Algerian Elections Pave Way for Oil Sector Revamp

Now that Algeria has completed its election process, will a revamp of its current hydrocarbon laws move faster? The thoughts on that are mixed. While some expect the government to pick up the pace in order to attract new investment as soon as possible, others think it more likely that there will be no movement until at least late-2012 or early 2013.

The upcoming change to the hydrocarbon laws will primarily focus on tax issues, such as offering tax incentives for companies willing to explore offshore. The government also believes tax incentives will increase foreign investment that will in turn bring technology know-how for the planned development of Algeria’s unconventional resources.

An adviser to the country's energy minister, Ali Hached, told delegates at a conference at the outset of May that the laws would be amended before the end of the year although no clear timetable was stated. The new tax law will only apply to new projects however.

Since the country made its last change to its hydrocarbon laws in 2006 new investment has fallen off significantly. Its last three bid rounds for oil and gas permits attracted less than enthusiastic interest from foreign firms and for the most part major E&P firms absented themselves from the bidding fray.

One operator in Algeria, Petroceltic International plc, looks towards its future operations in Algeria with confidence. While the company will not benefit from the new tax laws it does think it is an important step for Algeria’s upstream sector. “We… believe this is an important step which will assist Algeria in the optimal long-term development of its natural resources,” the company’s chairman Robert Arnott said in the Chairman’s Statement in the 2011 Year End Report.