While it has largely been hoped that recent socio-political upheavals in North Africa would usher in an era of democratic reforms in countries previously ruled by brutal dictatorships, in places such as Libya, Tunisia, and Egypt, there has been a concurrent optimism on the part of state and privately-owned oil companies that new reserves would open up along with politics and society.
On Monday, Spanish oil giant Repsol SA’s ($REPYY) director for geological studies Eduardo Negri said that the company had just completed a study of the Saharan region “in order to identify prospective areas for shale gas and oil from a geological point of view,”.
Algeria, for instance, is among the world’s largest producers, and recent projects to scour previously unexplored territory in the country’s vast south, particularly from shale reserves, promises to double the its output of oil and gas over the next 10 years. Repsol has maintained a decent relationship with the Algerian regime, one of the only to have successfully weathered the Arab Spring protests that rocked its neighbors and led to three of them changing regimes.
Indeed, nations in the Maghreb, including Algeria and Libya, have already taken measures or signaled their willingness to do so in order to attract investments from foreign companies who specialize the development of oil and gas from shale and other unconventional sources.
For the short-to-near term, however, smaller drillers and explorers will have to contend with higher costs, though Negri seemed confident that costs will come down, saying “This is something that can be worked on if service companies take special effort in preliminary evaluation steps in order to show how they can reduce costs, thinking about massive operations in the future.”
Repsol, with projects already underway in Algeria and Libya, should be well-positioned to benefit if and when the shale boom hits North Africa in full force.
Shares for the $32 billion company were trading 0.5 percent lower on the pink sheets on Monday, to $24.75 a piece.