New Law on Hydrocarbons includes Privileges for Foreign Investors

The new law on hydrocarbons, to be issued before the end of 2012, includes encouraging measures for the foreign investors, in the field of hydrocarbons’ exploitation (oil and shale gas), in order to share risks with the large international groups, that use high and expensive technology in this area, as “Sonatrach” investments in the field of the modern hydrocarbons is expected to exceed the level of $ 30 billion over the next five years, General Manager of “Sonatrach” Abdel-Hamid Zarguine said.

Algeria started last June in drilling the first well of gas shale in the area of Ahanet, Ain Salah (southern Algeria), after a short period of issuing the first study of the International Atomic Energy Agency, which indicated the existence of huge reserves of shale gas in the south-east of Algeria, which may reach up to 2500 billion m3, while the GM of the group Sonatrach said, in response to “Echorouk” question that the reserves in the range of 600 trillion cubic feet, waiting for the allocation of the production of non-traditional fuels for export to abroad.

“The new law, to be examined by government later, aims to make the national area mining more attractive for foreign investments, after the international tenders, that were launched by the company since 2008, according to the conditions set forth in current law, faced a significant failure. The new law also includes very important fiscal privileges for foreign investors in the field of the non-traditional hydrocarbons. The Act of 6 years ago is no longer valid because of the rapid developments in the world of energy industries, especially after launching the production of shale gas in huge quantities that turned the United States from a net importer to the first global producer of gas before Russia”.

“Countries of the world put their rules into place to attract foreign direct investments, especially in the field of hydrocarbons, which is an important source of income. The massive investment in gas, shale oil requires fiscal privileges that commensurate with the size of the risks that will face companies in this new field in Algeria, especially as investment in this sector carries very large risk, which can carry one detection out of 5 to 10 attempts by the companies of oil and gas”, he added.