Algeria to amend energy law by year-end to lure overseas cash - source (updated)

SINOPEC Engineering Co

03/10/2017 17:24

(Adds detail, quotes) 
    By Lamine Chikhi 
    ALGIERS, Oct 3 (Reuters) - Algeria plans to amend its energy 
law before the end of the year as the OPEC producer tries to 
attract more foreign investors, a senior source at state energy 
firm Sonatrach told Reuters.  
    Algeria, a major gas supplier to Europe, wants to boost oil 
and gas revenues which were hit by a fall in global prices. 
    But oil companies have mostly stayed away, saying the legal 
framework is too tough, the bureaucracy stifling and terms leave 
little profit even in times of high oil prices. 
    The new law is expected to facilitate foreign oil and gas 
exploration including untapped shale production and provide more 
tax incentives, the Sonatrach source said, without providing 
details. 
    "The sooner the better, the law will be amended before the 
end of this year," the Sonatrach source, who has knowledge of 
discussions, said. 
    The new law also will encourage local investors to enter the 
oil and gas industry, the source said. 
    Reda Kouninef and Ali Haddad, two prominent Algerian 
businessmen, have expressed interest in investing in the energy 
market in recent years. 
    Algerian government officials were not immediately available 
for comment on a new hydrocarbons law, which would be a major 
development for the North African country.  
    Following a fall in global oil prices, Algeria has been 
looking for ways to improve its energy output. 
    It has already taken a more flexible approach with foreign 
oil investors by entering into bilateral deals with companies 
like France's Total  TOTF.PA . 
    Algeria, which has lost more than half of its energy 
earnings since 2014, has struggled in the past to increase oil 
and gas output without major foreign investment. 
    Prime Minister Ahmed Ouyahia said this week it was necessary 
to amend the energy law, following a suggestion by Sonatrach's 
CEO Abdelmoumen Ould Kaddour. He gave no more details. 
    A windfall tax introduced in 2006 was seen by foreign 
companies as a major disincentive. 
    "International energy companies will be especially 
encouraged by changes of the windfall tax and by opportunities 
to develop Algeria's abundant shale gas reserves," Geoff Porter, 
president of North Africa Risk Consulting, said.  
 
 (Reporting by Lamine Chikhi; Editing by Ulf Laessing and 
Alexander Smith) 
 ((lamine.chikhi@thomsonreuters.com;)) 
 
Keywords: ALGERIA ENERGY/LAW