December 21, 1995|By NEW YORK TIMES NEWS SERVICE
PARIS -- Algeria is on the verge of concluding several major energy deals for the development of some of its enormous oil and gas reserves. The agreements will bring a huge injection of capital to the country and are being characterized as a turning point in the West's confidence in Algeria's government.
British Petroleum has made a commitment to spend $3.5 billion in Algeria over the next quarter-century, the largest investment by a foreign concern since Algerian independence from France 33 years ago and one of BP's biggest foreign ventures.
French and American energy companies are to follow with at least another $3 billion worth of investments to extract and export oil and gas to Europe and the United States.
"By almost any measure, these deals are a strategic breakthrough," said Pierre Terzian, editor of Petrostrategies, an oil and gas newsletter based in Paris. "They mean big business thinks the worst is over for Algeria. You don't spend an average of $330 million a year for the next seven years in a country where you think the government is about to fall."
Although negotiations have been under way for some time, the completion of these deals is almost certainly tied to the triumph of President Liamine Zeroual in the country's first pluralistic presidential elections Nov. 16.
With 61 percent of the vote, Mr. Zeroual won a new five-year term as well as a legitimacy he lacked in his previous term, which he secured with the help of the military.
A former army general, Mr. Zeroual has promised further democratic reforms, including parliamentary and municipal elections. But he also vowed during his election campaign to crack down harder on a militant Muslim rebellion that has fueled a three-year civil conflict resulting in at least 30,000 deaths.
The British project involves exploration and production of natural gas from huge reserves in the central region of the Sahara, according to officials of Sonatrach, the Algerian state energy company, and BP. The undertaking is expected to last 25 to 30 years and is to double and eventually triple gas exports to Europe.
Arco, as Atlantic Richfield is known, is planning to invest in boosting the production of Algeria's oil fields in the southeastern part of the country.
Nazim Zoulloueche, general manger of Sonatrach, said the British agreement will open the way to development of Algeria's reserves for several decades to come.
These ventures will bring to Algeria hundreds of new expatriate oil experts who will join an estimated 5,000 foreign oil and gas technicians already living in the country, a commitment suggesting that the companies appear satisfied that the government is capable of protecting foreign citizens despite two years of repeated threats by Muslim militants to attack foreigners.
"I think it is a clear expression of faith in the future development of the country by foreign oil companies in Algeria's biggest business, which is oil and gas," said Nordine Ait-Laoussine, a former Algerian energy minister.
Islamic opponents of the government were poised to win elections in January 1991 when the government abruptly canceled the second round of elections in which the Islamic Salvation Front was leading and outlawed the party. Since then, the number of violent Islamic factions has multiplied and the factions have carried out a campaign of terrorism and killing.
But more recently, they appear to have lost popular support and have been weakened by the government campaign against them as well as by internal disputes.
