Algeria’s caretaker government has discussed amendments to the energy law with five large foreign oil and gas companies and has adopted a draft energy law, prompting massive protests over its right to change the legislation of such a crucial economic sector.
The draft energy law, which still have to be approved by the Parliament, revises the regulatory framework and the fiscal framework for oil and gas operations, in an attempt to attract more foreign investors. The draft includes three types of oil contracts - concession contract, risk service contract and production sharing contract - that are used by many oil and gas majors. The maximum foreign participation threshold of 49% would be maintained but strategic partners would be offered more advantageous fiscal rules, to avoid frequent changes in the tax system that deter investors. The tax system would be simplified to four tax types.
Algeria is seeking to attract foreign investors in its oil and gas sector, but administrative hurdles are estimated to discourage investors. Since 2005, calls for tenders have been held for 67 southern regions but only 19 proposals have been submitted and 13 contracts signed.