Algeria’s national oil company Sonatrach has postponed a planned summit designed to showcase its new hydrocarbons law and drum up commercial interest in the country’s oil and gas sector, according to industry sources.
The Algeria Oil and Gas Summit was due to take place on 17-19 June in Algiers but it has been put on hold due to political instability in the country.
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“Sonatrach approached the event organisers on Wednesday and told them the event would not be going ahead as planned,” said one industry source. “It seems likely that the implementation of the hydrocarbons law will also be delayed.”
Sources believe the event may now take place in September, depending on political developments within the country.
Earlier this week Algeria’s interim president, Abdelaziz Bouteflika, sacked Abdelmoumene Ould Kaddour as the CEO of state energy company Sonatrach. Sonatrach’s head of production and exploration. Rachid Hachichi has been appointed as Kaddour’s replacement.
Bouteflika formally stepped down on 3 April after being in power for two decades, following mass protests and pressure from the military.
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By GlobalDataKaddour had been close to Bouteflika and was put in charge of overhauling Sonatrach in March 2017 after years of management upheaval, corruption scandals and red tape that had deterred foreign investors. Kaddour is merely the latest top official and business leader to be deposed following the departure of the former strongman.
Sonatrach instability
The development cast doubt on whether the commercial deals Sonatrach had been working on will go ahead – such as plans to set up a trading joint venture with foreign firms.
Kaddour recently said Sonatrach would hold talks with US energy company Chevron to discuss a shale gas and oil production partnership.
Delays to the implementation of Algeria’s new hydrocarbon law could have negative repercussions for the country’s oil and gas sector.
As Sonatrach sought a new wave of investment from international oil companies, it had pinned its hopes on the government passing the long-awaited hydrocarbons law this year — designed to tackle a number of issues, in particular, Algeria’s oil and gas tax regime.
Algiers passed its last hydrocarbons law in 2005. That was meant to open the country up to international investment by replacing Sonatrach’s right to take a majority in all upstream partnerships and reducing its stake to no more than 30 per cent.
But it met with considerable opposition in parliament, forcing a reversal just a year later. The mandated majority for Sonatrach has led to significant project delays due to the company’s creaking bureaucracy and lack of cash.
Later amendments, such as a windfall tax on profits, made investments even less attractive, and subsequent licensing rounds failed to bring in new companies.
As a result, Algeria has been left behind in an increasingly competitive market for international capital.
MEED
This article is sourced from Offshore Technology sister publication www.meed.com, a leading source of high-value business intelligence and economic analysis about the Middle East and North Africa. To access more MEED content register for the 30-day Free Guest User Programme. https://www.meed.com/registration/
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