BP
to bring a new strategic partner, Statoil, to Algeria
Posted: 23 June 2003
BP said it had agreed in principle to sell a portion of its Algerian
interests to Statoil for $740 million in cash.
The sale comprises 50 per cent of BP's stake in the In Amenas gas
condensate project and 49 per cent of BP's interest in In Salah
gas. Following the sale, BP and Statoil will jointly operate the
projects with Algeria's state oil and gas company, Sonatrach.
In Salah and In Amenas, Algeria's third and fourth largest gas
developments, are expected to achieve first gas in 2004 and 2005
respectively.
Tony Hayward, BP's chief executive of exploration and production
said: "We are pleased to bring Statoil into these projects
and look forward to working with them and Sonatrach to bring the
projects on to production in 2004 and 2005".
Olav Fjell, Statoil's chief executive said: "This transaction
gives Statoil an exciting position as a joint operator working with
BP and Sonatrach in proven gas fields with significant growth potential.
It is an important step towards fulfilling our international growth
and gas strategy."
Subject to Sonatrach and Algerian regulatory consent and other
approvals, the sale is expected to complete by the end of 2003.
Goldman Sachs acted as exclusive financial advisor and Linklaters
as exclusive legal advisor to BP in connection with the transaction.
In Amenas
The In Amenas project, the largest wet gas joint development project
in Algeria, is located approximately 850 kilometres south of Hassi
Messaoud, in the south-east of the country. The project includes
development of four primary gas fields and gas gathering and processing
facilities. The project will produce approximately 9 billion cubic
meters a year of gas and some 60,000 barrels a day of liquids and
is on schedule to begin production in 2005. BP's share of reserves
at the end of 2002 was 252 million barrels of oil equivalent, according
to Securities and Exchange Commission definition.
Gas from In Amenas will be transported via pipeline to Hassi R'Mel
and from there to the ports of Arzew, Isser, and Skikda, or via
two export pipelines routed directly from Hassi R'Mel to Spain and
Italy respectively.
In 1998 BP entered into a production-sharing contract with Sonatrach
extending to 2022, with the potential for an extension to 2027 with
compensation by way of freely marketable liquids stemming from the
project.
In Salah
The In Salah project, located some 1200 kilometres south of Algiers,
includes development of seven proven gas fields, gas processing
facilities at Krechba and pipeline infrastructure stretching 579
kilometres north to Hassi R'Mel. The project is expected to produce
9 billion cubic metres a year of dry gas and is on schedule to achieve
first gas in 2004. BP's share of reserves at the end of 2002 was
403 million barrels of oil equivalent, according to Securities and
Exchange Commission definition.
BP entered into a 30-year contract of association with Sonatrach
in February 1997 regarding In Salah's development and production.
Sonatrach, BP and Statoil will market gas until the end of the contract
in 2027. Gas sales contracts are in place with Enel for 4 billion
cubic metres a year through to 2017 and with Sonatrach for 5 billion
cubic metres a year through to 2019.
Posted by Richard Price,
Editor Pipeline Magazine
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