Breaking News
oil and gas

Bouteflika’s Hydrocarbon Law Is Officially Replaced By New Implementation Texts

February 24, 2021

Finally, the “death certificate” of Bouteflika’s hydrocarbons law was officially issued, a law that “extended” for 16 years and caused a decline in the country’s production of hydrocarbons and alienated foreign partners, and this was through the publication of several application texts of the new regulatory document for the sector in the official gazette, marking the start of its actual application on the ground.

In this context, the 12th edition of the Official Gazette issued on February 17, 2021, included 6 implementation texts of the new hydrocarbon law, the first of its kind published out of 43 application texts regulating and running the most important economic sector in the country.

It is known that the new hydrocarbons law, which was approved in December 2019 noticed a delay in the implementation of texts, according to the recognition of the former energy minister, Abdelmadjid Attar, who, after his appointment, formed a working group to prepare the application texts and made them a priority workshop.

According to information provided to Echorouk from a source related to the file at the Energy Ministry, 38 implementation texts have been fully prepared pending completion of the preparation of 5 texts, as they are likely to be ready before the end of the current trimester.

In terms of numbers, Bouteflika’s hydrocarbons law (05-07) lasted16 years, specifically from April 28, 2005, until February 17, 2021, and this is the law that experts and observers of oil and gas affairs consider the main cause of the decline of Algeria’s quantitative production of hydrocarbons since 2007, and contributed to alienating foreign investors, and the major international tenders for oil launched by the Energy Ministry were declared useless more than once because of it.

Returning to the applied texts published in the last edition of the Official Gazette, one text is related to the source activity (research, exploration and production), as it specifies the procedures for selecting the surfaces subject of the retention request, the areas of exploration and the surfaces.

According to this text, the National Corporation (Sonatrach) or the contracting parties, according to each case, must be submitted to the “Oil” Agency, within the framework of the request for approval of the development plan, a proposal to determine the surface (s) of the exploration of the reservoir or the reservoirs to be exploited, which constitute the area of exploitation.

The delay in publishing the rest of the applied texts related to the source activity, the tax aspects and customs rights raises the question, given that these two files are the most sensitive, especially for foreign companies that are still waiting for these texts to determine their position to invest or not in Algeria, and these parts (source activity, taxes and customs rights) are the cornerstone of launching oil tenders.

As for the rest of the applied texts published so far, they pertain to how to calculate the prices and tariffs of oil products in the national market and the conditions for granting compensation for the consequences imposed by the state as well.

A text related to determining the methodology for calculating the selling prices of liquefied fuels and oil gases in the national market was issued and aims to define a list of fuels and liquefied oil gases, the methodology and methods for calculating their selling prices in the national market as well.

The various selling prices of fuel and liquefied oil gas in the national market are represented in the prices at the exit from the refinery that the refiners and converters apply to the distributors, the selling prices applied by the distributors to the retailers, and the selling prices applied by the distributors and retailers to consumers.

The text indicated that the prices include the costs borne by the repeaters, distributors and retailers with a profit margin that cannot exceed 10% of the cost price.

An implementation text was also issued to specify the methodology for determining the prices of crude oil and condensates upon entering the refinery and the price of selling natural gas to electricity producers and gas distributors.

An application text was also published to determine the conditions and methods of granting compensation for the consequences imposed by the state about the prices of natural gas and oil products, as the amount of the unit compensation for the liability imposed by the state is equal to the difference between the price calculated by the oil control authority and the price imposed by the state, according to the applicable regulation.

The same edition of the Official Gazette also included the executive decree that defines the functioning of the supervisory board for each of the two hydrocarbon agencies, namely the Hydrocarbon Resources Valuation Agency and the Hydrocarbons Regulation Authority (ARH).

The Official Gazette also published the decree that determines the methodology for determining the tariff for liquefaction of natural gas, and the tariff for separating liquefied oil gases, which basically stipulates that the Hydrocarbons Regulation Authority calculates every year the tariff for liquefaction of natural gas and separates the liquefied oil gases at the national level, without the consumption fees, and informs the producers by decision.