This article was taken from Menas Associates’ monthly Algeria Focus publication.

Data released by the National Statistics Office (NSO) on 11 July support Sonatrach’s report of 26 June and statements made at that time by its CEO, Amine Mazouzi.

As we reported in last month’s issue of Algeria Focus, he said that Sonatrach expects to produce 69 million tonnes of oil equivalent (toe) this year, compared to 67 million tonnes in 2015, which is a 3% increase. He said that “the era of stagnation is over” and that “hydrocarbon production is now in a growth phase”.

Mazouzi’s forecasts were based on the results for the first five months of 2016, along with even more promising projections for July. The NSO data released this month, although only covering Q1 2016, wholly supports his forecasts. The NSO shows production for the oil and gas sector was up 3.3% in Q1 2016 compared to the same period of 2015.

This increase comes after four consecutive quarterly year-on-year declines in 2015 — 7.1% in Q1; 2% in Q2; 1.4% in Q3; and 1.8% in Q4. Hydrocarbon production for the year as a whole was down 3.1% compared to 2014.

However, the sector’s increased production in Q1 2016 was largely driven by LNG activity, which registered a 21.5% growth compared to Q1 2015.

For the crude oil refining business, the increase in Q1 2016 was 5%, compared to a full-year fall of 2.4% in 2015.

Unlike LNG activities and crude refining, the production of crude oil and natural gas was down 0.5% in Q1 2016. However, this decline was smaller than the 2.9% decline for the full year of 2015.

Oil price falls by 10% in July

After holding at around the US$50 a barrel throughout most of late May and June, the Brent crude price drifted lower during July, losing some 10% of its value to around US$45 by the last week of the month. Although only a small dip, and not unexpected, it is nevertheless a disappointment to those who saw the rebound to the US$50 level as perhaps heralding a slight easing in Algeria’s economic difficulties.