On December 13 Gazprom was announced the winner of the hydrocarbon exploration and development tender for the onshore area El Assel located in the Berkine Basin of the People's Democratic Republic of Algeria.

The first open national and international tender for the hydrocarbon exploration and development was held by the National Agency for the Valorisation of Hydrocarbons Resources (ALNAFT). A total of 16 licensed areas were offered in the tender and more than 50 companies wished to participate.

Gazprom is planning to invest some USD 120 mln in the geological exploration as part of the project (2,500 km2 of 3D seismic data and drilling of four exploratory wells). Pursuant to provisional estimates the recoverable oil reserves in the El Assel area average 30 mln t.

Background:

Algeria’s proven natural gas reserves amount to 4.58 tcm (the first place in Africa after Nigeria – 5.15 tcm). The main part of the natural gas reserves is concentrated in the central and eastern parts of the country.

The Country’s proven oil reserves amount to 1.58 bln t (the third place in Africa after Libya and Nigeria). In the energy balance of Algeria natural gas accounts for 62.5 per cent, oil – 34.5 per cent, coal – 2.5 per cent, hydro energy – 0.5 per cent.

The Algerian State Oil and Gas Corporation (ASOGC) Sonatrach deals with oil and natural gas exploration, transportation and marketing, controls the bulk of gas production and wholesale trade.

In 2007 natural gas production by the Corporation amounted to 83 bcm with 24.4 bcm supplied to the domestic market.

Sonatrach imports pipeline natural gas to Italy, Spain, Portugal, Tunis, Slovenia, and LNG – to France, Spain, USA, Turkey, Belgium, Italy, Greece and South Korea.

On August 4, 2006 Gazprom and the ASOGC Sonatrach signed the Memorandum of Understanding. The document, in particular, determines the following basic directions of cooperation development: geological exploration, production, transportation, gas transportation and distribution systems development, asset swap, oil and natural gas processing and marketing in Algeria, Russia and in third countries.

On June 16, 2008 Gazprom opened its official Representative Office in the Algerian capital.