On the Algerian national television channel AL24 News, Hakkar said $8bn will be invested in 2022, and that “one third of these investments” will involve foreign partners.
“The largest share will be devoted to exploration and production to preserve our production capacity, as well as projects in refining to meet national demand for fuel,” he said.
A return to Libya
The group’s boss also announced steps by Sonatrach “for its return to Libya”, where it had suspended most of its activities since 2014. A delegation will go there by the end of February to prepare – alongside the National Oil Corporation (NOC), the Libyan national company – the “conditions of return in order to secure workers and equipment”.
Hakkar stressed that the Algerian group had “committed significant investments in oil and gas exploration” in Libya and that it would not “leave these discoveries without development”.
Since 2005, Sipex, a subsidiary of Sonatrach, has been operating in the Ghadames region, about 230km south of Tripoli, although activity at the site has been very erratic due to the security and political context in Libya. In May 2021, Hakkar received the head of the NOC, Mustafa Sanalla, to discuss the return of Sonatrach in Libya.
Within four years, Sonatrach is also planning, among other things, the construction of a refinery in Hassi Messaoud (the largest oil field in Algeria) and an extension of the Skikda refinery to convert some derivatives into fuels, added Hakkar.
In January, Sonatrach also intends to put into service the fourth turbo-compressor for the Medgaz pipeline, which transports Algerian gas to Spain and Portugal, according to Hakkar.
This unit will ensure supplies to the Spanish market, in accordance with the contractual quantities – estimated at 10.5bn cubic metres – and in order to meet any requests for additional quantities, he said.
Since November 2021, Algeria has stopped operation of the Gazoduc Maghreb Europe through Morocco, which supplied Spain and Portugal.
The article continues below
Get your free PDF: Top 200 banks 2019
The race to transform
Complete the form and download, for free, the highlights from The Africa Report’s Exclusive Ranking of Africa’s top 200 banks from last year. Get your free PDF by completing the following form
The group’s revenue increased by 70% in 2021 thanks to a 19% increase in its hydrocarbon exports, the CEO also said, noting that Sonatrach exported $34.5bn in 2021, compared to $20bn in 2020.
He explained that the average price of a barrel of oil is around $70, but that “Sonatrach’s strategy is based on a price of $50 to deal with any market fluctuations”.
Algeria, the fourth largest economy in Africa, is particularly exposed to variations in hydrocarbon prices because of its dependence on oil and gas revenue, which account for more than 90% of its external revenue.
Trade deficit reduced
The recent rebound of crude oil prices has helped to reduce the Algerian trade deficit from “$10.5bn at the end of September 2020 to $1.6bn in September 2021”, the Bank of Algeria said in late December.
READ MORE Africa's Great Green Opportunity
In 2011, Sonatrach had announced an investment plan of $60bn – for the period 2011-2015 – to strengthen its production capacity. With the collapse of crude oil prices from 2014, the group reduced its investments, which were further revised downwards after the outbreak of the Covid-19 pandemic in 2020, with a new fall in the price of oil.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options