Algeria’s state-owned hydrocarbon firm Sonatrach will invest $40 billion into oil exploration, production and refinement as well as gas prospecting and extraction between 2022 and 2026, CEO Toufik Hakkar said on Monday.
“Our investment plan between 2022 and 2026 is approximately $40 billion, including $8 billion in 2022,” Hakkar said on state television, noting that a third of investments will involve foreign partners.
“The largest part will be dedicated to exploration and production, to maintain our production capacities, as well as refining projects to meet the national demand for fuel,” he added.
The plan includes a refinery project at the largest oil field in Algeria, Hassi Messaoud, as well as an extension of the Skikda refinery in the northeast to convert certain derivatives into fuel, the CEO added.
The firm also plans in January to put into service the fourth turbocharger of the Medgaz pipeline, which transports gas to Spain and Portugal, Hakkar said.
The turbocharger will allow for the provision of supplies to Spain in accordance with contractual quantities, estimated at 10.5 billion cubic meters, as well as meet any additional demand, he said.
Algeria closed in November the Maghreb-Europe gas pipeline that supplies gas to Spain and Portugal, crossing through Morocco.
Sonatrach recorded a 70 percent increase in revenues in 2021 thanks to a jump in hydrocarbon exports, Hakkar said, noting that its exports amounted to $34.5 billion compared to $20 billion the year before.
He explained that while oil is priced at an average of $70 per barrel, “Sonatrach’s strategy is based on a price of $50 to avoid all market fluctuations”.
Algeria depends on oil exports for more than 90 percent of its foreign revenues, making it particularly vulnerable to price fluctuations.
The recent recovery in crude oil prices allowed it to offset its trade deficit, which declined from $10.5 billion at the end of September 2020 to $1.57 billion the following year, the central bank said in late December.
Hakkar also said Sonatrach will dispatch a team to Libya by late February to look into re-establishing a presence there.
The firm, which partners with Libya’s National Oil Corporation, suspended the bulk of its activity in the war-torn country in 2014.
In 2011, Sonatrach announced it was investing $60 billion over the following five years to boost its production capacity, but had to revise its spending after global oil prices plummeted in 2014.
The coronavirus pandemic also prompted the firm to reduce spending.