Algeria to Boost Gas Shipments to Asia on Expanded LNG Capacity

LNG carrier Cheikh el Mokrani, Image: Sonatrach

March 3 (Bloomberg) — Algeria plans to increase natural gas shipments to Asia where the fuel costs more than in Europe, the Sahara nation’s traditional market, state-oil company Sonatrach Chief Executive Officer Abdelhamid Zerguine said.

“There is stiff price competition in Europe,” he said at a conference today in the capital city of Algiers. “We will focus our efforts on selling more in Asia where prices are 50 percent higher.”

The North African country’s capacity to load gas on tankers will rise this year as it expands two plants that liquefy the fuel for seaborne shipments. Africa’s largest gas producer, Algeria also exports the fuel to Europe through three pipelines spanning the Mediterranean Sea.

Algeria’s gas shipments dropped 11 percent last year to 45 billion cubic meters, according to Societe Generale SA estimates. The country’s deliveries have declined since peaking in 2005 at 65 billion cubic meters as local consumption increased 40 percent and production fell 12 percent.

The country’s gas exports should grow again starting in 2016 as new energy projects come on stream, Ali Hached, senior adviser to the energy minister, said in an interview at the same conference. Algeria’s combined output of oil and gas should increase 13 percent to 220 million metric tons of oil-equivalent in two years, Zerguine told the audience.

Gas output shrank last year after terrorists attacked the eastern In Amenas field, damaging the site and prompting BP Plc and Statoil ASA, the operating companies, to withdraw staff from the facility and also from another gas field, In Salah, in the central desert.

Algeria, a member of the Organization of Petroleum Exporting Countries, inaugurated an enlargement last month of the liquefaction plant at the eastern port of Skikda and plans later this year to commission an LNG unit at Arzew, in the west.

The two expansions will lift the nation’s annual capacity for seaborne shipments by 16 billion cubic meters to 60 billion cubic meters this year, according to Sonatrach. The country also has two gas pipelines running to Spain and one to Italy.

– Salah Slimani and Maher Chmaytelli, Copyright 2014 Bloomberg.

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