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The Energy Question in Tunisia: Between the urgency of the challenges and the resignation of guardianships …

The Energy Question in Tunisia: Between the urgency of the challenges and the resignation of guardianships …
November 10
12:26 2015

By Hamed El Matri,

In a world where the race for energy proves decisive in the development of nations, the adoption of a new energy strategy, more in line with the capabilities of the Tunisian energy sector, its opportunities and limitations, must constitute the One of the top priorities of Tunisia today.

It is true that Tunisia is not an oil producing country as are its neighbors, but the energy issue has always been a major parameter, which greatly influenced its economic performance.

Many countries with deficit energy balance, including Tunisia, could finally breathe after the oil price collapse accused since the beginning of the year. But we must not delude ourselves that this oil crisis, as were other previous, would last madly. It is possible that prices will soon resume their growth and probably will target new highs.
While being subject to the law of supply and demand; if crude prices had dropped this year, it is because, on one hand, production was abundant – effect of the price increase in 2009-2014 and had boosted the development and exploration of hydrocarbons through the world, including with non-conventional hydrocarbons (shale gas and oil). And this was associated with a relative decrease in demand from major consumers such as China, India and Brazil; and the effect of the increase in inventories in China and USA.

But beyond the temporal contexts, there is the long term trend as safe inevitable: the continuous increase in demand / consumption, reserves against increasingly difficult to produce, and thus a potential supply that reabsorbed.

With globalization and liberalization of trade exchanges and scientific progress marked by a foundation of knowledge sharing and technology, energy represents one of the major challenges for the future. The race to develop, led to an escalation of -facteur Direct energy consumption by propelling the productivity-is marked by another race for control of the “reservoirs” of energy resources in the world. According to IEA forecasts (1) laconsommation mondialeaugment energy at a rate of 1.4% per year.

The energy issue will then constitute a major challenge for any nation, no matter whether productive or not, and regardless of the size of its needs.

Thus, in perspective, the plans in each country to ensure its energy balance that will be more critical to its survival. And if we had allowed Tunisia to manage the day-to-day, no real strategic vision in recent years, it is imperative to change and our country must rapidly begin its reforms plan its energy transition, bringing more balance has its energy balance, define its alternatives and diversify its needs and then prepare for a future -As soon today- less generous -in terms of energy-that had been the first 50 years after independence.

This will happen, first of all, with an assessment of the choices adopted in the Tunisian energy policy in recent decades, identify successes and weaknesses, and learn to tackle the challenges ahead with better arguments and vision clear strategic.

Tunisian context

Due to its production or its reserves of petroleum products, Tunisia can not be considered in producer countries. But have few resources, or even none at all, does not exclude that the energy strategy is essential throughout a country’s development process.

On the contrary, the less the country has resources, plus its authorities must provide the means to cover the deficit and especially anticipate future trends (both locally and internationally) to prevent crises and mitigate the exogenous against-effects .

In simplest terms, and for the Tunisian case, the “Tunisian Energy Reform”, as discussed, is to work on two main areas:

Develop and diversify energy resources more; namely the intensification of prospecting, exploration and development, the search for new non-tracked reserves of any kind, whether in conventional energy, renewable or non-conventional
Mastering the energy bill, in order to optimize costs, work on synergies, strengthening the competitiveness of local products and reduce the burden and dependencies, and that, whether financial, economic or geostrategic.
To these two great titles, joins another vector which is the promotion of regional development, and approaches to follow to make the energy sector a driving force for regional development in disadvantaged areas and initially based on the majority of energy resources and minières.Ce vector draws its rationale for the specificity of the Tunisian context, including the new post-revolutionary socio-economic landscape.

The oil sector crisis and crisis of the Tunisian energy balance

The question énergétiquepèseénormément the national budget. In 2013, the compensation fund had to cover more than 3 billion dinars just to make up the difference between the accused international purchasing prices, and local selling price of hydrocarbons. This represented about 7% of the state budget, and these costs were at the expense of regional development plans and public investment, and secured by recourse to extérieures.Ce debt burden was rather “manageable” in 2013, despite the $ 110 average price of crude, but it cost us two points on the croissanceéconomique, to end the year at 2.4%.

Considering the current economic performance (around de0% growth announced for 2015) and that we realize that crude prices this year were around an average of $ 50, it is not exaggeration to say that if crude oil prices were the same thresholds that two years ago, no government would be able to balance the figures and avoid bankruptcy!

Thus, fluctuations in international primary energy prices have indeed a direct impact, and more consistent on the living standards of the Tunisian and even if this effect is camouflaged or delayed. That is why we need to have better control of our energy balance, and stain the maximum preservation of outside influences.

The 70s saw ledémarrage major oil fields (Borma & Ashtart). The oil flowed freely and then brought back to the state coffers considerable inputs which helped launch major projects and infrastructures.Cet surplus energy balance has been eroded from one year to another to neutralize the ‘Since 2000, the tendancesn’ont not changed, production has continued to deteriorate and consumption to grow, and then moved to an energy deficit gets heavier from one year to another.

