Algeria to Focus on Gas Output as OPEC Cuts Oil, Sonatrach Says

ALGIERS (Capital Markets in Africa) – Algeria will focus on boosting natural gas production as the Organization of Petroleum Exporting Countries seeks to trim oil supplies to counter a global glut, according to the chief executive officer of the nation’s state-owned energy company Sonatrach Group.

“As we are restricted by the OPEC quotas, our strategy today is to increase our gas production capacity,” CEO Abdelmoumen Ould Kaddour told reporters Tuesday visiting the Medgaz pipeline in Beni Saf in north-western Algeria. The nation was instrumental in crafting OPEC’s historic deal last year to curb oil production.

Sonatrach’s exports generate more than half of the government’s budget revenue. Yet the country’s oil output has declined since August 2008 as foreign investment sagged, and its monthly production of a little more than 1 million barrels a day this year is close to the lowest since 2002, according to data compiled by Bloomberg. Algeria’s oil output was cut 50,000 barrels to 1.039 million barrels under the OPEC agreement which runs through March.

The Medgaz pipeline which connects to Spain was used to transport 6.9 billion cubic meters of natural gas last year, and shipments may reach 7 billion cubic meters this year, Ould Kaddour said. Capacity of 8 billion cubic meters can be increased by 2 billion cubic meters, he said. Medgaz ships 15 percent of Algeria’s exports and supplies 25 percent of Spain’s gas needs, according to a data presentation shown to reporters Tuesday.