BP Amoco and Sonatrach Give Go-ahead To Develop Sahara Gas For Europe

abarrelfullabarrelfull wrote on 11 Aug 2012 07:35

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23 February 2000
BP Amoco and the Algerian state company, Sonatrach, are to go ahead with developing a $2.5 billion complex of gas fields in the Sahara Desert in central Algeria which will supply some nine billion cubic metres of gas a year to the fast-growing markets of southern Europe.

First deliveries of gas from the seven In Salah fields, 1,200 kms south of Algiers, are due in 2003. Some four billion cubic metres of gas a year have already been assigned to ENEL in Italy and negotiations are at an advanced stage to sell the balance in the Italian and Spanish markets.

The decision to develop In Salah follows a three-year exploration and appraisal programme which established reserves of more than 7.5 trillion cubic feet of high-quality gas in the seven fields, with additional volumes identified in adjacent reservoirs.

Describing the go-ahead as "a very significant step for us and Sonatrach", BP Amoco Exploration chief executive Richard Olver said: "Gas forms a major plank of BP Amoco's growth strategy and southern Europe is a region where demand for gas is expanding rapidly and, we believe, will continue to grow over the coming decades.

"We and Sonatrach aim to meet a substantial portion of that demand. This project is a key development in that process, but we are also looking with Sonatrach at ways of extending our partnership to bring further quantities of gas to market in the future."

In Salah is BP Amoco's second major project with Sonatrach in Algeria. Preparation work is also under way on the In Amenas project, a gas and condensate development based on four fields in the east of the country for which Amoco signed a production-sharing contract in mid-1998. In Amenas will produce 20 million cubic metres of gas a day and 45,000 barrels of condensate and LPG.

The estimated $2.5 billion capital cost of the In Salah development over the life of the fields will be funded 65% by BP Amoco and 35% by Sonatrach. The companies expect to award the main design and construction contracts in the second quarter, with construction work due to begin before year-end.

BP and Sonatrach signed a contract in December 1995 to explore and appraise the gas fields in District three and set up a joint marketing venture - In Salah Gas Marketing, based in the Hague - to secure sales contracts for this potential new source of gas. Two jointly-staffed organisations were established to conduct the exploration and appraisal operations in the desert and market the gas in southern Europe.

The exploration and appraisal programme required the acquisition of 750 square kilometres of 3D seismic and 2,000 kms of 2D seismic data, one of the industry's largest land-based programmes in recent years. Five appraisal and four exploration wells were drilled on the fields to provide data to develop plans for production. The programme, conducted between April 1997 and February 1999, required some 1.5 million man-hours in remote desert locations and was carried out within schedule, below budget and without incident.

In Amenas is a gas and condensate development project centred on four fields located in eastern Algeria. The production-sharing contract was originally signed by Amoco in June 1998. The development will produce 20 million cubic metres of gas and 45,000 barrels of condensate and LPG from the second half of 2002. BP Amoco will lift its share of liquids from Algerian ports and the gas produced will be retained by Sonatrach. The project team recently completed a programme of tests on existing wells in the fields and will undertake a 3-D seismic survey later this year. This will provide information for engineering design of the production facilities, the construction of which is expected to begin in early 2001.

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