Prime Minister Ahmed Ouyahia has stressed that if Algeria wants to attract the necessary investment to significantly boost oil and gas — and especially shale gas — production then it must revise Algerian hydrocarbon law. He said it was essential to rewrite the Algerian hydrocarbon law to change the existing taxation system and financial incentives in order to make them more attractive.
As everyone, including the government’s hardliners, knows that the failure of Algeria’s last four licensing rounds has been the result of unattractive, indeed hostile, investment regime.
On many previous occasions Algeria has strongly hinted that it will change the investment laws but has failed to do so, or has progressed at a snail’s pace. The latter has enabled a slightly more flexible approach with IOCs which have led to bilateral deals with companies like Total. A senior Sonatrach official has, however, said that the Algerian hydrocarbon law will now be amended before the end of the year in order to attract foreign investors.
Ouyahia calls for resumption of shale gas E&P
As well as the urgent revision of the Algerian hydrocarbon law, Prime Minister Ahmed Ouyahia also gave the signal on 1 October for the resumption of shale gas exploration and production in order to make Algeria more attractive to foreign investors. He made the announcement at the Arzew petrochemical hub where he was attending the inauguration of two new LNG tankers that have been acquired by Sonatrach’s Hyproc Shipping Company subsidiary. It is now almost two years since shale gas exploration was suspended in January 2016. The first exploratory drilling had been successfully completed in December 2014 in Tamanrasset wilaya’s In Salah region about 1,500 kms south of Algiers.
In 2015 the fear of environmental damage to the Sahara’s sensitive aquifer systems led to prolonged pubic demonstrations at In Salah against shale gas exploration. These soon spread to other Saharan towns as well as to northern Algeria and the shale gas protest quickly became the main vehicle for general widespread protest and opposition to the government.
The latter never made clear whether its suspension of the shale gas exploration programme was a response to the nationwide demonstrations or due to the collapse of oil prices to under US$30 a barrel, which had made further E&P of shale gas economically unfeasible. Its reasoning tended to reflect the nature of its audience, as both the Bouteflika Presidency and fomer prime minister Abdelmalek Sellal’s government tried to give the impression that they were listening to the concerns of the protestors…
This article was taken from our weekly Algeria Politics & Security publication. If you wish to discuss to contents of this article with one of our writers or consultants then please contact us.