If the increase in consumption is also a direct consequence of natural registered economic growth; the decline in domestic output of energy sources many reasons, but especially justified by the natural depletion of historical deposits of oil, and the lack of development required to offset this decline.
It is no doubt that strategic planning on energy in Tunisia has been lacking, and this is manifested by a number of choices that were in phase deviation, missed opportunities, or delays on the energy transition by Identification and source of the development of alternative energies.

This makes, and for the near future, we do not have a multitude of choices. While the energy transition must be thought and that strategies should be decided, it must ensure, in the meantime, our energy balance for future years.
We must also prepare for times of probable oil prices, failing which, although it may end up in “dry down”!
There is much talk of renewable energies in Tunisia, but it just is not much in this area other than to “speak”. Tunisia has been considerably delayed from its Moroccan neighbor, for example, and the rest of the World in général.Il is unrealistic to consider renewable energy to a nearby energy transition, having failed to set up toutesles scientific foundation, technical and industrial necessary.
Thus, our energy system is and will remain for some time, based on the oil and gas extracted locally, if not imported. Tunisiedispose the oil potential of a very modest, but the exploration and development efforts are not helping àaméliorerla situation.
While all the oil fields are in decline and the majority is the end of life, the discoveries are rare fonttrès (one small discovery was enregistréeen 2014), lack of investment in oil exploration and political will to support -surtout- the area.
The huge drop in hydrocarbon production is literally frightening; it is of the order of 10% per year (figures from 2013 and 2014), and it gets worse!
Without renewal of reserves, it is the entire oil sector, which is reflected threatened its survival. It is very important to remember that the weight of this sector is more conséquentsdans the économietunisienne, dépassantpar such as tourism or phosphate, yet very present in the consciousness Tunisian collectivedes.

When incompetence even more expensive than corruption! No doubt the oil price fall had relegated the interest for the sector to a lower level of emergency, but this should not fool ourselves existential difficulties saw what Today sector.
If the national fiscal balance could take a breath with the fall in oil prices of US $ 100-48, producing companies had been dispossessed of the entire margin of income available to them, and for many of them, they had flatly turned red (losses), especially for marginal offshore fields or production.
The operating cost per barrel is particularly high in Tunisia, addressing the $ 35 / bbl on average (some already exceeding $ 50!). Including depreciation and taxation (tax charge on profit, local Marche discount is other taxes) per barrel cost exceeds souventles $ 50!
We do not need to explain further to understand that most of the operators that invest in the Tunisian market is in a phase of net losses.
This may be classified under the “business risks”, certainly, but what is serious is that when all stakeholders are suffering from this situation, the authorities continue their laxity and their archaic and incredibly passive management the sector, despite the efforts of the small staff of the Directorate General for Energy.
Some offshore fields have reached their economic limits (Ashtart, Dido) and can not continue to be operated economically because of high operating costs: personnel surplus, high loads, low production, very high tax (for Ashtart) …
The Government and Parliament must have the courage to review the high fiscal terms Ashtart to enable further field operations (where huge investments have been made), otherwise it will soon be abandoned for lack of profitability.
Terrestrial fields also suffer a decline in their potential and the high cost of operations, but also the lack of infrastructure (pipelines …), and social movements that make the daily operations sometimes impossible.
Although the state is partner through ETAP at least 50% share for the majority of oil fields in Tunisia, these problems seem to be treated as those of the “operators” not an issue “national” . The authorities always react late, and after that the losses are in the millions dinars, and often give the impression that they do not care too much about the challenges and problems facing the sector.
As our country has long been a service platform for neighboring countries, the decline in activity, especially in oil exploration, is in the process of forcing the service companies to cut staff or close and exit countries. Before long, it is the Tunisian operators who will use services from Algeria and elsewhere with much more expensive cost. When we talk about services, it goes from engineering to exploration techniques to civil engineering, through those maintenance or specialized technical assistance. These companies are in fact almost 80% of jobs working for the oil sector!
The vicious circle tightens and thus, with the departure of service engineering companies, research well or a seismic acquisition cost us so many times soncoûtactuel, further decrease the attractiveness of our country for investors. Potential discoveries in Tunisia is small and has a high risk of exploration, if the investment costs will be even higher, no investor deems more profitable to risk its funds in our country.
The crisis is truly global, but other countries have responded quickly to minimize its impact and save thousands of jobs. For example, Great Britain and Norway have taken exceptional tax measures to help oil companies to continue their activities, knowing that -s’ils did not do something to straighten somewhat digits- these companies can not survive, and therefore thousands of qualified people quickly find themselves unemployed.
Our authorities, they behave with the challenges and difficulties experienced by the sector with an insensitive bureaucratic approach that touches on recklessness.
Since the promulgation of the Constitution, Article 13 had given rise to different interpretations and there was unanimity as to what the hydrocarbons code should be amended to conform with Article 13 n … Governments ‘yet did nothing about it; everyone still expects the new hydrocarbons code amended -entretemps- and we had to stop granting exploration permits!
It was “a choice Facility” undertaken by some officials fleeing their responsibilities and avoiding taking decisions. Yet it was enough to pass by law all new oil agreement, ensuring that it conforms with the Constitution, Article 13 included.

