Algeria’s state oil firm Sonatrach will exchange crude for refined products with the world’s largest oil trader Vitol in its aim to reduce a record fuel import bill, Sonatrach said Tuesday.
CEO Abdelmoumen Ould Kaddour said Sonatrach would pay processing costs before bringing refined fuel back to Algeria.
“Our goal is to reduce our imports of gasoline, they are too high,” Ould Kaddour told reporters.
He said the firm was also negotiating to buy shares in a foreign refinery, but he did not give details.
The deal is due to take effect in early February, according to a document seen by Reuters.
Sonatrach, Algeria’s only domestic oil producer, produced about 1 million bpd of crude in December, according to the Reuters OPEC survey.
Vitol would receive up to two million barrels a month of the OPEC member’s light, sweet crude and would deliver gasoline and gasoil in return until the end of the year, Reuters reported.
One of the sources familiar with the matter said Vitol would have the option to resell the crude on the open market as long as the products provided to Sonatrach met the contract’s specifications.
Algeria, which needs to meet surging domestic fuel demand, paid $800 million for fuel imports in 2016, but that more than tripled in 2017 to a record $2.5 billion because of refining problems, a Sonatrach source said.
Ould Kaddour was speaking on a visit to the southern gas complex of Tiguentourine, operated by Sonatrach, BP and Statoil, where he said gas output was stable at 8.8 billion cubic meters (bcm) per year, just below maximum capacity of around nine bcm.
Algeria, a key supplier of gas to Europe, exported 55 bcm of gas in 2017, Ould Kaddour said. That was up slightly from the 54 bcm it exported in 2016, according to Sonatrach officials.
Ould Kaddour’s visit marked the fifth anniversary of an attack by al Qaeda-linked militants at Tiguentourine that killed 40 mostly foreign contractors.
He said Sonatrach was improving relations with its foreign partners and had resolved more than 10 of 15 litigation cases.