Algeria: Development contracts progress slowly

On 3rd February, the Algerian Council of Ministers reviewed a host of measures related both to the recent unrest in the country and also to economic development. Among dozens of other decisions, the approval of four presidential decrees on oil and gas exploration inched forwards developments in the strategic south west and in the Berkine Basin. Amendments were approved for contracts governing BG Group's Hassi Bahamou permit, Repsol's Reggane and for a development at Rhourde Messaoud Nord involving Eni. Six of Sonatrach's own exploration deals also got the go-ahead.

An amendment to Sonatrach's July 2002 agreement with Repsol and its partners to develop the Reggane field has confirmed the balance of shareholdings in the joint venture. Sonatrach holds 40 per cent, Repsol YPF 29.25 per cent, RWE Dea 19.5 per cent and Edison International 11.25 per cent. The partners have been awaiting approval of this development for more than a year.

BG Group's contract with Sonatrach for exploration and development of the Hassi BaHamou perimeter has also been amended to extend its exploration period until 2012. BG North Sea Holdings is also awaiting approval of its February 2010 deal to buy its partner Gulf Keystone Petroleum's 38.35 per cent interest in permit for $9.9 million, giving BG a 75.1 per cent stake.

A third decision approved a minority stake for Eni Algeria Exploration in the Rhourde Messaoud Nord perimeter through an amendment to a July 2009 agreement between Sonatrach and Alnaft). According to Eni, it signed a framework agreement with Sonatrach in 2008 “setting out the common contractual ground” and extending the duration of the Rhourde Messaoud development licence and one other for a further 10 years. No details were released about Sonatrach's six exploration contracts agreed with Alnaft in June 2010, which have also now been approved.

For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics & Security.

© 2011 Menas Associates

Petrobras buys Repsol's stake in the Refap refinery

Petrobras has bought Repsol's 30 per cent stake in the Refap refinery, acquiring full ownership of the facility. Brazilian state-owned Petrobras agreed to pay Reposol $350 million and take on the $500 million debt as part of the stake acquisition.

Petrobras intends to spend around $224 billion between now and 2014, to develop oil fields and expand refining in a bid to increase fuel output by 77 per cent to 3.2 million b/d by 2020. According to the company's refining director, Paulo Roberto Costa, the new acquisition will enable Petrobras to increase capacity and cut costs.

Speaking to the press in Rio de Janerio, Costa said "It's very important for Petrobras to seek synergies between all its refineries." He added that the company expects to supply all its facilities with “100 percent” of domestic oil.

The Refap refinery, said to be Brazil's fifth largest, has the capacity to process as much as 190,000 barrels of crude oil per day.

In 2001, Pertobras sold Repsol a 30 per cent stake in the refinery as part of an asset exchange initiative. Repsol had also bought a chain of service stations around Brazil, which it later sold.

Sources: Reuters, Bloomberg

For more news and expert analysis about Brazil, please see Brazil Focus.

Total stops gasoline supply to Tehran

Total has issued an official statement, saying that it has stopped gasoline sales to Iran, as a show of support for the international community's efforts to curtail Iran's nuclear programme. Total is the fourth western oil company, who has ceased doing business with the Islamic Republic.

The decision is thought to be linked to the fourth set of sanctions, approved by the US Congress, which constrict US companies supplying Iran with gas and conducting financial business transactions with key Iranian banks.

Industry experts have suggested that international suppliers of gas to Iran could be faced with curt restrictions to the US banking system, property transactions and foreign exchange, and are therefore intent to safeguard their own business interests.

Iran's dependency on gas imports is immense, due to insufficient refining capacity, and the impact of gasoline shortage has already been felt by the Iranian capital.

Shell, LUKOIL, BP, Reliance Industries and Glencore, are some of the companies that have either stopped fuel sales to Iran or intend to do so upon expiration of trading agreements. Repsol said it had pulled out of a contract it won with Shell to develop part of the South Pars gas field in Iran, and has no further plans to do business with the Islamic Republic.

Total who, up till recently, was still in negotiations with Tehran to take part in South Pars phase 11, has said that despite its, “interest in the South Pars 11 project,” the group “has not moved ahead with it” or sees any possibility to do so in the near future.

Source: Reuters

For more news and expert analysis about Iran please see Iran Strategic Focus.