Eni Moves on Algerian Shales

Eni SpA has signed an agreement on cooperation with Algerian state-owned energy company Sonatrach for the development of unconventional natural gas.

Eni said the deal will have particular focus on shale gas as the Italian company says there are "significant" reserves of such gas in Algeria.

"Eni and Sonatrach will jointly implement activities to assess the technical and commercial feasibility of exploration and operational initiatives in shale gas," the company said.

Earlier, Algeria's Sonatrach had said that it would be launching a pilot project for developing unconventional gas resources in 2012.

Djamel Bekkouche, the head of Sonatrach E&P Exploration had said that the state company was searching for a partner to assist in development and that there been an exchange of views with international oil companies, including Eni, about shale gas development,

Algeria's energy minister, Youcef Yousfi, had said the potential for unconventional natural gas in Algeria was comparable to major plays in the United States.

"We are interested in growing unconventional gas reserves. Based on estimates, the reserves might be as high as 1,000 trillion cubic feet.”

Algeria was identified in an assessment by the U.S. Energy Information Administration as being amongst a group of countries that already produce substantial amounts of natural gas and also have large shale resources.

Steve Ratcliffe, a senior vice president at Eni has commented earlier this month that the company was evaluating shale gas opportunities in the North African country.

Sonatrach has no experience of developing shale gas or exposure to technologies such as hydraulic fracturing and horizontal drilling required in the unconventional process.

“We need partners that have experience in shale gas and tight gas production,” said Minister Yousfi.

Algeria is the third-largest supplier of gas to Europe after Russia and Norway.

Eni entered the European shale gas market this past December with the acquisition of Minsk Energy Resources and its three licences in the Polish Baltic Basin.

In May 2009, Eni entered into  a strategic alliance with Quicksilver Resources, acquiring a 27.5% interest in an area with production from unconventional gas shales located in the Barnett Shale formation of the Fort Worth Basin in Texas.