Algeria to curb oil output by 14% in next 4 years
Sonatrach plans to invest over $50bn in operations from 2017 to 2021 with the aim to increase production by 14%
Sonatrach, the national oil company of Algeria, wants to increase crude production by 14% in the next four years, reversing an eight year decline.
The company plans to accomplish this by investing over $50bn in operations from 2017 to 2021. Sonatrach will drill about 100 wells per year through 2021 and invest $9bn in exploration for new fields.
The state-owned Sonatrach is given majority ownership of all oil and gas projects in the country. According to the EIA, Sonatrach produces about 80% of Algeria’s total oil output.
Algeria’s oil output has been in decline since 2008. February production of 1.04mn bpd was the lowest monthly production since 2002. According to Bloomberg, Sonatrach exports account for more than half of the Algerian government’s yearly revenue, giving the government significant motivation to increase oil earnings.
Algeria’s government has significantly cut spending in response to the oil price downturn, Reuters reports. The national budget was cut by 9% in 2016, and dropped an additional 14% for 2017.
Despite these efforts, though, the government projects a budget deficit of more than 8% of GDP in 2017.
Algeria has been a major champion of the OPEC cuts, viewing a higher oil price as critical to fund government programmes. Cuts were first agreed to in OPEC’s September meeting in Algiers, Algeria’s capital. According to Bloomberg, however, Algeria has not yet met its cut target, reporting 72% compliance.