Political Pressures

Algerian oil production has increased to 1.5mnb/d, up from 1.4mn last year and 900,000 bpd in 1999 according to a June announcement by Energy and Mines Minister Chakib Khelil. Over the next five years, the government plans to invest around US$33bn to raise output to 2mn bpd by 2010. Algerian state energy company, Sonatrach, has so far announced eleven oil and gas finds this year, compared to thirteen in the whole of last year. According to recent IMF figures, the hydrocarbon sector accounted for 38% of GDP, 98% of exports and 71% of budgetary revenue in 2004. With the OPEC basket oil price set to stay above US$45/bbl into 2010 as we expect, Algeria will have plenty of room to carry out major infrastructure projects while maintaining a relatively healthy budget position.

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