[Algeria] Sonatrach in talks with oil firms to start joint venture
27-07-2018 09:25:00 | by: Andrea Ayemoba | hits: 6194 | Tags:
Sonatrach is in talks with oil majors and trading firms to start a trading joint venture after the Algerian state energy company reached a deal this year to buy its first overseas refinery, its chief executive said.

A decision on forming the venture had been expected at the end of July but could be delayed by a month, Reuters quoted two sources as saying.

“The foreign firm will have small shares in the trade joint venture,” Sonatrach CEO Abdelmoumen Ould Kaddour told Reuters in Algiers.

Potential partners, which have held talks with Sonatrach in recent weeks, include BP, Total, Royal Dutch Shell, Chevron, Repsol and Vitol, the world’s biggest independent oil trader, the sources said.

Vitol, BP and Shell declined to comment. Total, Chevron and Repsol did not immediately respond to requests for comment.

Sonatrach’s expansion into refining and trading reflects a shift among national oil companies that for decades focused on producing oil and gas while leaving marketing to third parties.

Its move to form a venture is one of several steps aimed at easing the burden of its hefty fuel import bill that tripled year-on-year in 2017 to a record $2.5 billion.

It signed a contract this year with Vitol to receive products in exchange for crude, the first such deal in decades, and said in May it had agreed to buy ExxonMobil’s 175,000 barrel-per-day (bpd) Augusta refinery in Sicily, Italy.

Traders said the refinery mainly processes sour crude grades now and would need adjustment to take light, sweet oil from Algeria, a member of the Organization of the Petroleum Exporting Countries that produces a little more than one million bpd.

Boston Consulting Group was advising Sonatrach on its long-term strategy, the sources said.

Since Kaddour’s appointment in 2017, the CEO has sought to resolve disputes with foreign oil firms, such as a deal reached in February with Italy’s Saipem to end a row over four gas projects.

He has also worked to cut new commercial deals, such as signing an agreement to build a petrochemical plant with Total and working on plans with ExxonMobil for possible shale oil production in Algeria.