Russian Gas Could Make Up Shortfall From Algeria, Analyst Says
Loss of production from Algeria's In Amenas gas field after last's week attack by Islamist militants will cut deliveries to Europe by as much as 9 billion cubic meters a year, a French gas analyst told the Bloomberg agency.
Russian gas will most likely be used to replace the shortfall, Thierry Bros of Societe Generale SA in Paris, said in an e-mail.“We could see gas prices trending upwards in the coming days. But we believe that unless the situation deteriorates more than our hypothesis, NBP gas prices should be capped at 70 pence a therm,” he said, referring to the National Balancing Point, the UK gas-trading hub.
British newspapers wrote that gas supplies seemed to be stabilising in the wake of the shock caused by the bloody events, noting that Algeria is Europe's third largest gas supplier.
The occupation of the remote gas installation, which started last Wednesday, came to a violent end on Sunday when Algerian troops attacked again, routing the terrorists who had been holding hundreds of workers hostage. The final death toll is emerging, but at least 37 non-Algerian staff and 29 terrorists died, according to the Algerian government.
Norway's Minister for International Development, Heikki Holmaas, said his stepfather, Tore Bech, was among the missing and presumed dead. Bech worked at the site for Norwegian energy company Statoil, which co-manages the facility. Its company statements about the events are here.
Experts told the Financial Times that a dilemma for the industry was whether In Amenas had been an isolated attack or part of a trend. “The main issue to assess is whether the Algerian event represents a new ongoing threat and a general associated elevation in the risk environment or a one-off occurrence which may now result actually in tighter security in the region,” said Nick Robson, head of Jardine Lloyd Thompson’s credit, political and security risk business. The Independent quoted industry sources saying that the actions by Islamic militants which precipitated the bloody death toll would cause reviews of operations by energy majors. Drilling by Total of France and Italy's Eni SpA might also be affected by the hostage crisis, said the sources.
Dr John Burman of Cambridge Global Research Ltd, a consultancy advising financial institutions on their Middle East investments, told the London Independent: "For the UK, in particular, Algerian gas is more of an issue than Algerian oil. Algeria is a smaller producer than, say, Qatar, but it is still a major gas player. The problem for Algeria is that gas exploration and extraction requires significant levels of technological investment. If the energy majors are pulling out because of the terrorist threat, Algeria's gas industry will suffer acutely."
Energy products make up over 90% of Algerian exports, and more than a third of its GDP (gross domestic product). Gas is piped to Europe via Italy.