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Said Akretche , Chairman and Managing Director of NAFTAL - Algeria

22 nd World LP Gas Forum, Rio de Janeiro - Brazil 7 th – 9 th October 2009. ALGERIA : A LEADING LP GAS EXPORTER AND CONSUMER. Said Akretche , Chairman and Managing Director of NAFTAL - Algeria. 1. Introduction. Algeria is a leading LPG producing country.

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Said Akretche , Chairman and Managing Director of NAFTAL - Algeria

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  1. 22nd World LP Gas Forum, Rio de Janeiro - Brazil 7th – 9th October 2009 ALGERIA : A LEADING LP GAS EXPORTER AND CONSUMER Said Akretche , Chairman and Managing Director of NAFTAL - Algeria

  2. 1. Introduction Algeria is a leading LPG producing country. In 2008, Algerian exports reached 7.5 million tons and domestic consumption exceeded 1.95 million tons. However, the on going policy proping up natural gas consumption has hampered the growth of LPG in particular bottled butane, a product that remains the vital source of energy in rural areas. Nevetherless, opportunities for development of the domestic market of LPG (bulk butane, bulk propane, small public distribution network of LPG and LPG auto gas) exist and can be a valuable alternative. Thanks to abundant resources and because of their properties, LPG can play a greater role in meeting energy needs in transportation, industrial and agro business sectors in the future. 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  3. 2. Place of LPG in the Algerian energy policy The consumption energy model : Rank of LPG Environment Act Natural gas & LPG Renewable and solar energies promotion Act Promotion of use of the mostavailable energy forms The Algerian energy consumption model Energy efficiency Environment protection New fuels pricing structure New tariffs on Electric power & gas Saving Energy Act (1999) Energy Auditing (déc 05-495) The SavingEnergyNationalPlan The saving Energy National Fund IntergouvernementCommetee for Saving Energy Tariff policy Strategic options Conventional fuels substitution by Widespread use of LPG Fuel 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  4. 3. Exports of LPG • Algerian LPG development strategy is based on : • The strengthening of its leadership on the European market in general and the Mediterranean market in particular; • The increase of its shipping capacity; • Downstream integration; • Investment in terminals & storage capacity ; • Arbitrage opportunities. Million tons 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  5. 4. LPG meeting energy needs in Algeria Large specter of uses… …Consumption In 2008, LPG consumption in Algeria represented 7 % of the total final energy consumption. 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  6. 4. LPG meeting energy needs in Algeria LPG in the Algerian energy chain LPG is produced in oil and gas fields, located in the southern region of Sahara. It is transported by a an extended pipelines network to separation plants in Arzew. LPG is also produced by oil refineries and LNG plants. 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  7. Production of LPG in gas fields Production of GPL in oil fields Separation units (in oil and gas fields) Treatment units (GP1Z and GP2Z) LNG plants Oil refineries Propane and Butane Export Domestic market Bulk Propane and Bottling Propane Bulk Butane and Bottling Butane LPG/F 4. LPG in meeting energy needs in Algeria LPG supplies LPG production in Algeria (2008) Million tons 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  8. 5. LPG Market in Algeria NAFTAL : the leading LPG distributor in Algeria (1) NAFTAL is an Algerian company for distribution of petroleum product and LPG. NAFTAL is 100% subsidiary of SONATRACH GROUP. Fuels LPG Marine Fuels Aviation Fuels • Naftal missions • Sales of petroleum products and LPG • Development of distribution infrastructures and complying with the environment and safety energy policy • Training in petroleum products distribution business Lubricants Bitumen Training Tyres 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  9. Staff LPG Division Marketing Division Fuels Division LPG Districts Fuels Districts Marketing Districts 5. LPG Market in Algeria NAFTAL : the leading LPG distributor in Algeria (2) Storage Distribution network • 1 940 service stations • 49 fuels storage facilities; • 03 LPG bulk storage facilities; • 42 LPG bottling plants; • 47 bottled LPG storage outlets; • 26 aviation fuels storage facilities • 06 marine fuels storage facilities • 27 lubricants and tyreswarehouses • 15 bitumen units Organization Transportation • 910 km of transmission pipeline (180 km under construction) • 3 000 vehicles (heavy duty trucks and tankers) 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  10. 5. LPG Market in Algeria Butane : Consumption • The Algerian butane consumption rose from 1 million tons in 1990 to 1.5 million tons in 2008. • During this period, the annual average growth rate had been 2.4%. This low growth was due mainly to rural exodus and natural gas grid expansion. • In 2008, butane represented 75 % of total LPG sales. 1000 tons 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  11. 5. LPG Market in Algeria Propane & autogas : Consumption 1000 tons • Propane consumption rose from 48 000 tons in 1990 to 166 000 tons in 2008 • The annual average growth on this period had been 7.6 % • The growth in demand is mainly bolstered by the industrial sector. • Sales of bottled propane stabilized in the 1990s. Before 2004, sales maintained the same growth at a rate of 0.5 % a year. • During the last ten years, the LPG fuel average consumption growth rose by 10 % per year • The share of LPG fuel in the total consumption of fuels is small (4 % in 2008). 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  12. 5. LPG Market in Algeria (LPG bottling plants) RA1.K RA1.G Bottling plants Naftal (42) Skikda Annaba El Taref Jijel Béjaia Bottling Plants OtherOperators(15) Alger Boumerdes OEB Bottling Plants on project (30) Tipasa Guelma T.Ouzou Chlef Blida Constantine GP1.Z GP2.Z Mila A.Defla Mostaghanem Sétif S.Ahres Oran Bouira BBA Tissemsilt Médea Relizane A.Timouchent Batna Mascara Tebessa M’Sila Khenchela Tiaret Biskra Tlemcen Djelfa SBA Saida El Oued Laghouat Naama El Bayabh Ghardaia Ouargla Centres emplisseurs GPL HMD Tindouf Adrar H. R’mel Djanet 12 Tamanrasset

