Algeria: Sonatrach to invest $40bn over five years

Algeria's state-owned oil and gas group Sonatrach has announced intentions to invest $40 billion between 2022 and 2026 in oil exploration, production and refining, and gas exploration and extraction, CEO Toufik Hakkar said Monday.

"Our investment plan between 2022 and 2026 is about 40 billion dollars, including 8 billion dollars in 2022," Hakkar said explaining that one-third of the investment will involve foreign partners.

"The largest share will be devoted to exploration and production, to preserve our production capacities, as well as to projects in refining to meet the national demand for fuel," he said.

In this interview, the group's boss also announced Sonatrach's steps "towards its return to Libya", where it has suspended most of its activities since 2014.

According to Hakkar, a delegation of the group will go there by the end of February to prepare with its partner the NOC, the Libyan national company, the "conditions of return in order to secure the workers and equipment".

- Important investments in Libya" -

Hakkar stressed that the Algerian group had "made significant investments in oil and gas exploration" in Libya and for no reason will the company "leave these discoveries undeveloped".

Sonatrach's four-year plan includes a refinery in Hassi Messaoud (the largest oil field in Algeria) and an extension of the Skikda refinery (north-east) to convert certain by-products into fuels.

Sonatrach also plans to put into service in January the fourth turbocompressor of the Medgaz pipeline, which transports Algerian gas to Spain and Portugal, according to Hakkar.

The group's revenues have increased by 70% in 2021 thanks to a 19% increase in its hydrocarbon exports, Hakkar said, adding that Sonatrach has exported 34.5 billion dollars in 2021 against 20 billion dollars in 2020.

He explained that the average price of a barrel of oil was around 70 dollars, but "Sonatrach's strategy is based on a price of 50 dollars, to avoid any market fluctuation".

The fourth-largest economy in Africa, the country is particularly exposed to variations in hydrocarbon prices because of its dependence on oil and gas revenues, which account for more than 90% of external income.

The recent rebound of crude oil has helped to reduce the Algerian trade deficit, which contracted "from 10.504 billion dollars at the end of September 2020 to 1.571 billion dollars in September 2021", the Bank of Algeria said at the end of December.

In 2011, Sonatrach had announced a $60 billion investment plan for the period 2011/2015 to strengthen its production capacity.