June 27, 2018 / 7:14 PM / 4 months ago

Sonatrach sees Exxon pact by year's end, boosts output after OPEC deal

WASHINGTON (Reuters) - Algeria’s Sonatrach expects to sign a shale development agreement with Exxon Mobil Corp by the end of the year, the state-controlled energy producer’s chief executive said on Wednesday.

FILE PHOTO: An employee stands near the headquarter building of the state energy company Sonatrach in Algiers, Algeria June 26, 2016. Reuters/Ramzi Boudia/File Photo

The OPEC member, which has some of the world’s largest supplies of shale rock, wants to tap gas reservoirs deep in the country’s southern region, but needs foreign expertise.

Exxon, the world’s largest publicly traded oil producer, has large shale operations in the United States and decades of experience in OPEC member nations.

“We’re looking at their experience in shale and would like them to be involved with us,” Sonatrach CEO Abdelmoumen Ould Kaddour told Reuters on the sidelines of the World Gas Conference in Washington.

Kaddour and Exxon started talking six months ago about a potential deal. Seven Exxon employees are in Algeria inspecting the country’s geology and other factors for a possible agreement, Kaddour said.

“We’ll probably see an Exxon agreement soon, before the end of the year,” he said.

Exxon declined to comment.

OPEC

Algeria sees last week’s agreement from the Organization of the Petroleum Exporting Countries to boost output as a “good deal” and the country has increased output by 30,000 to 40,000 barrels per day, Kaddour said.

“If this (OPEC) agreement falls apart, there’s no control on the price” of oil, he said. “You have Saudi (Arabia) and Russia that want to increase as much as they can produce, and then you have the other side, like Iran and other countries, that do not want that increase.

“We need to stay together as a group. Keeping that equilibrium alive is the most important thing.”

Kaddour, who took the top spot at Sonatrach last year, has launched a long-term strategy “SH 2030.” It targets $67 billion of additional revenues by 2030, of which 50 percent will be reinvested.

As part of that, Sonatrach is working to boost natural gas exports to Europe and other markets. Exports are the largest sources of hard currency for Algeria, and the company has space available on export pipe to Europe, he said.

The company is spending $10 billion this year to boost its production, Kaddour said.

“We want to increased our share of the international market in oil and gas,” Kaddour said.

Sonatrach is also in talks with Chevron Corp to start a trading and marketing business for its crude oil and natural gas, Kaddour said. Chevron declined to comment.

Reporting by Ernest Scheyder and Richard Valdmanis; Editing by David Gregorio

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