Algeria to boost LNG shipments to Asia as sales to Europe drop

Algeria, Africa’s largest natural gas producer, has expanded capacity to ship the fuel on tankers and plans to sell more of it in Asia and make up for a decline in exports to Europe, its main market.

“Asia offers the best opportunities in terms of market size and market diversity,” Ahmed Mazighi, the director of market studies at state-run energy company Sonatrach, told the North Africa Oil & Gas conference on Monday in Algiers. Energy saving measures and renewables are reducing fuel consumption in European countries that account for more than 90 percent of Algeria’s gas exports, he said.

Algeria authorized two liquefied natural gas plants in the past two years, increasing its annual capacity to export the fuel on tankers by 12 billion cubic meters, according to Sonatrach. LNG is gas cooled to a liquid to allow its transportation to a destination not linked by a pipeline. It is then brought back to gaseous form and fed into the grid.

Booming gas production in North America and declining consumption in Europe is prompting gas producers from Russia to Algeria to boost sales in Asia where prices are higher and new LNG receiving plants and pipelines are planned. Mozambique in October said China, India and Japan are possible clients for an LNG plant planned to start in 2018 or 2019.

The Algerian expansions, located in the eastern town of Skikda and western town of Arzew, bring the country’s total annual gas export capacity to 89 billion cubic meters, of which 36 billion are LNG and 53 billion cubic meters are pipelines, according to Sonatrach publications made available at the conference.

Algeria has three pipelines taking its gas across the Mediterranean Sea, one landing in Italy and two in Spain.

While export capacity is rising, Algeria’s actual exports have declined since their 2005 peak of 65 billion cubic meters, with local consumption increasing and production falling.

Algeria supplied 47 billion cubic meters to overseas buyers in 2013, according to Sonatrach. Italy accounted for 46 percent of the sales, Spain 26 percent, France 8 percent, Turkey 7 percent, Portugal 4 percent, Slovenia 0.4 percent and the U.K. 0.2 percent. Outside Europe, Tunisia is the biggest client, accounting for 3 percent of total exports.

Projects to bring new reserves on stream have been delayed by a 2010 corruption probe at Sonatrach and a 2013 attack on the In Amenas gas field operated by BP Plc and Statoil ASA.

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