Irish firm to benefit from Algerian supply

Irish exploration firm Petroceltic is expected to directly benefit from an anticipated increase of Europe’s importation of Algerian gas, being sought in a bid to counter Russia’s supply dominance.

The oil and gas exploration and production company holds a 38.25% stake in Algeria’s massive Ain Tsila gas field, which has 10 trillion cubic feet of proven gas reserves. The company made no comment yesterday, as it is in a pre-annual results closed period.

Algeria has the tenth largest gas reserves in the world, although it is only using less than half of its pipeline capacity to Europe.

The Financial Times reported, on Wednesday, that due to the EU’s ongoing tensions with Russia, in a bid to diversify energy supplies, policymakers are looking to increase gas exports from Algeria — a move which could further unlock the northern African country’s energy supply potential.

Algeria is Spain’s biggest gas supplier and the EU is hoping that the proposed Midcat gas pipeline, set to link the Iberian country with France, will expand Algerian exports into western Europe.

Spain, France and Portugal are due to meet, next week, to prioritise the Midcat project.

“Ain Tsila is an important asset for Algeria and for security of future supply into southern Europe,” researchers at London-based advisory house, Peel Hunt said in a recent note on Petroceltic.

“Once on-stream, the field is expected to produce at a plateau rate of 355 million standard cubic feet of gas per day for 14 years, providing long-term visibility on earnings and cash flow.

“We believe that the quality and scale of Ain Tsila differentiates Petroceltic from many of its peers and that its cash-flow generation potential ought to provide a platform for growth, and screens well as an asset that would be attractive to larger acquisitive companies,” it added.

For its part, Petroceltic — which recently continued the paring back of its geographical focus to Algeria, Bulgaria, Egypt and Italy by pulling out of Romania, after a similar move in Kurdistan — recently said it remains on course to develop Ain Tsila — with its partners, Enel and Sonatrach — and is still targeting first gas from the field in the second half of 2018.

Petroceltic is expected to further downsize its asset base by selling its partial stake in an offshore block in Greece.

The company’s exploration activity will focus on Italy and Egypt, with Algeria and Bulgaria acting as the firm’s core production operations.