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29.12.2017 16:11
Algerian shale gas will need more time, Russia completes first delivery of LNG to Europe
AUTHOR: publics.bg


  • © Beyond Coal & Gas Image Library, flickr.com

Algeria needs to exploit its shale gas resources to offset a surge in local energy consumption that is eating into vital exports, but developing the industry will take time and require far-reaching reforms at the state energy firm, Reuters reported.

The North African country is a key gas supplier to Europe, but exports have suffered from delays to several gas projects and a steep rise in the use of subsidized gas at home as the population has grown. Algeria’s gas exports are expected to fall to 54 billion cubic meters in 2017 from 57 billion in 2016, the state energy firm Sonatrach has said. In the decade to 2014, domestic gas consumption has more than tripled.

To reverse the fall in exports, Sonatrach has started talks with France’s Total and Italy’s ENI, Sonatrach officials say. The aim is to exploit shale resources estimated at 22 trillion cubic meters, the world’s third largest. The foreign firms have not confirmed this, although Total’s CEO said in December his company was open to greater cooperation after Sonatrach said it would work with Total on shale gas, Reuters reminded. The talks are part of changes pursued by Sonatrach’s new chief, Abdelmoumen Ould Kaddour, a U.S.-trained engineer who took office in March aiming to overhaul a sprawling group hit by inefficiency, delays and corruption scandals.

But new shale gas projects will not happen overnight as only limited geological survey data exists and Algeria needs to change legislation to offer more attractive terms to foreign firms, which are selective about investments at a time of low energy prices. Key Western firms are anxious about gas supplies as Algeria’s exports drop. They are also keen to break the link between what they pay for Algerian gas and the oil price, which can result in losses if crude prices are high. When oil is high and gas prices on freely traded European markets are low, buyers of oil-linked gas incur big losses. The trend now is for long-term gas contracts to reflect gas prices at European trade hubs. Norway and Russia are moving to this model but Algeria has been slower to make the shift. As publics.bg wrote, from 1 January 2018 Gazprom is authorised to sell natural gas at non-regulated prices for LNG production with subsequent export.

Meanwhile, Russia completed its first delivery of liquefied natural gas to Europe. The ice-class LNG tanker, the Christophe de Margerie, delivered the first batch of LNG from Russia’s Yamal LNG plant to the British Grain terminal on Thursday, a representative of the British energy company National Grid, Jeanette Unsworth, told TASS.

The company’s representative refused to specify the exact volumes of LNG offloaded, but stressed that it is "not a record." "However, it is the first time a Russian cargo has been delivered to our Grain facility and the first time and ice breaker ship has berthed there," she added.

Asked what would be the destination of this gas, Unsworth said: "We cannot tell you the destination of the gas for commercial reasons," and added that "it will not enter the National Grid UK transmission network."


TAGS: Algeria | shale gas | development | delays | reforms | supply | natural gas | Europe | Sonatrach | fall | exports | Russia | first delivery | LNG | Yamal | liquefied natural gas | UK | National Grid 


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