PROMOTION ACTIONS IN THE HYDROCARBONS MINING FIELD
Since 2017, ALNAFT has initiated a new approach for the promotion and valuation of investment opportunities through the conclusion of study agreements on the hydrocarbon potential of basins in the Algerian mining sector.
This new approach has the following advantages:
- Risk reduction on the project by carrying out a study prior to any commitment by the company;
- Confirmation of the hydrocarbon potential and the economic viability of the proposed projects;
- Better knowledge of the mining sector for ALNAFT which will have a study at the end;
- A free operation for ALNAFT;
- The valuation of G&G data available on the mining sector;
- To arouse the interest of companies for the conclusion of hydrocarbon contracts.
This new dynamic of promoting oil and gas projects has been implemented to interest companies already present in Algeria and operating in the national mining sector. The process consists of constructing economically profitable development projects including several areas to be developed in synergy, particularly in the vicinity of existing treatment and disposal facilities, and offering them to these partner companies.
This promotion strategy takes into account the national oil and gas situation and proposes to constitute an alternative route to support upstream activity.
The study agreements are the result of a process which begins with the expression of interest of the oil company and which culminates in the signing of a study agreement for hydrocarbon potential, through the organization of the Data Room.
The process of concluding a study agreement includes five (5) major steps:
a. Expression of interest
On the occasion of events or meetings, ALNAFT presented its new promotion strategy to the oil companies, the latter expressing their interest expressly, by e-mail or by mail to conduct a study, within the framework of a convention.
b. Confidentiality agreement
A confidentiality agreement is signed between ALNAFT and the oil company.
c. Opportunity presentation meeting
Once the confidentiality agreement is signed by the parties, a technical presentation meeting of the proposed opportunities is organized and a copy of the technical presentations is given to the company at the end of this meeting.
d. Data Room
After examining the technical presentations of the opportunities offered by the company's experts, a Data Room for viewing the data available on the areas selected by the company is organized. Two options are possible: physical data room or online data room.
e. Conclusion of the study agreement
Once the data room has been organized, and after having taken cognizance of the volume and quality of the existing data on the selected areas, the company defines the projects on which it wishes to conduct a study.
A model study agreement is sent to the company. Once the terms of the conduct of the study have been discussed and negotiated, the two parties proceed to the signing of the study agreement.
As soon as the agreement is signed, the data is made available to the company to start the study.
Figure 1 - Process of concluding a study agreement
The main articles of a study agreement deal with:
- The duration of the agreement which is fixed by mutual agreement;
- The work program to be carried out for the study which is proposed beforehand by the partner and validated by ALNAFT;
- The conduct of the work which is entirely the responsibility of the partner company and in the most diligent manner possible, according to the norms and standards established on the basis of the best practice in force in the international oil industry;
- ALNAFT's commitment to make available to the partner free of charge the data available concerning the study area;
- The partner undertakes to organize technical immersion training workshops for the benefit of engineers from ALNAFT and Sonatrach;
- The parties hold study review meetings to assess the status of the study, at an agreed frequency;
- Upon completion of the study, the company will present the results and submit a final study report to ALNAFT.
- At the end of the study agreement, if the interest is confirmed, and if ALNAFT considers, technically and economically, that the work program proposed by the partner is advantageous, ALNAFT will support the company in negotiations with SONATRACH for the conclusion of a hydrocarbons contract.
- In the event that several companies have carried out a study of hydrocarbon potential on the same project, the competitors will be decided on the basis of a technical and economic evaluation of the offers proposed and the most advantageous offer will be retained by ALNAFT.
3. Proposed perimeters
Since 2017, ALNAFT has proposed twenty-two (22) study areas comprising both exploration and development projects; but with priority for the latter category in order to respond to a national oil situation which requires the generation of additional production inputs as soon as possible.
4. Physical Data Room & online Data Room
ALNAFT has organized, from 2017 to date, fourteen (14) Data Rooms for the benefit of ten (10) companies, including twelve (12) physical Data Rooms and two (2) online Data Rooms.
The two (2) online Data Room, for passive visualization of data, were organized for the benefit of the two companies and are justified by the global health situation, linked to the COVID-19 pandemic which led to the closure of borders and which did not allow teams of experts to travel to participate in a Data Room in classic face-to-face mode.
ALNAFT also initiated, in 2016 through the launch of a Call for Expressions of Interest, an action to promote the mining sector according to the business model built around multi-client projects with companies specializing in the field.
A new Call for Expressions of Interest was launched in February 2020 to carry out studies on the petroleum potential of basins and the joint marketing of data, results and their interpretations and the examination of the offers proposed led to the selection of five (5) specialized companies with which clarification and contract negotiation meetings will be held shortly.
The promotion model through the implementation of multi-client projects and also envisaged, with specialized companies and having proven experience in the conduct of this kind of projects. This consists of entering into a commercial multi-client service contract with a specialized company that offers a subscription financing model with future clients interested in the acquisition of a detailed study on an area of the mining domain carried out by this company.
Interested customers may consider entering into a partnership with Sonatrach once the potential has been confirmed and the economic interest justified. The income generated by the sale of the completed study is shared between ALNAFT and the specialized service company according to the terms of the negotiated commercial contract.