Trump ‘Fortunately’ Failed to Sway OPEC, Algerian Oil Boss Says
Trump ‘Fortunately’ Failed to Sway OPEC, Algerian Oil Boss Says
(Bloomberg) -- Africa’s biggest oil and natural gas producer plans to expand in most areas of the energy industry except for crude, shunning U.S. President Donald Trump’s latest Twitter directive for OPEC members to reduce oil prices.
Algeria’s state-owned Sonatrach Group plans to develop onshore and offshore gas fields, start a trading business, revamp and build refineries and expand output of petrochemicals, Chief Executive Officer Abdelmoumen Ould Kaddour said in an interview. While Sonatrach could boost oil production by 200,000 barrels a day, there is no need for an imminent increase in supplies, he said. Algeria is the third-biggest gas supplier to the European Union.
The Organization of Petroleum Exporting Countries gave a tepid response on Sunday to Trump’s tweet last week insisting that the group “must get prices down now!” OPEC, along with allied producers, said it would boost output only if customers requested additional oil. The producers are halfway toward their June pledge to pump an extra 1 million barrels a day of crude.
“Trump tweets are disturbing, but fortunately this time he did not have an impact on the OPEC decision,” Kaddour said. “The price of oil is subject to many variables, not only the tweet from the president of the U.S.”
The “right price, the fair price,” for both consumers and suppliers is between $70 and $80 a barrel, Kaddour said. Global benchmark Brent crude climbed as much as 2.7 percent on Monday to $80.94 a barrel, the highest since November 2014.
Algeria spearheaded the effort by OPEC and allies including Russia to push prices higher by cutting production. The cuts took effect in January 2017, though producers changed course in June and committed to increase output to make up for losses in Venezuela and Iran.
Sonatrach could produce an additional 200,000 barrels a day if necessary, Kaddour said. Algeria pumped 1.07 million barrels a day of oil in August, and production has declined from a peak of 1.41 million barrels a day in December 2007. Output including gas is equivalent to 3 million barrels a day, making it the biggest combined producer of oil and gas in Africa, according to data compiled by Bloomberg.
The government is working on a law to entice foreign investors and reduce taxes and bureaucracy, and it may take effect by early 2019, he said.
Sonatrach expects to enter into a joint venture agreement with Exxon Mobil Corp., and will form a partnership with Total SA to build a $1.5 billion petrochemical plant by the end of the year, Kaddour said.
Sonatrach is also in discussions with 14 companies, including Chevron Corp., Total and Vitol SA, to form an oil and gas trading joint venture, he said. “We are looking for new ways of trading our products,” he said, though the company hasn’t decided whether to partner with an oil producer or a trader.
--With assistance from Salah Slimani and Giovanni Prati.
To contact the reporters on this story: Annmarie Hordern in Algiers at ahordern1@bloomberg.net;Mohammed Aly Sergie in Dubai at msergie@bloomberg.net
To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Claudia Carpenter, Bruce Stanley
©2018 Bloomberg L.P.