Tunisia aims to boost output in oil and renewables
A new hydrocarbons code could breathe fresh life into an already robust pipeline of projects that are changing the energy landscape in Tunisia, as the government looks to incentivise new production in the wake of declining oil output.
New energy reform
A net oil importer, Tunisia is pushing a new reform bill on hydrocarbons to enhance the sector’s appeal to international investors by further formalising the sector.
The new law – a draft of which was finalised at the end of last year – addresses issues in the oil and gas industry by aligning the licence-granting process with the constitution and takes measures to inject more transparency into the process, though details on how have not been announced.
The code will also overhaul regulations for unconventional energy, where deficiencies in the legal framework have often frustrated multinationals trying to carry out operations in Tunisia – in the latest reminder of this, a subsidiary of US shale producer Anadarko pulled out of the country in mid-February after its request to conduct shale gas exploration was rejected.
Oil output in Tunisia has halved in recent years – from 80,000 barrels per day (bpd) in 2010 to roughly 40,000 bpd last year – as industrial giants like Italy’s Eni and Dutch Shell have left the country, citing issues ranging from work stoppages to non-renewal of drilling permits. The number of sector operating licences has also dropped by half since 2010, from 52 to 26, according to official sources.
Renewables on the rise
While it hashes out the new legal code to boost exploration, Tunisia is also looking to diversify its energy mix through a pipeline of renewable energy projects.
At the Tunisia 2020 Investment Conference held in November, the country set a target to install 3.8 GW in new generation capacity from renewables by 2030 at an estimated cost of TD15bn (€6.1bn).
To achieve this, the government pledged to build five solar power plants with a combined capacity of 300 MW in the country’s south for TD750m (€306m) , and an 80-MW wind power station in the mountainous Kebili area, also in the south, for TD240m (€97.8m) .
The country is set to switch on its first large-scale photovoltaic power farm next year: the 10-MW TuNur project in Tozeur Governorate. Upon completion, the concentrated solar plant will generate 9400 GW per hour of electricity per year.
While such projects receive state support, the government expects that private investors will chip in on a handful of selected projects throughout the country. To be built, maintained and operated solely by private companies, according to government sources, these will add 380 MW in installed capacity by 2020 for a total investment of TD1bn (€410.9m). The extra capacity would be added to the grid by 2018, following a call for tenders by the Ministry of Energy, Mines and Renewable Energies.
Other projects reserved for the private sector include a 15-MW biomass plant to be built for TD68m (€28m) in Sfax Governorate, using waste from the area’s well-known agriculture sector and agro-industries.
With irradiation rates of 1800-2600 KWh per sq metre per year – 20% higher than most irradiated sites in Europe – Tunisia is well equipped to meet the requirements of its overarching Tunisian Solar Plan (Plan Solaire Tunisien, PST). Launched in 2009, the PST aims to lift renewables’ share of the energy mix from 3% to 12% by 2020 and 30% by 2030.
At present, the country’s renewable capacity comes from just two wind farms with a combined installed capacity of 250 MW, according to 2015 figures from the Ministry of Industry, Energy and Mines.
Foreign investment regulations
Investment in oil and renewables alike could receive a boost from incentives laid out in a new investment law approved by Parliament in September, which will be enforced in April.
The new law, drafted to enhance foreign investor appeal across all sectors of the economy, should benefit those looking to enter the renewables market. Its provisions include measures to cut red tape by reducing the number of authorisations needed for project approval, as well as to shorten wait times by better enforcing administrative deadlines.
Anticipation of the new code is already attracting attention from private players, according to Jérôme Sudres, regional director of Quadran, a French producer of green electricity.
“Tunisia’s renewable energy sector is very promising, as the strong commitments made over the past years are clearly being materialised,” he told local press late last year, adding that Quadran plans to expand its operations within the country over the next few years.
This Tunisia economic update was produced by Oxford Business Group.