Sonatrach And Gazprom Agree LNG Swaps
Sonatrach has provisionally agreed an LNG swap deal with Gazprom with the aim of optimizing sales to (potential) Asian customers. The Algerian state firm’s CEO ʹAbd al-Hamid Zerguine struck the deal with Alexei Miller, CEO of the Russian state giant, at a meeting on the sidelines of last week’s World Gas Conference in Kuala Lumpur. Sonatrach is keen to diversify its sales into East Asian markets, the largest global region for LNG consumption but is keen to avoid the transport costs that this would entail. Algeria would in return supply LNG on behalf of Gazprom to some of the Russian firm’s European customers.
“We discussed ways of optimizing our global LNG sales by means of swaps to create a win-win situation where both parties save on transport costs,” Mr Zerguine told Algerian state news agency APS
. “Now that we’ve agreed in principle our marketing teams are going to work together on a list of clients that it could apply to,” he added. Gazprom has 50% of the 10mn tons/year Sakhalin II LNG project, which exports from Sakhalin Island just north of Japan in Russia’s Far East.
The two state giants in 2006 signed a memorandum of understanding (MOU) to cooperate internationally in various domains but this expired a year later. This earlier MOU had “failed because specific projects had not been identified,” Mr Zerguine told APS
, adding that any new MOU would have to contain specific projects. One key reason the earlier MOU failed was the opposition of the two state firms’ European customers (and EU competition authorities) to collusion between their key suppliers. This opposition is likely to be reignited by any new deal.
The two parties also discussed Gazprom’s “successful” Algerian exploration efforts. Gazprom in April drilled the most recent of four exploration wells on its El Assel acreage in the Berkine Basin, southeast Algeria. The first well, drilled in November 2010, struck 2.1mn cfd of gas and around 400 b/d of crude. Gazprom, which was awarded the acreage in December 2008 following bidding, estimates the acreage to hold 230mn barrels of oil.
Meanwhile, also in Kuala Lumpur, Sonatrach and Indonesian state oil firm Pertamina signed an MOU governing cooperation across various energy spheres “in Algeria, Indonesia and third countries.”. Pertamina’s regional upstream interests consist of exploration acreage in Libya (offshore Area 17, and Sirte Basin Area 123) and a 15% stake in Block 15 offshore Sudan.
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