HSBC targets oil/gas project finance in Algeria
by Reuters India
HSBC aims to help Algeria's Sonatrach obtain project finance for big oil and gas ventures under a cooperation deal with the state energy giant's main local banker, an HSBC official said on Tuesday.
Rachid Sekak, HSBC Algeria chief executive, told Reuters in an interview the framework cooperation accord with Banque Exterieure d'Algerie (BEA) was aimed mainly at funding Sonatrach ventures using local banks and in the local dinar currency.
Sonatrach, which currently generates about $1 billion a week making it Africa's biggest firm by revenue, plans to spend a total of over $20 billion on pipelines, gas and petrochemical plants and upstream oil and gas developments in coming years.
"HSBC is ambitious, but BEA is also ambitious," Sekak said.
"What we have in mind is mainly the big Sonatrach projects, but it could be other projects as well outside the hydrocarbon sector because BEA wants to diversify. We could apply this to the steel industry or water desalination for example," he said.
Sonatrach normally does its banking with BEA, one of six state banks with plenty of liquidity but short on project financing expertise. The HSBC deal is the only such cooperation accord on project financing between BEA and a foreign bank.
Sekak said the logic behind the accord stemmed from a recent decision by Algerian authorities to end reliance on external financing for future infrastructure work. To date, big oil and gas projects have mostly been funded by foreign energy firms.