  13. 5. LPG Market in Algeria LPG demand 1 000 tons Bottled • Shrinking of demand for bottled butane . • Expansion of LPG consumption will be carried by propane development and LPG • fuel promotion. 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  14. 6. natural gas grid expansion • Sonelgaz, the public company for power generation and natural gas distribution is the main competitor for LPG distributors; • Between 2004 and 2008 : the natural gas distribution network increased by 4000 km to a total length of 27 000 km; • 2008 : natural gas grid expansion reached 30% of households. The expansion of natural gas affected negativellythe sales of LPG; especially bottled butane. • Sonelgaz had an ambitious program for the 2004-2009 time span of connecting many villages and towns to its natural gas grid; • 2012 : Sonelgaz objective is to reach up to 50 % of households. 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  15. 6. natural gas grid expansion Sonelgaz natural gas grid : 27 000 km • Electric facility • Natural gas plant

  16. 7. market deregulation • Market deregulation objectives (2005-07 Law and 1997-435 Decree ) : • Opening of the domestic market of petroleum products • Promoting investments in storage and distribution of petroleum products. • Improvements in terms of public services, safety and environment concerns. • Results of 1997-435 Decree : • Emergence of 15 private operators in bottling and • LPG sales. • Distribution operations improvements ; • better services to the customer. • With some difficulties : • Cross filling; • Safety issues; • Marketing unfair practices. • New legislation (2005-07 law and 08-289 & 08-290 decrees ) : • Unbundling ; • Open access with creation of the Storage Infrastructures Manager ; • Supervision by the Regulation Hydrocarbons Authority (ARH).

  17. 7. Impacts of the market deregulation LPG Market after the 2005-07 law and 08-289 & 08-290 decrees Storage Infrastructures Manager Providers Distributors Oil refineries LNG plants Storage Infrastructures Manager (Gestionnaire des Infrastructures de Stockage - GIS) Service-stations Sales points Bottling plants Wholesale customers Field treatment units (GP1Z and GP2Z) Wholesale distribution Input prices Wholesale prices Post stamp rates for logistics Retail prices 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  18. 8. CONCLUSION • Algerian energy policy promotes the development of exports and consumption • of LPG; • Algeria is a one of the leaders in the international market of LPG; • Naftal is LPG historical actor and currently the market leader in Algeria alongside • with new private operators ; • Naftal is shifting its development strategy of LPG from bottled butane to promoting of autogas and bulk propane in order to make up for loss of market (actual and coming) to natural gas. 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

  19. Thank you 22nd World LP Gas Forum, Rio de Janeiro– Brazil 7th – 9th October 2009

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