Bouteflika’s Law Still Governs Algerian Hydrocarbon Sector

Fifteen months after the adoption of the new hydrocarbons law, the sector is still working according to the text of the former President Abdelaziz Bouteflika, who caused a decline in production, alienated foreign companies and failed major international tenders.

Major energy companies that expressed their desire to partner and invest in Algeria clashed with the persistence of the absence of implementing texts for the new hydrocarbons law, which issuance was delayed despite the Ministry of Energy accelerated their preparation since last June.

In this context, Sonatrach signed a memorandum of understanding with the Turkish Petroleum Corporation TPAO in April 2020, to research and explore oil and gas, always in light of the new hydrocarbon law.

According to a statement by Sonatrach, the purpose of the protocol is “to draw a roadmap for concluding a contract in the field of exploration and production of hydrocarbons in the Barkin Basin (southern Algeria) within the framework of the new legal and regulatory texts that govern hydrocarbon activities.

In addition to these agreements, Sonatrach previously signed a protocol of agreement with each of the American “Occidental Petroleum”, Italian “Eni” and the French “Total”, aiming at consolidating relations and historical partnership between the two parties at the level of the basin, which is located in the blocks 404 and 208 in the Barkin area (southern Algeria).

The National Hydrocarbon Company Sonatrach signed five memoranda of understanding with major international energy companies, with the aim of partnership and investment in Algeria under the new hydrocarbons law, as the signature was concluded at the height of the Corona pandemic, that is, since March 2020.

Sonatrach also signed memoranda of understanding with the American “Chevron and ExxonMobil” companies in 2020, to establish a future partnership and include these two American giants in the energy sector in Algeria under the new hydrocarbons law, which has new incentives for foreign companies, especially in the upstream activity, i.e. the drilling, exploration and production.

During the past year, Sonatrach also signed two memoranda of understanding with the Russian energy giants Gazprom and Lukoil, to discuss ways and prospects for investment and partnership in Algerian oil and gas fields under the new regulatory texts of the new hydrocarbon law.

In addition to these memoranda, there are dozens of international energy companies already active in Algeria and have also expressed their desire for more partnership and investment in Algeria under the new regulatory texts (the hydrocarbons law).

Previously, the Energy Minister, Abdelmadjid Attar, expressed his surprise at the absence of application texts for the new hydrocarbon law that was approved in November 2019, but after he took over the reins of the ministry in June 2020, he discovered that there is no implementation text yet out of 43.

Attar announced that preparing the application texts for the new hydrocarbon law will be among his priorities at the head of the ministry, to pass directly to the implementation of the law on the ground.

Echorouk source previously said that the energy ministry gave priority to applied texts related to exploration activities, that is to say, drilling, extraction and exploration, to be the first texts to be completed, and this happened last September when about 20 applied texts were referred in their entirety, related to the upstream activity and the tax and tax aspects of the government’s General Secretariat.

A source from the energy sector explained that the ministry intends to launch the first major international tender for hydrocarbons under the new law during the first three months of 2021 after previous tenders suffered a catastrophic failure due to the fuel law of the former President Abdelaziz Bouteflika.