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  • Algeria decides to set up two new fuel oil refineries to make up output deficit

    Khelil considers that 2006 was better than previous years

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    • ZURICH -(Dow Jones)- Swiss engineering company ABB Ltd (ABB) Wednesday said it has landed three contracts worth a total of $70 million to supply power products and systems to Algeria.

      The contracts - booked in the third quarter - are scheduled for completion in 15 months. They are the latest in a series of orders ABB has received from Societe Nationale d'Electricite et du Gaz (Sonelgaz), the state-owned electricity and gas utility, designed to strengthen and increase Algeria's electrical supplies.

      ABB has announced orders from Algeria this month worth about $500 million, including two major contracts from oil and gas company Sonatrach: $210 million for compressors and power systems to increase production at the Hassi R'Mel natural gas fields, and $215 million to supply pumping stations and automation systems for a 665-kilometer-long oil pipeline.

      ABB gains $70 million in new orders from Algeria

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      • The start of the Algerian Nigerian gas pipeline

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        • Opec is considering holding an emergency meeting to discuss the possibility of cutting output, Nigeria's oil minister has said.

          "We are toying with the idea of an emergency meeting," Edmund Daukoru, who also serves as president of the Organization of Petroleum Exporting Countries, said on Thursday.

          Other Opec officials said on Thursday that "the direction and spirit are there" for the organisation, which pumps more than a third of the world's oil, to cut production as the US economy slows and rival producers bring new supplies to market.

          Any reduction would aim to stem a price slide that has brought prices to just under $60 a barrel - 25% lower than prices were in mid-July, Opec trackers say.

          The Financial Times newspaper reported on Thursday that Opec was poised to cut at least one million barrels, or four percent of daily production.

          The 11-member organisation is due to meet in Nigeria on December 14 but some states, including Saudi Arabia, the world's biggest exporter, are already trimming supplies, shipping sources and customers have said.

          Last week Nigeria, Opec's sixth biggest producer and Venezuela, the fourth biggest, announced token output cuts, totalling 170,000 barrels per day or less than one percent of Opec's output.

          But since then oil prices have fallen further on rising US stockpiles, drawing the first reaction from Opec's core Gulf producers.

          Sheikh Ali al-Jarrah al-Sabah, the Kuwaiti oil minister, raised the chance of broader action on Wednesday, saying that his country might also cut back if prices continued to fall sharply.

          The Opec delegate said that while Saudi Arabia had not commented on the market so far, the fact that it raised the price of its heavier crude to Europe on Wednesday indicated the kingdom may be cutting supply.

          Iran and Libya also support a cutback while the UAE is also likely to do so, the Financial Times newspaper reported on Thursday, quoting Opec insiders.

          US oil prices have trebled in the space of four years, but are currently far below their mid-July peak of $78.40.

          Andrew Harrington, a resource analyst at ANZ Bank, said: "Obviously, Opec has seen that the world economy can keep going at $65 to $75, so they don't see any reason why prices should fall too much further."

          On Wednesday, Saudi Arabia's ambassador to the US reiterated the kingdom's long-standing view that there was an abundance of crude oil.

          The price for Opec's own basket of crudes fell to $54.19 a barrel on Wednesday.

          Opec members have sent conflicting signals on price.

          Iran's oil minister said last month he wanted to see Opec oil at or above $60, equating to around $65 for US oil.

          At the other extreme, Kuwait's oil minister said on Wednesday he would be worried by US oil at $50, putting the Opec basket at about $45.

          Opec 'to cut oil production'

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          • "...In Algiers, the Algerian press agency APS quoted an "informed source" who said the meeting would take place on October 18-19 in Vienna..."

            OPEC may hold emergency meeting on output cut: Nigeria, Algeria

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            • Africa's $13 billion plan to send Nigerian gas to Europe through a pipeline across the Sahara would be ambitious at the best of times.

              Factor in today's security risks - turmoil in the Niger delta, and banditry, separatist revolts and al Qaeda-affiliated gunmen in the Sahara - and to some it begins to look foolhardy. But many experts say the venture planned by Algeria, Nigeria and Niger can be protected from the physical dangers it faces.

              It's the economics, rather than the security risks, that will determine whether gas destined to fuel European homes and offices will ever flow beneath Africa's biggest wilderness. "The security aspects are serious...But security problems can be overcome if the economics are right," said Gavin Proudley of UK-based Quest, a business intelligence consultancy. "Long pipelines are (technically) challenging. And cross-border pipelines are traditionally very troublesome.

              So this project's kind of had two strikes against it," said Jim Jensen of Jensen Associates, a U.S.-based gas consulting firm. "But it looks like the economics are feasible," he said after running a computer analysis of the project's key features. The three countries said on Sept 19 they would seek financing for the venture from investors after UK consultancy Penspen/IPA concluded it was technically and economically viable.

