Global Arab Network | Tunisia: Energy investment continues to flow

Translate this article to your language:

GANPublications

e-Publications

Add Site to Favorites

Add Page to Favorites

Make Homepage

Share This Page

RSS Feed

--------------------------------------------------------------------------------------------------------------------
| |

Tunisia: Energy investment continues to flow

Global Arab Network - - George Haddad

Monday, 11 July 2011 14:31

Global Arab Network - While Tunisia’s oil and gas sector has taken a few knocks over the course of 2011 as a result of the fallout from the Arab Spring, investment by energy companies both large and small continues to flow as firms keep a clear eye to the country’s long-term potential. Many players operating in the sector have been unaffected by the unrest, and some are even doubling down, identifying opportunities to increase their exposure to a promising market as a result of the political transition, Global Arab Network reports according to OBG.

Upstream production in Tunisia is relatively modest, particularly when compared to the North African country’s massive hydrocarbons-producing neighbours. Libya has the eighth-largest oil reserves and Algeria has the 10th-largest gas reserves in the world, but Tunisia’s capacity is far more limited, with the world’s 50th-largest oil reserves and 58th-largest gas reserves according to BP’s 2011 “Statistical Review of World Energy”.

Demand in Tunisia outstrips supply, and the nation imports both gas and oil, but plans are afoot to transform the country into a gas exporter by 2014, with the intention of pumping 1.5bn cu metres of gas to Italy via the Transmed pipeline. To achieve this, several field projects on and offshore are in the works, with an estimated $3.2bn due to be spent on major upstream gas projects in the process, including: the South Tunisian Gas Projects, which will funnel gas from four southern concessions to Gabes; the development of the Hasdrubal offshore field, operated by UK-based BG Group; the Chergui field, handled by the UK’s Petrofac; and the Maamoura and Baraka offshore fields, which are supervised by Italian major ENI.

BG Group, one of the largest foreign investors in the country, itself announced in May that it intended to invest $300m its Miskar and Hasdrubal fields. The investment will also allow for the drilling of new wells in the Sfax region.

While the focus has largely been on Tunisia’s gas sector, the oil segment – which churns out around 80,000 bpd according to BP’s “Statistical Review of World Energy” – has been exhibiting signs of growth as well. In February, Austrian energy major OMV completed its $866m purchase, first announced in January , of the Tunisian assets of the US firm Pioneer Natural Resources. OMV said that both firms’ operations continued during the height of the protests at the beginning of the year. The deal will add 5800 tonnes of oil equivalent (toe) – 10% gas and the rest oil – to the Tunisian output of OMV, which produced 6500 toe from its two concessions in the south of the country.

The firm’s Tunisian production levels are also set to receive a boost from the Durra field, which Indonesian partner Medco said in early May would begin production of around 3000 bpd from June. OMV owns a 30% stake in the field alongside Medco, which holds a 20% stake, while ETAP has the remainder.

Smaller firms have also been demonstrating a strong interest as well as confidence in the Tunisian energy sector in recent months. In June, New Zealand Oil and Gas announced that it had won a two-year prospecting permit for in the southern Gulf of Gabes, having submitted an application in August 2010. The company’s chief executive, David Salisbury, said that Tunisia had stood out among the countries the firm was considering because of “its combination of good prospectivity, established exploration and production activity levels, reasonable fiscal terms and ease of doing business”.

Some companies have also identified new opportunities to increase their exposure to Tunisia arising from the political turmoil itself. Irish explorer Petroceltic in May, for example, announced plans to invest up to $100m to acquire interests in Tunisia and Egypt this year, most likely through farm-in deals with firms already operating in the region but having difficulties securing debt-based financing as a result of the unrest.

The unrest has had other limited consequences for Tunisian operators as well. An increase in protest activity over employment and pay in the wake of the political uprising has raised concerns about the possibility of disruptions in the short term. Demonstrators blockaded BG Group offices at Nakta, for example, in mid-May, in spite of a number of offerings by the British company to address protestor concerns, while local fisherman took part in an extended sit-in at Petrofac’s headquarters, calling for compensation for the company’s project’s impact on their livelihood.

However, in spite of this, operators have opted to push forward with their investment plans and ride out their short-term uncertainty in a bid to capitalise on the country’s longer-term appeal. With BG continuing to pour capital into the country, on top of the $3bn it has already invested, and smaller operators launching new prospecting operations, the upstream potential for this small North African country looks sizable. (OBG)

Global Arab Network

Add comment

The opinions of the authors in articles published are theirs alone and do not necessarily reflect the views of Global Arab Network
------------------------------------------------------------------------------
Published comments are the opinions of private individuals and do not reflect the views of Global Arab Network