Algeria to revise tax on energy projects

Energy Minister Youcef Yousfi told El Khabar newspaper on 10 April that Algeria plans to change the way it levies tax on some energy projects. The change will mean that foreign oil companies pay tax on profits they make from the projects and not on their turnover. Yousfi was quoted as saying: "The tax imposed will be based on the profitability of the projects, not as before, based on turnover."

The promised change is to make the country more attractive to IOCs after three consecutive bid rounds for oil and gas acreage failed to attract much interest. Yousfi said, however, that the new tax mechanism would only apply to oil and gas projects that are not currently in production and are considered high risk.

The changes are included in draft amendments to the hydrocarbons law drawn up by the energy ministry. Yousfi said that a ministerial working group had finished drafting the amendments and had presented them to the government for approval. The next stage will be for parliament to vote through the amendments.

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

© 2012 Menas Associates

Algeria: Priority for national pipeline constructors

Domestic pipe manufacturers will be given priority when Sonatrach issues procurement tenders for future pipeline construction projects. In his lengthy press conference at the end of December, Energy Minister Youcef Yousfi confirmed that he had instructed Sonatrach to ensure that this happened. The renewed emphasis on this appears to be related to the financial difficulties being suffered by ArcelorMittal's Annaba-based subsidiary TSS El Hadjar.

In principle, domestic producers and service providers have a competitive advantage built into public tender legislation. They are entitled to win with bids that are more expensive than those of international competitors. However, Sonatrach has recently been subjected to high level criticism of its failure to issue pipeline manufacturing contracts to a key local provider.

On 28th December, the powerful general secretary of the Union Générale des Travailleurs Algériens (UGTA) Abdelmadjid Sidi Saïd wrote a public letter to Yousfi about the difficulties faced by TSS El Hadjar in obtaining pipeline sales contracts from Sonatrach.

In his response, the minister refused to accept Saïd's view that the company had been subject to “exclusion” from such contracts. He said he preferred to approach the problem from a technical and qualitative point of view. “We are ready to work with the national companies on condition that they respect qualitative standards and manufacture all diameters of pipe that are needed,” he said. In addition, Yousfi said that energy companies had been issued with guidelines to use locally manufactured pipes, but that these guidelines also set standards on quality and diameter.

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

© 2012 Menas Associates

Algeria to intensify oil and gas exploration efforts

Algeria's Energy Minister Youcef Yousfi has said that the country will intensify its oil and gas exploration efforts in order to increase its hydrocarbon reserves and "guarantee the country's energy security in the very long term”.

"The Permanent Mission of our industry is to ensure the country's energy security in the very long term and ensure sufficient revenue for its development," said Yousfi in an interview. The minister added that Algeria, whose economy derives around 98 per cent of its revenue from oil, will also increase "its national capacity of oil and oilfield services."

Yousfi said that despite the current downturn in oil and gas markets, Sonatrach maintains its long-term investments plans. The state-owned company intends to invest around $63 billion to expand its capacity for gas exports.

Presently, Algeria supplies the EU with 12 per cent of its natural gas via two pipelines in Italy and Spain. A third pipeline is to be commissioned shortly and will be expected to deliver around 8 billion cubic metres of gas to various European destinations. Yousfi concluded by saying that Algerian gas exports are expected to reach approximately 100 billion cubic metres by 2015.

Source: Ennahar Online

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

Algeria to put pressure on foreign investors for technology transfer

Algeria's Energy Minister has said that the government is determined to put pressure on international oil companies to share technology with Algeria instead of simply extracting oil and gas out of the ground.

Energy Minister Youcef Yousfi addressed international media, in Canada, about the country's energy policy for the first time since his appointment in May. His stance seemed to reflect that of Algeria's government in moving toward economic nationalism.

"There is a need for a bigger partnership in industry, a partnership in manufacturing equipment and the transfer of technology, not the partnership of a seller and a buyer. This is a requirement which we are going to impose more and more," said Yousfi.

Earlier this month Algeria launched a new oil and gas licensing round to be completed by March 2011. It was not clear, however, whether technology transfer would be included as a requirement in the round.

The upcoming licensing round will be an important one for Algeria, as the previous two attracted little interest from foreign investors due to, according to several oil executives, the fact that the terms were not attractive enough.

Source: Reuters

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