              With costs of $10 billion for the pipeline and $3 billion for gathering centres, the project will send up to 30 billion cubic metres a year of gas to Europe via a 4,128 km (2,580 mile) pipeline crossing Nigeria, Niger and Algeria, starting in 2015. The project is looking for support from European governments and gas consumers, which are concerned about falling domestic supplies and increasing reliance on gas piped in from Russia.

              "It's bankable," declared Nigerian Minister of State for Petroleum Edmund Daukoru. He dismissed unrest in the delta, where militants are stepping up attacks on oil facilities and kidnapping expatriates, as a temporary phenomenon. Others are not so sanguine. Antony Goldman, a London-based independent energy analyst and risk consultant who specialises in Africa, said Nigeria posed a particular security risk at the moment.

              "The present security climate in Nigeria is not really conducive to an extraordinary project like this ... there is no quick fix to the security issues in the Delta and to build a massive project like this you would have to have long-term security guarantees that, at present, look hard," Goldman said. He added that nevertheless, billions of dollars were already being invested in the oil and gas sector in Nigeria. And huge pipeline projects on this scale had already been sucessefully completed in parts of the former Soviet Union.

              "The technology and the appetite for these vast engineering projects have increased in recent years, so that is why there is the level of interest that this project is generating," he said. Most experts expect the pipeline would be safely buried, but its more than 20 gathering and treatment stations would be above ground, offering a target to discontented armed groups.

              Geoff Porter, an analyst at Eurasia group, said the venture would give disaffected northern Nigerian communities the chance to mimic the disruptive tactics of southern ethnic groups. Porter points to Tuareg rebel groups in Niger and Algeria's al-Qaeda-aligned Salafist Group for Preaching and Combat (GSPC), who operate in the areas bordering Niger and Mali, as risks. Kevin Rosser, an oil and gas security specialist at Control Risks consultancy, was more positive.

              "There are some genuine threats, but on the whole they can be managed by some very simple techniques," he said. "You'd probably have the pipe buried, and there are a variety of techniques avaiable to detect tampering. All of it is pretty manageable. The bigger issues with that project are going to be political: If you have three transit countries involved, the economic and commercial issues are pretty daunting."

              The three countries are bullish on the economics. They say a window of opportunity will open in 2015 for the profitable delivery of a new source of gas into Europe, but they have yet to publish detailed commercial projections. Analysts say Europe will be more dependent on imports by 2015 and there will be a supply gap to be filled, though competition among potential suppliers will be fierce.

              "There are a lot of projects - both LNG and pipeline - which could potentially fill the gap," Philippe Carpentier, Managing Consultant at UK-based analysts Wood Mackenzie, said. "Also, some of the existing long term contracts could be rolled over, so the supply deficit could look quite a bit smaller by the time we actually get to 2015," he added.

              Sarah Emerson, of Energy Security Analysis, said investors would want to be assured the Sahara project could sell gas cheaper than Russia's Gazprom (GAZP.MM), Europe's number one supplier. "In big projects like this I like to see a clear price signal, an arbitrage (showing commercial advantage)," she said.

              "I'm not sure I'd invest my own money, but it's not as far out as I thought," said Jensen, a former sceptic who now thinks the project may have merit. "It comes back to how much gas you can dump into what is a somewhat risky project."

              Sahara gas pipeline faces tough security test

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              • "A key issue in the shortage involves contracts for helium supplies from a Qatar plant and two in Algeria that have been off-line."

                Floating balloon clusters likely to be absent in coming months thanks to global helium shortage

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                • Originally posted by Al-khiyal
                  ABB, the leading power and automation technology group, won three contracts worth $70 million in total to supply power products and systems that will help Algeria meet rising demand for electricity. The contracts – booked in the third quarter - are scheduled for completion in 15 months. They are the latest in a series of orders ABB has received from Société Nationale d'Electricité et du Gaz (Sonelgaz), the state-owned electricity and gas utility, designed to strengthen and increase Algeria's electrical supplies.

                  ABB has announced orders from Algeria this month worth about $500 million, including two major contracts from oil and gas company Sonatrach: $210 million for compressors and power systems to increase production at the Hassi R'Mel natural gas fields, and $215 million to supply pumping stations and automation systems for a 665-kilometer-long oil pipeline.

                  The work for Sonelgaz includes replacing transformers with a capacity of 60 to 80 Megavolt amperes (MVA) with 120 MVA transformers.

                  To meet power demands immediately, Sonelgaz also ordered two mobile substations rated 220 kilovolts (kV) and 60 kilovolts (kV) for installation in critical areas until fixed substations are completed.

