8,266 Active Recruiters     Over 2 Million Candidates Globally

Advanced
  1. Keep me logged in
  2. forgot password
cancel

Checkout Jobs Basket (0)

You can checkout a maximum of 150 jobs.

Signup Better for Candidates

  • Create a free virtual CV and let recruiters find you
  • Automatically have your profile matched to suitable Oil & Gas positions
  • Link to your profile using it as a free online CV
  • Store all your employment documents to your profile for easy sending
  • Always receive feedback on positions applied for

Signup Better for Recruiters

  • Advertise Oil and Gas jobs for free
  • Suitable candidates automatically matched to your position
  • View candidate profiles for free
  • No more waiting for candidates to respond to job advertisements
  • Only ever pay when you match a candidate to a position
  • No more cold calling and sorting through out dated CVs

Algeria's Crisis Clouds the Future for OPEC Oil Cuts

Published in Oil Industry News on Tuesday, 19 March 2019


Graphic for News Item: Algeria's Crisis Clouds the Future for OPEC Oil Cuts

Meet the exclusive group of oil producers that nobody wants to join.

Algeria’s deepening political crisis has made its future oil production extremely uncertain. So, ignominiously, it is now the latest OPEC member to have become so vulnerable that it forms part of the “Shaky Six” group of nations suffering involuntary output cuts or at risk of seeing their production fall.

This adds yet another complication for the OPEC+ oil ministers as they gather in Baku, Azerbaijan today and tomorrow to assess the effectiveness of their latest output deal and what they need to do in the coming months to rebalance the oil market. A drop in Algerian supply would add to the cuts already being implemented, but make it more difficult for the group to forecast when they might be able to ease restrictions.

Algeria’s fate was sealed by 82-year-old President Abdelaziz Bouteflika’s decision in February to seek a fifth term in office in elections that were due to take place on April 18. This provoked mass street protests, which did not dissipate after he withdrew his candidacy March 11. Instead, they continued, as the president’s decision to delay the poll until after a national conference on the country’s political future was taken as as a disingenuous tactic to avoid real reform.

Crucially for oil markets, the demonstrations that continued Friday included the Mediterranean ports of Arzew and Bejaia, which handle nearly 90 percent of the country’s crude and condensate exports, according to Bloomberg tanker tracking. This need not present an immediate threat to production – the country’s oil and gas fields are situated far inland. But limited oil storage capacity means that any disruption to flows through export terminals from workers’ strikes could quickly hit output.

More worryingly, if the protests escalate, the attention of the Algerian security services may shift to quelling political unrest and away from protecting remote oil and gas fields. That could leave those facilities vulnerable to the types of attack that rocked the country in January 2013, when Al-Qaeda terrorists overran the In Amenas gas field and killed at least 38 hostages.

Political unrest isn’t conducive to inward foreign investment, but any drop in spending by foreign oil companies would take time to show up in falling output. The other OPEC+ members should nevertheless be monitoring the situation with extreme care. The experiences of some of the other members of the Shaky Six – Angola, Iran, Libya, Nigeria and Venezuela – offer disturbing precedents for the future of Algeria’s output.

The closest comparable may be Libya, where civil unrest has seen repeated attacks on oil infrastructure. Storage tanks have been destroyed in battles to control export terminals, limiting the ability to keep pumping when storms close the ports. Production at the country’s largest oil field is now recovering. It had been halted since December, when guards and armed residents seized the facilities over financial demands. The field was then taken over last month by forces loyal to eastern militia leader Khalifa Haftar.

Should the situation in Algeria deteriorate, it could suffer some of the same types of disruption, although perhaps not on the same devastating scale.

A repetition of the recent past of other group members may be less likely, but still can’t be ruled out.

Nigeria has had to contend with simmering discontent in its Niger River delta region, where repeated attacks on oil pipelines have prevented output from reaching its potential. Algeria should be able to avoid similar attacks, which rely for their success in Nigeria on the network of impenetrable rivers and creeks that give thieves a degree of protection and access to the sea for their ill-gotten gains.

Production in Iran and Venezuela has been hit by U.S. sanctions, and could fall further in the coming months as President Donald Trump increases pressure on the leaders of the two countries. In Venezuela, the restrictions have come on top of decades of mismanagement, which have seen the country’s production fall below a million barrels a day from nearly 2.4 million in late 2015. There may be no immediate prospect of sanctions getting levied on Algeria, but if the current political class is seen to be keeping a new leader from taking office, that certainly can’t be ruled out.

Algeria produces just over a million barrels a day of light, sweet oil, most of which is exported to refineries in Europe. From the perspective of global oil balances, any loss of Algerian oil shipments might be more easily replaced with light, sweet U.S. cargoes than has been the case for the heavier grades lost from Venezuela and Iran. But the replacement barrels will have to travel up to ten times as far to get to European refiners. That will cause further disruption to a sector that is already having to find replacements for the Iranian crude that they lost when the U.S. re-imposed sanctions in November.

Algeria’s mounting protests give OPEC+ and oil market analysts everywhere one more uncertainty to factor into their ever more complex models, making forecasts more difficult and decision making more complex. A peaceful transition in Algeria could shield the oil and gas industry from serious disruption. But the risks cannot be ignored.

Source: www.worldoil.com

Please leave comments and feedback below





Tags

OPEC Oil and Gas, OPEC, Global Oil and Gas, Saudi Oil and Gas, Iran Oil and Gas, Russian Oil and Gas, Oil Price Freeze, Oil and Gas News








Oil and Gas News Archive


Latest Oil & Gas News







Featured Companies

  • View All JobsNOVATEK

    NOVATEK is one of the largest independent natural gas producers in Russia.

    Engaged in the exploration, production, processing and marketing of natural gas and liquid hydrocarbons, NOVATEK have 20 years of operational experience in the Russian oil and natural gas sector.

    Visit us online: www.novatek.ru/en/

  • View All JobsChronos Oil and Gas

    Chronos Oil and Gas is one of the fastest growing and best placed recruitment agencies in the sector.

    With over 300,000 candidates on our database and an international team of specialist recruiters we work with clients to staff major projects around the world.

    Register your CV at www.chronosoilandgas.com

  • View All JobsNatural Resources

    Natural Resources is a UK based recruitment company providing personnel of all disciplines and nationalities worldwide.

    We represent clients and candidates at all levels who operate globally within oil & gas, renewables, nuclear, power, mining, marine, drilling, construction and petrochemicals. Our client base includes energy and construction.

    Visit Natural Resources at natural-resources.com