Fugro: Pipeline Survey between Algeria and Italy

As North Africa gains in importance for it's natural gas exports to Europe, links are being made between the two continents.






Recently, on Rigzone, Fugro announced that they've "been awarded a contract to perform a detailed marine survey in the Mediterranean Sea to select the best route for the GALSI gas pipeline from Algeria to Southern Sardinia, and then from Northern Sardinia to the mainland of Italy".






Fugro will be using their vessel, the Geo Prospector (pictured on the right) and their geotechnical vessel, the Bucentaur (pictured on the left) - a drillship to do geological sampling.

The work is being financed by a group of companies, under a Joint Venture named Galsi S.p.A and includes the following companies:

1. Sonatrach
2. Edison
3. Enel
4. Wintershall
5. Hera
6. and the Sardinian company Sfirs.

Reading through the above Wikipedia corporate description of Galsi S.p.A, it can be seen that Sonatrach has the largest percentage, 36% and that Russia's Gazprom may potentially have an interest in the company and pipeline as well. Again, a there is a good mix of National and Independent's working together.






As developed countries look to do more business and as North Africa opens its doors to exploration, more and more links will be made. This pipeline begins in the middle of the Sahara and ends near Tuscany, Italy. Wikipedia describes the route as:





"The pipeline will start from the Hassi R'mel field in Algeria and the 640 kilometers long first section will run to El Kala at the coast of Mediterranean Sea. The 310 kilometers long offshore section with two legs will be laid between El Kala and Cagliary, Sardinia."





I worked in Hassi R'mel when I was in Algeria with Schlumberger and can definitely say Algeria has potential to become more a power in North Africa, if it follows Libya and Tunisia's model and focus on building a solid infrastructure and employing more locals. The oil infrastructure is a start, the next step is the roads, the sewers, and promoting a safe work environment. In the end though, I would return to Algeria and Hassi R'mel in a heart beat, as the people I met and Sahara desert is definitely a place to visit and experience.






Eni has been making investments in North Africa, mainly in Libya for the last quarter of a century. There is this very recent Press Release which states clearly that Libya's NOC and Eni "will continue to explore the prolific NC41 offshore area, and strengthen the hub of Mellitah by expanding gas export capacity from 8 to 16 billion cubic meters/year"






Expect over the next few years to see more positive news coming from North Africa.

Lining up for Exploration: NOC's and IOC's

Some interesting news came across the Dow Jones Newswire and can be found on Rigzone about some offshore blocks off of Columbia.

The Libyan's are also have bidders line up for some blocks as well. The MMS just recently completed some bids for blocks over the past few months for the Gulf of Mexico (GOM).


As more and more National Oil Companies (NOC's) move further away from their homelands, they are treading into the waters of the Independent Oil Companies (IOC's) and gradually reshaping the way oil is being found.


New partnerships are being formed and as we are seeing what is being done in Venezuela and Russia (the nationalization of resource companies), these NOC's are now being seen as new powerhouses.

In the past, Norsk Hydro (or Hydro) of Norway, was one of the few NOC's that explored abroad, outside their own boundaries. Even in the Gulf States, Dubai, for example, has recently purchased some heavy oil land and companies in Canada.

So how does that affect us? National Oil Companies do not strictly operate on market principles alone. Because of their close relationship to their respective government, they may have other objectives, such as wealth distribution (Venezuela - PDVSA), job creation, economic development, and energy security. Whereas the IOC's are concerned with market values and returning a good share price for their investors.

Two different motivations.

In 2006, five of the top ten companies could be considered state-owned and operated. That seems to be a decent ratio of private to state - 50%.

An interesting paper was published by the Federation of American Scientists concerning this very topic.

Looking at it another way, based on reserves in 2006, the top ten producing companies would all be state-owned and includes the following:

1. Saudi Aramco
2. NIOC
3. INOC
4. KPC
5. PDVSA
6. Adnoc
7. Libya NOC
8. NNPC
9. Lukoil
10. QP

As with every company involved in E&P, their ability to be profitable for either their shareholders or the state-motivations, depends greatly on technology and where they are exploring.

In the article on Rigzone concerning the exploration bids for Offshore Columbia Blocks, one notices that several of the companies involved are state-owned and now working with the major independent's, such as BP.

By working with the independent for-profit companies and through production sharing-agreements (PSA's), it allows the state-owned oil companies to access new technology.

It will be interesting to see how the next few years plays out and the courtship between NOC's and IOC's continues.