                  The third contract involves the design, manufacture, testing, erection and commissioning of 60 kV gas-insulated switchgear, transformers and associated equipment. The ABB equipment will be made at factories in Spain, Italy and Germany.

                  ABB to deliver systems and equipment in Algeria

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                  • LONDON (AFX) - Petroceltic International PLC said it has started drilling the second oil and gas well in the Isarene block in Algeria.

                    Drilling of the hole, known as Hassi Tab Tab 2, will take around 4-6 weeks to complete, it said.

                    Algerian state-owned oil group Sonatrach is Petroceltic's partner in the project.

                    Petroceltic begins drilling second Algerian oil well

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                    • ALGIERS (Reuters) - An Algerian law toughening energy investment terms guarantees adequate profits for foreign firms, many of which want to participate in the next licensing round, Energy and Mines Minister Chakib Khelil said on Sunday.

                      Khelil, speaking at a public forum organised by newspaper El Moudjahid, added foreign companies had not sent him any signal that they were worried about the law, seen by critics as part of a resource-nationalism trend sweeping the energy sector.

                      "I've seen no sign of worry from the (international) companies. The law remains attractive. I've not been approached by them," he said.

                      "Even if informally they are not happy to be taxed on the large profits, it's the law of the republic and it guarantees them an adequate profit."

                      Khelil declined to give a date for the next exploration and production bidding round for foreign investors, which had been expected before the end of 2006, but said he was confident it would be a success whenever it took place.
                      "We are not going to decide on it (the round) soon," he said. "I know that a lot of companies want to participate; that signifies that the Algerian market remains interesting for them."

                      The oil and gas producer last month enacted a law giving state-owned company Sonatrach, Africa's biggest company by revenue, a more central role and introducing a windfall tax on international oil companies.

                      The move, a reversal of previous legislation for planned energy liberalisation, is popular with a population suffering deep unemployment following years of political conflict and resentful of foreign participation in the Saharan oil and gas riches.

                      But the change has received a guarded reception in private among foreign oil firms, which have steadily increased their share of Algerian production over the past 15 years.

                      The firms had applauded the earlier hydrocarbons legislation, passed in 2005, that was meant to overhaul Algeria's oil and gas industry and to turn Sonatrach into a purely commercial entity.

                      Khelil had championed that liberalisation, but on Sunday he defended the about-face, voicing understanding for the cabinet's official explanation that Algeria needed to conserve oil reserves for future generations.

                      "This was a decision by the state, not a decision by our sector," he said.
                      The cabinet has said that Algeria's still-backward financial system lacks the capacity to process efficiently the large volume of petrodollars it receives every month. Until Algeria has that ability, it is better to keep the oil and gas in the ground, it decreed.

                      The country expects to earn more than $50 billion in energy earnings this year, up from $45.6 billion in 2005.

                      "The law is coherent," Khelil said. "Our problem is the capacity to digest the funds at the moment. This is why we must at first implement reforms in banking, in the judiciary, in all sectors in order to have a capacity to digest."
                      "If in the future we improve the management of our economy, our policy would orientate the (energy) sector towards more business."

                      Foreign oil companies working in the country have declined to comment on the latest changes until an appendix detailing practical measures is published.
                      Among the details they will be seeking are a definition of the excess profits that will now be subject to a windfall tax in any month in which Brent crude averages over $30/barrel.

                      The rate at which the tax is applied has an enormous margin of variation, from five to 50 percent. Again, companies will be looking for an explanation of how that rate will be set.

                      It is only when the appendix is published that the next investment round can go ahead, as the detailed measures will provide the legal and commercial framework for new investments.

                      The country aims to increase oil output to two million barrels per day (bpd) by 2010 from around 1.4 million bpd now and to produce 85 billion cubic metres (bcm) of gas per year in the next five years from 62 bcm now.

                      The biggest foreign operator is U.S. Anadarko Petroleum Corp . Others include Royal Dutch Shell, BP, BHP Billiton, ENI and Hess Corp.

                      Algeria says new oil law gives firms adequate profit

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                      • Lagos • Opec will meet in Qatar on October 19 to thrash out the details of a one million barrels per day cut in oil supplies and put a floor under prices, an Opec official said yesterday.

                        The gathering is likely to be far from straightforward even though all 11 members are united on the need to remove excess oil from world markets. Iran and Venezuela, struggling to pump enough to meet their Opec production quotas, do not want to cede market share to Saudi Arabia and Algeria, pumping beyond formal Opec limits, delegates have said.

                        Oil prices have dropped by 20 per cent since July to below $60 per barrel and the exporter group must act now to stem a “catastrophic” price slide, Edmund Daukoru of Nigeria said. He said there was broad agreement the cut should be made from the average actual output level over the past 12 months, which is close to Opec’s existing production ceiling of 28m b/d.

