Algeria has more drilling rigs than the rest of Africa combined, yet oil production still isn’t recovering after years of decline.
It is little wonder the nation remains one of the most vocal supporters of action to increase prices by curbing output at the OPEC meeting next month, Bloomberg reported.
The Organization of Petroleum Exporting Countries has been hit hard by the decline in oil prices. Algeria, like other members, is rolling out economic reforms to deal with the consequences of the slump, which include the nation’s first current-account deficit in more than a decade. Unlike Saudi Arabia and Iraq, it has been unable to soften the blow by boosting output.
“In the short term, for sure, the only hope is for prices to rise” because Algeria has little flexibility on production, said Alexandre Kateb, chief economist at Algiers-based financial services company Tell Group.
“What it can do is on the level of diplomacy. Trying to influence other members within the organization and achieve some consensus.”
Decades after the discovery of Algeria’s first major oilfields in the 1950s, the country’s exploration success rate has fallen to less than one well in five, according to data from state oil company Sonatrach Group. Last year, it drilled 149 wells and only made 22 minor finds. Crude output for the past two years has remained at about 1.1 million barrels a day.
Algeria had 36 rigs drilling for oil last month, two-thirds of the total for the African continent, according to data from Baker Hughes Inc. Nigeria, which produced 600,000 barrels per day more crude than Algeria in April, had just six operating rigs, data show. While Algeria plans to buy eight more rigs this year, it is not making greater discoveries. Algeria’s income from oil and gas exports, which account for nearly 60% of the economy and 95% of foreign receipts, has plunged by almost half since crude prices tumbled.
