Algeria: Relations Between Sonatrach, Its Partners Develop in 'Normal Way'

Relations between Sonatrach and its partners develop in a "normal way," the national oil and gas company's Vice President of Sales and Marketing Ahmed El-Hachemi Mazighi said Monday in an interview with APS.

In reply to a question on the news published recently by the media alleging that the signing of agreements was suspended by Sonatrach's partners, Mazighi said "the discussions we are conducting with our partners, be they Exxonmobil or others, are bound by confidentiality agreements.

"It is therefore impossible to brief reporters on the state of progress of the discussions, which, however, does not prevent us from making statements on any suspension or shift."

Sonatrach's official said "my answer is very simple: what interest does a company like Exxonmobil have in suspending negotiations with Sonatrach? Enabling its competitors to be ahead of it?! It does not make sense!"

"Algeria still has the world's third-largest shale reserves. Do you think that it is in the interest of a company of the size of Exxonmobil to suspend discussions? Personally, I don't think so."

"Our relations develop in a normal way," Mazighi said, disclosing that he had received, as vice president of Sales and Marketing of Sonatrach, an amendment from Exxonmobil, last Monday (18 March 2019), relating to marketing of oil and gas."

"It is proof that those people continue to sign agreements with us."

Sonatrach: Algeria has never provided customers with free gas

Algeria "has never provided customers with free gas or other hydrocarbon liquids," SONATRACH vice-president for Marketing Activities Ahmed El-Hachemi Mazighi told APS on Monday.

Asked about the news reported by some media outlets on the alleged free-of-charge gas export to France, Mazighi added "it is impossible to provide France or another country with free gas or other (hydrocarbons) liquids."

"I want to recall the rules of exporting operation. For a hydrocarbon molecule leaves the Algerian soil, there must be a customs declaration. The declaration includes a measured volume associated with a price. Without a declaration of the price and the volume, we cannot export," added the same official.

In the past, we had two cases of exception: in 2004 when we had to temporarily export our crude to our storage capacity in Korea. The crude, in this case, had left Algeria with a temporary invoice. The second exception concerned the crude oil processing which began in 2018: the title of ownership is transferred to a customer and we you are accountant of gasoline and diesel oil import statement to customs.

So, he summed up, "to the question of whether the Algerian gas was exported to France free of charge, the answer is NO".

Besides, the SONATRACH vice-president for Marketing Activities said that for natural gas contracts come into force, they need to be approved by the Company's social bodies and by the public authorities.

"In the field of natural gas, unlike other liquid products, things are very well regulated. Do you think that the company's bodies or authorities can approve a contract or endorsement with a price equal to zero? Never," he insisted.

Mazighi also said that under the bill 05/07, "Sonatrach has to declare, on a monthly basis, the export prices of natural gas, LPG, crude or refined products. If there is any doubt about prices, Sonatrach is audited by the National Agency for the Development of Hydrocarbon Resources (Alnaft).

As regards, Algeria's relations with the French partner in the field gas, "first we must say that we export GNL to France. This relation goes back to 1976. Four contracts were concluded: three of these contracts were signed in 1976 and the fourth in 1991. Out of the four contracts, two expired in December 2013. At present, only two contracts remain in force: the first is on exports of 3.5 billion m3 / year until 2020, while the second concerns a volume of 2 billion m3 / year until 2020, "he explained.

"Since 1976, we have concluded four contracts with France, which have allowed to export, until now, 390 billion m3 of LNG, the equivalent of seven years of gas export," he added.

According to him, the volume of gas exported to France represents 10% of Sonatrach's overall gas exports portfolio.

Drop in oil, gas exports in January: Sonatrach explains

The fall in Algeria's hydrocarbon exports by 40% in January 2019 (USD2.14 billion in exports against USD3.6 billion in January 2018) is due to many factors, Sonatrach's Vice President of Sales and Marketing Ahmed El-Hachemi Mazighi said Monday in an interview with APS.

In January 2019, "there have been many port consignments because of bad weather. As a result, several cargoes of crude oil, refined products or LNG/LPG have shifted from January to February," Mazighi said.

"We therefore should not take into consideration January's figures only, as all liquid products that were due to be shipped via ports during this month (January 2019) have shifted to February 2019 because of the closing of ports" owing to weather.

Over January and February 2019, Algeria has exported USD6.086 billion against USD6.630 billion during the same period in 2018.

"We have an eight-percent decline which reflects a fall in the average prices of exported products: over the first two months of 2018, the price was 68 dollars/toe (tonne oil equivalent) before dropping to 62.7 dollars/toe in January and February 2019.

In addition, Mazighi said "we have actually recorded a drop in gas exports via pipeline, but should be aware that 95% of our gas is exported to the European market, which is a seasonal market."

"The winter of 2019 was not as cold as it has usually been in southern Europe. As a result, our clients have sharply reduced their monthly, weekly and daily orders."

There was also a shrink in the domestic market.

During the first two months of 2019, the volume of exports via pipeline dropped by 23% compared with the same period in 2018, due to a decline in European customers' demand, according to Sonatrach official

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