US oil company Anadarko Petroleum Corp. has officially launched production in Algeria’s Illizi Province, with plans to produce 146,000 barrels per day in partnership with Algerian state-run Sonatrach.
Production at the southeastern el-Merk field, in Illizi Province, began on Sunday, 26 October.
The field is estimated to hold roughly 1.2 billion barrels of oil and is located in what is being described as the heart of Algeria’s oil development plans.
Sonatrach, Algeria’s state-owned oil company, holds a 51% stake in the project, which will run up an exploration bill of about $4 billion for an estimated 80 wells.
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A 49% share of production will go to Anadarko and its partners, Eni, Maersk, Conoco Philips and Talisman.
The project plans to produce 12,000 barrels a day by May 2014, ramping up to 130,000 per day, the peak, by the end of next year.
Algeria is a member of the Organization of Petroleum Exporting Countries. OPEC said the country has proven crude oil reserves of 12.2 billion barrels.
Production here is being launched as security in Algeria is increasingly threatened by the chaos in neighboring Libya. The situation in Libya and the threat to Algeria’s borders have increased since the attack on the BP-Statoil Amenas gas facility in Algeria in January.
Last week, Algerian security forces discovered a massive weapons cache, including hundreds of anti-aircraft missiles, near the border with Libya, in the area of Illizi. There are concerns that production at Illizi could become a target for militant attacks.
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Algeria is dealing with the threat of militant infiltration along its borders with both Libya and Tunisia. As of 21 October, the Algerian army is on full alert and an additional 12,000 troops have been mobilized and deployed on the country’s eastern border with Tunisia.
On the legislative front, the investment atmosphere has improved since the adoption in January of a new national hydrocarbon law revamping the production tax system, state ownership and exploration incentives.
By. Joao Peixe of Oilprice.com