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Algeria to Renew LNG Deal with France's Engie in March

Maritime Activity Reports, Inc.

March 8, 2017

Algeria's state energy company Sonatrach will renew a deal with French gas and power group Engie to supply 10 billion cubic meters of LNG per year, a source at Sonatrach told Reuters on Wednesday.

The signing ceremony will take place in France, likely before the end of March, and Algeria's Energy Minister Nouredine Bouterfa will attend, the source said.

No further details have been provided on the length of the contract, which will replace one that has just expired. But Sonatrach's CEO Amine Mazouzi said recently that new contracts will be for at least 10 to 15 years but no longer than 20 to 25 years.

Sonatrach has opted for a dual approach that mixes its traditional preference for long-term contracts with spot market deals to get the maximum out of them at a difficult time for Algeria, which has been hit hard by the drop in oil prices.

Most of the current long-term gas export contracts between Algeria and European customers are due to start coming to an end between now and 2020.

Gas exports from Algeria are expected to grow to 57 billion cubic metres (bcm) in 2017 versus sales of 54 bcm in 2016, according to Sonatrach's figure.

Algeria, a major supplier of gas to Europe through pipelines, has covered 55 percent of Spain's needs in gas in 2016, 16 percent of Italy's demand and 15 percent of Portugal's needs, according to Sonatrach.

After years of stagnation in energy production, the North African OPEC member country is starting to see gains since last year in oil and gas output, helped by investments in getting more yield from maturer fields and bringing delayed gasfields online.

(Reporting By Lamine Chikhi)

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