Algeria To Lure Oil Companies With Tax Incentives

Algeria is mulling over luring in international oil companies with tax incentives in a new energy law aimed at stimulating the North African country’s oil and gas industry. The government is already in talks with BP and Anadarko to explore its shale gas resources, too, Algerian officials said this weekend as quoted by Reuters.

Oil and gas together account for 95 percent of Algeria’s export revenues and contribute 60 percent to its annual budget. The country suffered its share of pain after the 2014 price collapse, but now things are beginning to look up as international prices recover.

This weekend, speaking at an energy conference in Oran, Algeria’s Energy Minister Mustapha Guitouni said “We will remove all obstacles, wage a battle against bureaucracy and change tax procedures. The amendment is required by our energy security. The current system must change.”

The last time Algeria held a tender for oil and gas blocks was in 2014, when, unsurprisingly, interest was weak, with only four out of 31 blocks finding suitors. At the time, the terms that Algiers offered foreign investors in its oil and gas industry were seen as too unattractive.

Since then, there has been talk of an energy sector reform, but nothing concrete had been drafted until recently. Now, there are studies being conducted about the viability of local shale gas reserves with BP and Anadarko likely to take part in these studies if they agree on mutually beneficial terms with the Algerian government.

Meanwhile, oil and gas export revenues from the North African country jumped by a quarter on the year to US$7.1 billion in the first two months of 2018, despite its compliance with the OPEC-wide oil production cut deal. Algeria is an important natural gas supplier to Europe, but domestic demand for the fuel is also rising, forcing the government to seek ways to make everyone happy.

By Irina Slav for Oilprice.com

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