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Algeria parliament approves amendments to energy law

Source: Thomson Reuters Foundation - Mon, 21 Jan 2013 16:52 GMT
Author: Reuters
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By Hamid Ould Ahmed

Jan 21 (Reuters) - Algeria will offer foreign energy firms easier tax terms and other incentives under amendments to its hydrocarbons law passed by parliament on Monday.

The changes, prompted by weak interest shown in bidding for Algerian oil and gas permits in recent years, come in the wake of an attack on a gas plant where more than 60 workers and militants died.

Energy and Mines Minister Youcef Yousfi told reporters in parliament after the vote that the changes would strengthen the OPEC member nation's position and said he doubted foreign firms would quit Algeria over the recent attack.

"I don't think foreign companies will leave definitively," he said.

The amendments offer incentives to foreign companies wishing to invest in unconventional resources such as shale gas and shale oil and will link taxes on partners of state energy firm Sonatrach to profit instead of turnover.

"I'm very happy with the approval of this law. This a strong signal to the world that Algeria is advancing with determination," Yousfi said.

"Following this approval we will start looking for unconventional hydrocarbons. There are signs that Algeria is very rich."

Sonatrach, which unveiled a ${esc.dollar}80 billion, five-year investment plan last year, will remain a majority partner in all upstream and downstream projects.

Top foreign energy firms in Algeria include BP and Norway's Statoil.

Algeria's last three rounds of bidding for oil and gas permits attracted lacklustre interest from foreign firms, raising questions about whether it could maintain output levels and meet growing demand.

In a 2011 round, just two blocks were awarded, down from three in 2009 and four in 2008, which prompted the government to make changes.

Under Monday's amendments, investors are set to be granted prospecting licences for up to 11 years and exploitation licences of 40 years for shale gas and 30 years for shale oil.

Conventional energy licence terms remain unchanged at seven years for prospecting and 25 years for exploitation, with a five-year supplementary period for natural gas deposits.

Algeria wants to develop shale gas and offshore production to help ensure security of supply.

"This endorsement will allow us to boost our capacity to meet long-term needs and give the state additional means to develop the country," Yousfi said.

A member of the Organization of the Petroleum Exporting Countries (OPEC), Algeria's oil and gas sales abroad account for about 97 percent of its total exports.

Sonatrach, BP and Statoil jointly operate the In Amenas gas complex where last week's attack occurred.

Yousfi said a decision on a restart date for the plant could be made on Tuesday. (Editing by Anthony Barker and Jason Neely)

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