December 13, 2017 / 2:52 PM / a year ago

UPDATE 1-Algeria's Sonatrach plans closer ties with Total on energy projects

(Adds details, background)

By Lamine Chikhi

ALGIERS, Dec 13 (Reuters) - Algerian state energy firm Sonatrach and Total are planning to work more closely together on offshore, petrochemical, solar energy and shale exploration projects, Sonatrach’s CEO said on Wednesday.

The CEO’s comments signal a new chapter for the companies’ efforts to cooperate on energy projects and show they have put behind them past disputes, including one in the mid-2000s over profit-sharing on oil and gas contracts.

“Our relation with Total is good now. We will do a lot together including in shale, solar and offshore. We are also into petrochemicals,” Sonatrach CEO Ould Kaddour told reporters.

He was speaking on the sidelines of a ceremony for Total and Sonatrach to sign a joint cooperation deal to produce 5 million cubic meters of gas by April 2018 at Algeria’s Timimoun gas field.

“We definitely need its (Total’s) expertise and knowledge,” Kaddour said, he did not give more details.

Total CEO Patrick Pouyanne, who was also attending the ceremony, said the Timimoun cooperation was the beginning of a “fruitful, strong and reliable” partnership between the two firms.

Algeria, a major gas supplier to Europe, remains dependent on oil and gas earnings which provide 60 percent of the state budget and Sonatrach’s performance is key to the health of the economy.

The North African OPEC member had struggled to attract oil investment in the past because of unattractive terms, but in 2016 Sonatrach adopted a more flexible approach to bilateral talks with foreign partners.

The sharp fall in oil prices hit Algeria hard, prompting the government to find ways improve revenues.

But there are still divergent views within Algeria’s ruling classes over how hard to push for foreign investment and domestic economic reform to boost revenues and spur growth.

Kaddour, a U.S. educated engineer has sought to improve the performance of Sonatrach, a sprawling state empire, and attract more foreign investment to boost its oil and gas production.

Reporting by Lamine Chikhi; Writing by Ulf Laessing; Editing by Edmund Blair and Jane Merriman

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