Eni’s Descalzi pens gas MoU with Sonatrach’s new CEO

Italian oil and gas firm Eni has signed a memorandum of understanding on gas supplies with Algeria’s state company Sonatrach which this week got its new CEO.

Abdelkader Bensalah, the interim president of Algeria – appointed following the resignation of Algeria’s President Abdelaziz Bouteflika after almost 20 years in power – on Tuesday ousted the former Sonatrach CEO Abdelmoumene Kaddour.

Kaddour was replaced by Rachid Hachichi, the international media have reported, citing state TV’s report on Tuesday.

Come Thursday, Eni and Sonatrach announced that their respective CEO’s Claudio Descalzi and Rachid Hachichi had signed a Memorandum of Understanding (MoU) “to confirm their willingness to come soon to the renewal of the gas supply contract and the transportation arrangements through the pipeline crossing the Mediterranean Sea for the forthcoming years.”

Eni said the MoU represented “a further step towards the strengthening of the long term relationship between the two companies and set the basis of a new contractual framework taking into account the changes in the market conditions.”

According to a report by Reuters, the former CEO of Sonatrach Kaddour had been close to the former president Bouteflika, who resigned after protests.

Earlier this month, just after Bouteflika’s resignation, Jennifer Cowan, research analyst, North Africa upstream, at Wood Mackenzie,  said the intelligence firm expected no negative impact of the political turmoil on Algeria’s 1.6 million barrels per day of liquid output or 9 billion cubic feet per day of gas production, around half of which is exported to Spain and Italy.

“However, we expect some impact over the longer term. The energy minister, Mustapha Guitouni, was replaced by Mohamed Arkab, previously president of the power and gas distribution company, Sonelgaz, just days before Bouteflika left the office. Further reshuffling is likely, which may slow decision-making,” Cowan said on April 4.

Woodmac has said that country faces declining oil output and modest growth in gas production and it has limited projects under development.

Wood Mackenzie has said it expects PetroCeltic’s Ain Tsila gas/condensate field to be onstream in 2022, while the second wave of South West gas developments (Hassi Ba Hamou and Hassi Mouina) is not expected before 2025.

“In the meantime,” Cowan said, “Algeria may have to choose between meeting growing domestic demand (increasing about 5% year on year) or reducing future export commitments. We expect domestic demand to take precedence.”

Offshore Energy Today Staff

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