Luring global oil firms an uphill task for Algeria

As Algeria embarks on plans to double its gas output in the next seven to 10 years, it will struggle to draw global oil firms because of its tough demands, security concerns and slow bureaucracy.

The Algerian energy minister Youcef Yousfi said last month the discovery of major reservoirs in maturing and new gasfields would help the country to boost its current gas output of 3 trillion cubic feet a year. Mr Yousfi said a new auction of exploration blocks would be held in the next couple of months, but did not set a firm date for the licensing tender, which was initially planned for February.

The ministry is also looking at regions in Algeria’s south-west, which are little explored and where some oil and gas discoveries were made recently.

The country also expects to drill its first offshore well next year.

But discoveries have to keep pace with rising domestic demand that is eating into exports.

Robin Mills, the head of consulting at Manaar Energy Consulting, said Algerian gas output had been flat and exports were declining because of fast-rising domestic demand and the lack of major new developments.

Mr Mills said gas volumes in the European market were contracting instead of growing, and that posed a problem to Algeria because of its reliance on Europe's gas market.

According to Mr Yousfi, Algeria, a member of the Organization of Petroleum Exporting Countries, is also producing 1.2 million barrels of oil a day.

New discoveries included about 1 billion barrels of additional reserves to Hassi Messaoud, Algeria’s biggest field that contributes a third of its output.

Rob Smith, a consultant at Facts Global Energy, said Algeria was trying to improve its image, but the licensing round and security concerns were key concerns.

Foreign investors have been showing little appetite for taking part in licensing rounds for the oil and gas rights, because of the tough terms in production-sharing agreements.

In the last three licensing rounds, global oil firms also displayed little interest. In a licensing round in 2011, the state-run energy firm Sonatrach won a permit, while the other went to Spain’s Compañía Española de Petróleos (Cepsa).

“The wait-and-see attitude [of foreign investors] revolves around improving the fiscal terms and making security a bit more comfortable for the foreign investors,” said Mr Smith. “That would likely mean letting them have private security as well as the Algerian military.”

Algeria is also counting on drawing global oil firms and foreign investors to its tight gas and shale gas resources. The Algerian energy minister estimates that the country has 300 to 500 trillion cubic feet (tcf) of tight gas and 700 tcf of shale gas.

“It will be very difficult to do much with that unless they can really speed things up,” said Mr Mills, “because these unconventional resources need cost control, they need rapid pace of activity, they need a lot of service company support, and that is going to be very difficult.

“When a discovery is done, there are very rigid procedures for delineating it and preparing development plans … that does not allow the companies to be very flexible and particularly for unconventional resources that is not going to be suitable.”

Algeria ranked fourth globally in terms of natural shale gas reserves, behind the United States, China and Argentina, according to a study, published in June, by the US Energy Information Administration and consultancy Advanced Resources International. Algeria’s estimate of 707 tcf was triple the 230 tcf forecast in a 2011 report.

Mr Smith said there was a lot of shale potential in Algeria. “But with the current sort of technology, shale requires a lot of water to make it work. You need a place for it to be exported or go into the domestic system to be used,” he said.

To encourage more foreign investments, Algeria amended in January its hydrocarbons law, but investors are not likely to rush in because the changes are not major.

Mr Mills said the legal amendments were “cosmetic” and he thought it would be hard for Algeria to boost output significantly until it offers major changes and more incentives.

The legal amendments came after the deadly January attack on the In Amenas gas complex, operated by Norway’s Statoil and Britain’s BP.

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If you go

Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.

When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.

How to get there: Emirates currently flies from Dubai to Orlando five times a week.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Formula Middle East Calendar (Formula Regional and Formula 4)

Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi

Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi

Round 3: February 7-9, Dubai Autodrome – Dubai

Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi

Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia

'THE WORST THING YOU CAN EAT'

Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.

Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:

Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.

Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.

Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.

Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.

Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.

COMPANY PROFILE

Name: HyperSpace

Started: 2020

Founders: Alexander Heller, Rama Allen and Desi Gonzalez

Based: Dubai, UAE

Sector: Entertainment

Number of staff: 210

Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners

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Brief scores:

Toss: Rajputs, elected to field first

Sindhis 94-6 (10 ov)

Watson 42; Munaf 3-20

Rajputs 96-0 (4 ov)

Shahzad 74 not out

Dubai Bling season three

Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed

Rating: 1/5

Other IPL batting records

Most sixes: 292 – Chris Gayle

Most fours: 491 – Gautam Gambhir

Highest individual score: 175 not out – Chris Gayle (for Royal Challengers Bangalore against Pune Warriors in 2013)

Highest strike-rate: 177.29 – Andre Russell

Highest strike-rate in an innings: 422.22 – Chris Morris (for Delhi Daredevils against Rising Pune Supergiant in 2017)

Highest average: 52.16 – Vijay Shankar

Most centuries: 6 – Chris Gayle

Most fifties: 36 – Gautam Gambhir

Fastest hundred (balls faced): 30 – Chris Gayle (for Royal Challengers Bangalore against Pune Warriors in 2013)

Fastest fifty (balls faced): 14 – Lokesh Rahul (for Kings XI Punjab against Delhi Daredevils in 2018)

UAE currency: the story behind the money in your pockets

Guide to intelligent investing

Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:

Stay invested: Time in the market, not timing the market, is critical to long-term gains.
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German intelligence warnings

2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250

Source: Federal Office for the Protection of the Constitution