DOHA: Algeria, Africa’s largest gas exporter, may drop plans to build a gas-to-liquids plant and delay some energy projects due to soaring costs, the country’s oil minister said yesterday.
Chakib Khelil said the plans to build a 36,000 barrel-a-day GTL plant at Tinrhert may be shelved.
“We had three bidders and one dropped out,” he told reporters on the eve of the Gas Exporting Countries Forum in Doha. “It is too expensive apparently, so we may drop it.”
Consuming nations may suffer as Middle East energy producers cut back on spending to expand output capacity from some of the world’s largest oil and gas reservoirs because rising construction costs may render some ventures economically unviable.
Qatar’s Deputy Premier and Energy Minister HE Abdullah bin Hamad al- Attiyah had said in February that the future of multi-billion dollar GTL projects that involve Marathon Corp and Conoco Philips remained in doubt and wouldn’t be decided until a study was completed in 2009.
In February, ExxonMobil Corp and Qatar Petroleum scrapped a GTL project, for which cost was partly to blame. GTL converts natural gas to liquid petroleum products, such as vehicle fuels.
Algeria also faces delays in liquified natural gas projects, with Spain’s Repsol recently saying the Arzew LNG plant would not be completed on time.
“We are not happy about that. They won it in a bid. So we insist that it comes onstream in 2009,” Khelil said.
Some of the other projects in Algeria, including the 4.5mn tons a year Gassi Touil plant and the Skikda LNG complex of an identical size, have been delayed from 2009 to 2011.
The projects “are being delayed because of haggling over costs and lack of subcontractors,” Khelil said. The minister also said Algeria plans to launch an oil and gas exploration round in 2007, and is exploring joint ventures with Russia and Brazil to develop energy projects.
Sonatrach, Algeria’s state-owned oil and gas company, recently signed a memorandum of understanding with Russia, which holds the world’s largest gas reserves, to cooperate on exploration projects.
“We do joint investment projects in other countries. We are looking for exploration and downstream projects together,” Khelil said.
Algeria also recently signed an MoU with Brazil’s Petrobras to help develop the country’s offshore acreage. “They have developed technology for deep offshore, and we have deep offshore that has not attracted a lot of interest,” Khelil said.
Khelil also said that Algeria planned to build nuclear power stations to meet rising demand for electricity after it passes a law later this year to allow the development of atomic plants.
“We will issue a new law on nuclear power. We have to research nuclear reactors. We expect to sign an agreement for a nuclear plant in the next 20 to 25 years.”
Algeria, Africa’s largest gas exporter, follows Arab states in the Gulf which have collectively decided to potentially build nuclear power facilities.
Neighbouring Iran is locked in a stalemate with the US and the UN over its decision to press ahead with its nuclear programme.
The Islamic republic has rejected calls to suspend its nuclear activities, which include the installation of 3,000 uranium enriching centrifuges, regardless of tighter economic sanctions and possible military action. The US is concerned Iran’s nuclear research is a cover for developing weapons technology.
Middle East states, where economies are booming from record high oil revenue, are seeking to build nuclear plants to meet surging demand for electricity and seawater desalination.
“They want to stretch the reserve life of their most important export item and have an alternative energy source,” said Eckart Woertz, economics analyst at the Gulf Research Center, a Dubai-based independent think-tank.
Egypt, Saudi Arabia, Morocco and Algeria have officially approached the International Atomic Energy Agency, which oversees the industry, for technical assistance with developing nuclear technology for peaceful uses, Woertz said.
At least 97% of Algeria’s electricity is produced by natural gas-fired power stations, according to the US Energy Information Administration website. - Dow Jones Newswires
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