Sonatrach eyeing Mideast to Turkey as new LNG markets

Algeria’s state energy company Sonatrach Group is looking to capitalise on booming natural gas demand from nations including Egypt and Jordan amid efforts to boost its own production.
Sonatrach is discussing liquefied natural gas supplies to Egypt, which plans to issue a tender, and is looking at other Middle Eastern markets such as Jordan, chief executive officer Amine Mazouzi said in an interview during the World Energy Congress in Istanbul.
The nation that shipped the first commercial LNG cargo to the UK 52 years ago is seeking to keep its niche as new production from the US to Australia helps boost global liquefaction capacity by about 50% by 2020. That threatens the position of older suppliers such as Algeria, good for about 5% of global supply last year, as buyers seek more flexible and innovative LNG contracts.
Africa’s largest gas producer is increasing output following declines over the past decade due to a combination of ageing fields, laws that deter outside investors and security fears following a 2013 terrorist attack that killed foreign workers. Algeria started two production trains since 2013, according to the International Group of LNG Importers, or GIIGNL.
“Egypt has more LNG needs,” Mazouzi said. “We now have new LNG coming to market after we increased our LNG capacity. We are also looking at other Middle East markets to supply LNG such as Jordan and elsewhere.”
Algeria, Europe’s third-largest natural gas supplier that mainly links its sales of the fuel to crude prices, may boost exports to the region in 2017-18 as it increases output, according to Elchin Mammadov, an analyst at Bloomberg Intelligence. Algeria supplies Europe with both pipeline gas and LNG.
The Middle East is driving LNG demand growth amid slowing demand from Asia and Europe. LNG imports into the region more than doubled last year, reaching almost 10mn metric tonnes at year-end as importers Egypt and Jordan started purchases, according to GIIGNL.
Sonatrach is among nations Egypt is negotiating future LNG supplies with. While the country is seeking to import 120 cargoes next year, the tender hasn’t yet been announced. State-run Egas had a contract with Sonatrach for 6 LNG cargoes in 2015.
Sonatrach is boosting gas production volumes by starting new projects at the aging Hassi R’Mel gas field. It will sign a delayed deal with Norway’s Statoil ASA “within a few weeks,” Mazouzi said.
Statoil operates Algeria’s In Salah and In Amenas gas fields with Sonatrach and BP. In Amenas was the target of a terrorist attack in January 2013 that killed 40 people.
Among other markets, Sonatrach is looking to boost supply to Turkey, where it has a contract for 4bn cubic meters a year that expires in 2020, Mazouzi said.
“Turkey is one of the markets we want to supply with additional volumes of LNG,” he said.