                        Some members of the group, such as Saudi Arabia, have pumped far above their quotas this year to feed a surge in oil demand from Asia. Others, such as Venezuela and Indonesia, have been unable to meet their quotas due to capacity decline.

                        Opec to meet in Doha on October 19th

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                        • ALGIERS (Reuters) - OPEC's ministers have reached an agreement to cut output by 1.0 million barrels per day and they will announce the decision at a meeting in Doha on Oct 18 to 21, Algeria's energy and mines minister said on Sunday.

                          "All OPEC members came to an agreement to reduce OPEC production by 1.0 million barrels per day," said Chakib Khelil, quoted by the official Algerian news agency APS as telling reporters in parliament.

                          "We (OPEC ministers) will make that announcement (of the production cut) officially and in a coherent manner during our next meeting in Doha," he added.

                          "The cut would certainly have direct impact in the market," he said.

                          OPEC agrees on output cut -Algeria

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                          • ALGIERS (Reuters) - The Algerian parliament has endorsed a new energy law giving state-owned oil and gas company Sonatrach a key role in the upstream oil and gas industry and imposing a windfall tax on foreign energy companies.

                            The new law includes granting Sonatrach at least 51 percent share in every oil and gas exploration contract awarded to foreign companies.

                            It also makes it compulsory for Sonatrach to participate in every oil and gas exploitation deal, and entitles the company to own at least 51 percent in every oil-refining plant joint venture.

                            "It is a gain for the public good as that (law) will reinforce the state's role in monitoring the sector. This will have a positive effect on future generation," Energy and Mines Minister Chakib Khelil said after the legislative body passed the bill late on Saturday.

                            The new law also imposes a windfall tax ranging from 5 to 50 percent on excess profits every time Brent crude averages over $30 a barrel, Khelil said.

                            "All production sharing agreements (including those signed in the past) will be subject to an exceptional tax on exceptional profits. That depends on the level of production," he said.

                            The law also increased the level of participation Sonatrach could claim in production-sharing agreements with foreign companies to 51 percent from 20 to 30 percent in the 2005 legislation.

                            The government says the law is aimed at slowing the pace of exploration and preserving resources in Algeria, an OPEC member country, which announced 12 oil and gas discoveries for the first half of 2006 against nine for the whole of 2005 and 13 the previous year.

                            The government had said the new legislation would not affect a plan to increase output to two million barrels per day (bpd) by 2010, from 1.5 million bpd now, and to export 85 billion cubic metres (bcm) of gas in the next five years from 62 bcm currently.

                            The biggest foreign operator in Algeria is U.S. Anadarko Petroleum Corp. Others include Royal Dutch Shell, BP, BHP Billiton, ENI and Hess Corp..

                            The law will take effect early next year after executive decrees on the practical aspects of implementing the legislation are published.

                            New Algeria energy law gives Sonatrach key role

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                            • Algerian reassurances were not enough:

                              Although Algerians have reassured about the perspectives and backgrounds of the Algerian Russian gas agreement, the European commissioner for energy Mr. Andreas Bibalg has started wide discussions with Europeans on this topic.

                              Meanwhile, the Italian Group INIL announced the expansion of its work scope and investments in Algeria to settle the divergences Algeria had with Italian Groups through the international justice and which ended in favour of Algeria.

                              Representatives of the European energy sector have participated in the discussions under the supervision of the Energy European commissioner, who stressed the concerns of Europe about the Algiers-Moscow axis. Italian Minister of Economic Development Mr. Pierluigi Bersani has also attended the discussions. To recall, he visited Algeria last week and revealed to the Algerian party all the Europeans concerns. He was reassured by Mr. Chakib Khelil, the Algerian Energy and Mines Minister, and was given explanations on the Russian Algeria agreement. Europe showed fears from seeing Russians take control of the European market and the emergence of a virtual monopoly threatening Europe as regards gas supplying.

                              Europe starts discussions on effects of Algerian Russian gas agreement

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                              • ROME (MarketWatch) -- ENI SpA, Italy's biggest oil company by output, said it is studying natural gas upstream projects in Algeria as part of its efforts to boost its presence in the hydrocarbon-rich North African country, according to an ENI energy conference Tuesday.

                                The Rome-based company is studying "projects to develop gas so as to have synergies with its existing presence there," said Chief Executive Paolo Scaroni on Tuesday at the conference in Castelgandolfo near Rome, which was open only to reporters. The CEO didn't elaborate. Eni has oil exploration and production activities in Algeria.

                                According to Domenico Dispenza, ENI's director general of the gas and power division, Italy imported last year 26.6 billion cubic meters of gas from Algeria, followed by Russia with 21.2 billion cubic meters out of a total consumption of 86.2 billion cubic meters.

                                Italy's ENI studying upstream gas in Algeria

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