Algeria’s state-owned oil and gas company SONATRACH will launch offshore drilling with France’s TOTAL (NYSE: TOT) and Italy’s ENI (NYSE: E) on two sites in the east and west of Algeria at the start of 2019, its CEO said on Oct. 7.

“We should start drilling at the beginning of next year,” Abdelmoumene Ould Kaddour told reporters on the side-lines of a signing ceremony with TOTAL for a petrochemical plant that will produce 550,000 tonnes of polypropylene per year.

“The potential is huge. We have gas in the east around Skikda, and oil in the west around Mostaganem,” he added.

SONATRACH and TOTAL have also agreed to invest $406 million to boost the output of the gas field named Tin Fouye Tabankort Sud.

“Our partnership with TOTAL is good and it allows us to implement our long-term strategy,” Ould Kaddour told reporters.

TOTAL Chairman and CEO Patrick Pouyanne said in a statement earlier on Oct. 7 that TOTAL and SONATRACH had signed new agreements, including a contract to develop the Erg Issouane gas field.

In the meantime, here is the same event as reported by the francophone local media: Algeria is officially embarking on offshore oil exploitation. The CEO of SONATRACH, Abdelmoumen Ould K, confirmed that the first offshore drilling would be launched in the first half of 2019.

For Algeria, these new drillings have become more than an alternative to oil extracted onshore. It is important to know that the recurring increase in crude oil and technological advances in offshore operations offer more opportunities and margins for petroleum companies.

In all likelihood, it is the Italian giant ENI who as the partner of SONATRACH for the development of its offshore activities. SONATRACH has long conducted negotiations with ENI’s to launch these explorations. These negotiations have advanced considerably since the conclusion in January 2017 of a memorandum of understanding (MoU) with the Italian company Versalis (a 100% subsidiary of the Italian group ENI) to carry out studies on petrochemical projects.

The MoU with Versalis deals with feasibility studies for the realisation of petrochemical complexes in Algeria, and the strengthening of cooperation between the two companies in the field of Petrochemicals.

It is to be noted that offshore oil exploitation has its peculiarities if compared to the conventional oil exploitation. This difference is due to the environment in which it occurs. In fact, up to 200 m in depth, it is possible to fix the operating platform. More than 200 m, pressures are increasing and becoming less sustainable. The control of operations, even though robots, is then more difficult. In these conditions, floating platforms are more appropriate. Most offshore oil farms do not exceed 500 m in depth.

The first offshore drilling will be carried out in the provinces of Oran and Béjaïa, delimited as offshore exploration zones after seismic studies were carried out in their territorial waters. The interpretation of the 2d seismic data of the 1200 km of the Algerian coasts, led the prospecting to these two provinces. In Algeria, offshore areas that are likely to hold hydrocarbons are located between 2000 and 2500 metres in depth, according to the results of the first seismic studies carried out on the Algerian offshore. As for the cost of single offshore drilling, it is close to $100 million.

Abdelghani Henni, back in January wrote that Algeria ranks third globally after China and Argentina in technically recoverable shale gas reserves with 20 Tcm, according to the U.S. Energy Information Administration. (Source: Shutterstock.com)
Developing abundant shale gas has become a necessity for Algeria to reverse its declining domestic natural gas production and safeguard its economy.  Shale gas is however not for NOW. The struggle is ferocious between the French and the Americans and it is not over yet.

Meanwhile, it must be said that all the onshore and diminishing conventional oil reserves are located deep in the Algerian Sahara whereas all offshore are obviously in the country’s territorial waters of its northern shores.  Shale gas on the other hand prospected pockets are mostly all located also in the Sahara but close to many inhabited oases whose populations are predominantly and adamantly against any exploration of such fossil resources.