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BMI View: Algeria's short-term oil production will be supported by increased focus on conventional assets,
but in the absence of deeper, market-oriented reforms foreign participation will remain low, limiting the oil
output over the long-term. Our outlook for the gas sector is also bearish, mostly due to slow progress in gas
pricing reforms, which will curb upstream investment and lead to production declines toward the second
half of our forecast period. More generally, the Algerian market oil and gas market will continue to suffer
from unattractive fiscal and regulatory regime, ongoing security concerns, and the weakened commodity
Latest Updates And Key Forecasts
? Algeria's oil and gas reserves will continue to decline during 2016-2020. Oil reserves are forecast to
contract by 33.7% to 8.0bn bbl in 2025, while gas reserves will see a reduction of 19.5%, falling to
3.6tcm over the same period. The country will shift the exploration focus away from shale and other
frontier plays towards improving recovery from producing assets.
? Sonetrach announced that Algeria's oil production is entering a new phase of growth. In 2016, the
company expects to increase its gas production to 69mn tonnes, up from 67mn tonnes a year earlier. We
hold our forecast that Algeria's oil production will increase marginally in 2016 and 2017, before declining
at an average annual rate of 1.2% during 2018-2025.
? Algeria will continue to lag its regional peers in terms of gas pricing reforms. Reforms will be
insufficient to draw significant new foreign investment into the upstream gas sector over the coming
years, contributing to secular decline in domestic output.
? We hold our view that Algeria's refining capacity will remain stable at 650,800b/d until 2025. While the
country's NOC is planning significant upgrades to the country's refining sector, we have kept the new
capacity out of our forecast due to lack of details and progress in the new projects.