Tuesday, 1 March 2011

Algeria: Development contracts progress slowly

On 3rd February, the Algerian Council of Ministers reviewed a host of measures related both to the recent unrest in the country and also to economic development. Among dozens of other decisions, the approval of four presidential decrees on oil and gas exploration inched forwards developments in the strategic south west and in the Berkine Basin. Amendments were approved for contracts governing BG Group's Hassi Bahamou permit, Repsol's Reggane and for a development at Rhourde Messaoud Nord involving Eni. Six of Sonatrach's own exploration deals also got the go-ahead.

An amendment to Sonatrach's July 2002 agreement with Repsol and its partners to develop the Reggane field has confirmed the balance of shareholdings in the joint venture. Sonatrach holds 40 per cent, Repsol YPF 29.25 per cent, RWE Dea 19.5 per cent and Edison International 11.25 per cent. The partners have been awaiting approval of this development for more than a year.

BG Group's contract with Sonatrach for exploration and development of the Hassi BaHamou perimeter has also been amended to extend its exploration period until 2012. BG North Sea Holdings is also awaiting approval of its February 2010 deal to buy its partner Gulf Keystone Petroleum's 38.35 per cent interest in permit for $9.9 million, giving BG a 75.1 per cent stake.

A third decision approved a minority stake for Eni Algeria Exploration in the Rhourde Messaoud Nord perimeter through an amendment to a July 2009 agreement between Sonatrach and Alnaft). According to Eni, it signed a framework agreement with Sonatrach in 2008 “setting out the common contractual ground” and extending the duration of the Rhourde Messaoud development licence and one other for a further 10 years. No details were released about Sonatrach's six exploration contracts agreed with Alnaft in June 2010, which have also now been approved.

For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics & Security.

© 2011 Menas Associates

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