A sector adrift

The number of free blocks for oil exploration has multipliédurant the dernièresannées until almost cover the whole country map; almost 50 free blocks in late 2015!

Oil companies have had to leave for Tunisia and dropped visibility foul license; how else to explain the presence of a company with dozens of engineers and departments comprehensive exploration, engineering and development in a country that does not grant a permit, and no one can guess when is what would be the rescue!

The question is not only political, administrative component is much worse, and maybe it was he who generates the most frustration for professionals. The inability of the authorities to manage, and make resolutions over sociaux.Faute problems seeing the ‘leaders’ finally take their ‘responsibilities’, these operators often find themselves at the center of debates they do not understand and which have absolutely nothing to do with them, despite the considerable efforts they are willing to invest in social and community projects.

Worse, response times very long government, sometimes putting weeks (even months) for answers to an email or a match, then that is an area where everything is expensive rents, and day and that unnecessary and unjustified expectations are -also-cost a them- as expensive as the operations! Permit extensions put a year or more to be published

Official newspaper ! While, meanwhile, equipment, personnel and funds are mobilized; waiting for the famous publication!

No research permits were granted since 2012, when only one license was awarded to a small company. Research activity is at its lowest level; 2-3 wells are drilled Research a year when the country needs a less than 15 wells per year to discover hydrocarbons and talk of a possible renewal of oil reserves and mitigate the decline in domestic production.

Due to the falling oil prices, the year 2015 was marked by a sharp decline of investments in the development of the oil sector in the world.
Yet, in this difficult situation, and while investors willing to engage in research are becoming increasingly rare in the world- what about a country with low exploration potential such as Notre us are still “offered the luxury” to refuse requests for research permits, though presented by some serious companies, claiming that the oil and gas code has not been amended!
If we really wanted to take a positive approach, and responsible, it could well amend one or two article of the Code for the granting of these licenses is possible while respecting the new constitution
Such passivity (at all levels) that can generate discouragement of any professional to invest in the sector and not to leave the country.
The majority of abandoned fields are prey to rust and damage to nature. While many concessions are due to expire from 2018, and nobody knows whether they will be subject to renewal, extension beyond 2019 at no. It is unlikely to ask investors to work in Tunisia in such poor visibility!
Even more implausible still refer to regulations from 1953, forcing the partners to request an extension of a concession for ten years of the term of the Concession, while we are unable to offer them any visibility, be it that for the short term!

If we continue to neglect this sector, it will soon collapse. It is sad to see foreign operators scramble to find buyers for their resell their assets in Tunisia and leave the country, while huge efforts were made to bring them (promotion missions, Présentationstechniques, company visits, model contracts, studies, conferences …).
Those who do not understand the field will not notice that changes signs, an operator who goes and another replaces it. But there is a huge difference between a multinational company that has a reputation to preserve, experience and knowledge to implement, funds to invest in the development … and small unknown operators who come to make a quick gain and maximized, without an ability or even the desire for development or optimization.

Given the urgency of the challenges, indifference Guardianship

MPs, and general policies, are not aware of this extreme situation. Service companies directly and indirectly employ thousands of Tunisians are very affected, and dozens will soon put the key under the door. The fall in production is a net loss, significant and direct income in the currency status, and it is now up to hundreds of millions of dollars per year!

Yet each loan “obtained” from abroad cost them much more in time and money, but to address the issue of governance of our own natural resources.
The famous draft amendment to the hydrocarbons code has yet been submitted to the Council of Ministers. His response was that the board had to develop laws for all natural resources. Needless to explain that it would take years to bring out all these laws. Needless to explain that this is probably an “excuse” to escape a tricky subject, the subject of political outbidding, financial interests, which no one wants to take responsibility.

The world will not wait for us … meanwhile neither the investment nor the fall in production, or the deterioration of the economic and energy balance.

Finally, perhaps the energy issue less interest among Tunisians today, citizens and governments, considering the current level of prices. But this can not be an excuse to abandon such a strategic sector as important as oil production.

But in the very near future, when the price of oil will burn again, we will receive the brunt of the impact of negligence committed in recent years. And then we realize-and it is all too later- that our situation is much worse than that of 2012 and 2013. Our economy has meanwhile much weakened, becoming unable to cope with such shocks, and there, without play the prophets of misfortune, there will be a sudden and total collapse of the Tunisian economic system.

The debate on the governance of oil and energy resources, oil and gas in Tunisia, had much attention and generated a lot of tension. But one thing is certain. If we do not rectify the most possible, avoid shooting, there will not be much to hope for, or recover these resources, and it will be one of the greatest-and most of the mess coûteux- history of this country.

Hamed El Matri
SOLIDAR Tunisia – Energy Commission

Translated from the source: 

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