The French energy giant Engie (formerly GDF-Suez), a subsidiary of Suez, has signed a memorandum of understanding in the renewable energy sector with the Algerian public oil group Sonatrach, an AFP journalist said.
“This is an agreement for cooperation and sharing of expertise in three areas of common interest,” Bruno Bensasson, Africa director at Engie, told AFP.
These areas are the “solarisation” (use of solar energy) of gas pipeline compression stations, the valorization of flaring gases (burned during the extraction of oil and gas) and the “energy efficiency” of industrial processes. (such as production or liquefaction of gas for example), he said.
This agreement is “a commitment to work together,” he said. “There are no commercial commitments yet” at this stage. “It’s about working together, preparing for the future (…) before moving on to bigger things.”
Engie is a major economic player in Algeria, particularly in the exploration and production of natural gas. He is the main buyer of liquefied natural gas (LNG) in the country.
Engie has entered into long-term LNG contracts with Sonatrach accounting for 8.5 billion cubic meters per year, according to the group, as well as a long-term contract for the supply of gas piped via Medgas, representing 1 billion cubic meters per year.
It has also signed a gas production sharing agreement with Sonatrach for the Touat region, located in the south-west of the country, in the Algerian Sahara. The start of production is expected in 2018 for a period of 27 years.
The relations between Engie and Sonatrach had been strained for the last two years. In May 2016, an Engie executive said he was in favor of a revision of the system of long-term gas supply contracts, indexed on oil prices, which was firmly rejected by Algiers.
In January 2017, a senior manager of a subsidiary of Engie had blamed the tension on the gas supply in the south-east of France, in the heat of cold, to a “production problem” in Algeria. Sonatrach responded by assuring that it had respected its “contractual commitments”.
In April, Algerian Prime Minister Abdelmalek Sellal at the time ensured that the dispute with Engie was settled.