What will Eni do in Algeria
Eni has signed two agreements in Algeria on oil and the energy transition. Here are data, details and scenarios
Eni today signed two agreements with the energy company Sonatrach in Algeria: a new oil contract in the area of the Berkine basin, in eastern Algeria; and a memorandum of understanding for cooperation on the energy transition.
WHAT THE CONTRACT CONSISTS OF
The contract in the Berkine basin (in its southern part, more specifically) concerns an area of 7880 square kilometers near the production sites Menzel Ledjemet Est and Central Area Field Complex, managed by the joint venture between Eni and Sonatrach.
The reserves estimated in the territory covered by the contract amount to 135 million barrels of oil equivalent; the start of production is scheduled for the end of 2022, once the agreement is approved by the Algerian authorities.
THE NEW ALGERIAN LAW ON HYDROCARBONS
The one reached today is – reads a press release from Eni – the first contract signed by the Algerian oil industry after the entry into force of the new law on hydrocarbons, which offers advantageous conditions (mainly tax relief ) to companies with the aim of to attract foreign investments in the exploration and exploitation of fossil resources.
THE PROTOCOL ON THE ENERGY TRANSITION
The collaboration protocol on the energy transition, on the other hand, provides for the evaluation of projects in the sectors of renewable sources, hydrogen, carbon dioxide capture and storage and bio-refining. Eni underlines that these are "initiatives towards carbon neutrality ", ie the net zeroing of CO2 emissions that the company intends to achieve by 2050.
WHAT ENI DOES IN ALGERIA
Eni has been present in Algeria since 1981 and operates in the hydrocarbon and renewable sources sectors: operations are concentrated in the Bir Rebaa desert, in the central-eastern part of the country. The activities in the Berkine basin, on the other hand, are mainly located in the northern portion, and specifically in the Sif Fatima II, Zemlet El Arbi and Ourhoud II blocks, where the company has a 49% stake.
In 2020 Eni produced 19 million barrels of oil and condensates and 1.6 billion cubic meters of natural gas in Algeria. As for renewables, however, in 2020 the installed photovoltaic capacity amounted to 5 megawatts but the company is working on the expansion of the Bir Rebaa North photovoltaic plant.
ENI-BP NEGOTIATIONS IN ALGERIA
In June, the Reuters news agency revealed the existence of Eni's negotiations with the British energy company BP to acquire its assets in Algeria. Details are unknown, and the two companies have not made any comments.
In times of decarbonisation, large oil groups are reorganizing their business models and focusing on the most profitable operations. For example, BP would like to focus on the Gulf of Mexico and considers Algeria an inconvenient place to do business. It has already tried to dispose of its assets in the country – in 2020 it produced 141 million cubic feet of gas and 6,000 barrels of oil per day – but without success. Eni, however, has an interest in growing in North Africa, mainly in Egypt, and therefore the expansion in Algeria could aim to make the country a new energy hub.
THE ENI-SNAM AGREEMENT ON PIPELINES
At the end of November, Eni agreed tosell 49.9 per cent of the pipelines carrying Algerian gas to Italy to Snam, an Italian natural gas infrastructure company: TTPC (Algeria-Tunisia) and TMPC (Tunisia -Italy). The value of the agreement was 385 million euros.
About 30 per cent of the total gas imported from Italy comes from Algeria.
Beyond the immediate value of the Italo-Algerian gas pipelines, Snam considers them interesting also in view of future energy developments: the company's CEO, Marco Alverà, in fact, argues that "North Africa can also become a hub for the production of solar energy and green hydrogen “. The pipelines, suitably updated, could therefore allow the transport to Italy and the rest of Europe of the hydrogen generated in Algeria and neighboring countries from renewable electricity.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/eni-algeria-sonatrach/ on Tue, 14 Dec 2021 14:28:50 +0000.