undeveloped gas reserves • The market for Algeria’s gas & LNG is growing • Algeria has long successful history in oil & gas • Sonatrach: a partner of choice Challenges: • Undiscovered gas is increasingly difficult to extract • Infrastructure is near saturation • Rising project costs (a global trend) • Fiscal environment

  16. Thank you

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