Algeria looks to invest $70bn in shale gas

Algiers - Algeria's state-owned energy giant Sonatrach plans to invest at least $70bn over the next 20 years to exploit shale gas in the southern desert, its managing director said on Sunday.

The firm intends to press ahead with its plans despite huge public opposition in the In Salah area of the central Sahara where successful test drilling was announced last month, Said Sahnoun told state radio.

Sonatrach hopes to produce some 20 billion cubic metres (700 billion cubic feet) of shale gas per year from 200 drill sites, Sahnoun said.

Schools, businesses and public offices in In Salah have closed since the start of the year to demonstrate their concerns about the environmental consequences, the French-language Liberte newspaper reported.

In order to extract shale gas, a high-pressure mixture of water, sand and chemicals is blasted deep underground to release hydrocarbons trapped between layers of rock.

Environmentalists argue that the process - known as fracking, or hydraulic fracturing technology - may contaminate ground water and even cause small earthquakes.

Sahnoun acknowledged that Sonatrach could have done more to allay public concerns but insisted they were unfounded.

"Perhaps we haven't communicated enough about the issue," he said.

"The pilot well in In Salah is producing clean gas. The waste water is being managed."

Algeria is the third largest supplier of natural gas to Europe but its hydrocarbons sector has suffered in the past decade from a lack of foreign investment.

The sector was further hit by a January 2013 attack by Islamist radicals on the In Amenas gas complex, on the Libyan border, hundreds of miles (kilometres) east of In Salah.

Workers from Sonatrach, as well as British energy giant BP and Norway's Statoil, were taken hostage and 40 staff were killed during a four-day siege which ended with the army storming the complex.

Output plummeted following the attack, only returning to growth in October last year.