Algeria’s state oil company released plans to ramp up production by 14 percent by in four years while making massive investment in the nation’s struggling energy sector, according to a new report by The National.
The Sonatrach Group has budgeted $9 billion for the 2017-2021 term to hunt for new oil and gas reserves in the North African country’s desert areas, according to Farid Djettou, the company’s foreign contracts head. By investing roughly $50 billion in the outlined period, Algeria will gain roughly 100 wells a year.
Sonatrach’s oil and gas exports make up nearly all of Algiers’ revenues, which are used to pay the employees of the country’s large public sector. Red tape prevents strong private enterprises from emerging, concentrating the consequences of economic gains and losses in the national government’s coffers.
The worst consequence of this structure has become clear since oil prices dropped in 2014 due to the international supply glut. In November 2016, the Organization of Petroleum Exporting Countries (OPEC), of which Algeria is a member, decided to cut production by roughly 1.2 million barrels per day. Eleven non-OPEC nations committed to reducing output by an additional 600,000 barrels per day for the first half of 2017.
Still, the oil market recovery has been slow, and Algeria needs to diversify and liberalize its economy to gain access to much needed funds from the World Bank and other lending institutions.
The Algerian government also installed Hocini Arezki as the acting head of federal energy regulator Alnaft on Thursday.
Among other concerns for Algeria is the failing health of President Abdelaziz Bouteflika, who suffered a debilitating stroke in 2013. Since then, members of his family and other close allies have been running the country on his behalf, according to reports from the capital city.
By Zainab Calcuttawala for Oilprice.com
More Top Reads From Oilprice.com:
Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…