UPDATE 1-Algeria launches energy bidding round, 31 fields on offer

Tue Jan 21, 2014 11:51am EST

Related Topics

* Algeria seeking to draw more investment

* Concerns over security, contract terms

* 31 new fields on offer in latest round

By Hamid Ould Ahmed

ALGIERS, Jan 21 (Reuters) - Algeria launched an energy bidding round on Tuesday with 31 fields on offer for companies, as the OPEC member and key European gas supplier tries to woo foreign firms to help it reverse declining output.

Algeria's announcement came a year after an Islamist militant attack on its Amenas gas facility killed 40 oil workers and rattled foreign investors already wary over the North African state's contract terms.

Ali Betata, head of the ALNAFT, the agency in charge of handling bids, told reporters that 17 of the fields on offer would be in the south, five in the north and the rest located in the centre of the country.

"We will explain to our partners the elements and incentives included in the bidding," Energy Minister Youcef Yousfi said, when asked about concerns the bidding may not attract foreign investors.

Algeria's last round in 2011 awarded only two contracts out of the 10 offers - one to Spain's Cepsa and the other to the country's own state energy firm Sonatrach.

The country gets most of its output from mature fields and needs foreign investment to develop new reserves. But the government said recently it had made some "promising" discoveries among the more than 30 finds last year.

Algeria's new energy law, passed last year, includes tax and other contractual incentives for foreign companies, and benefits for unconventional energy resource investments such as shale oil and gas contracts.

Yousfi said as part of new developments, the country's offshore explorations would start at the end of this year or early next year.

The minister said the bidding includes perimeters for shale oil and shale gas.

Algeria has also said it plans to build five oil refineries to double its production capacity, but has not yet given details on when construction would begin.

Oil production is around 1.2 million barrels per day - the same level as 2012 - with energy export earnings $63.5 billion in 2013, down 10 percent from a year ago, officials said.

The January 2013 attack on the Amenas plant by militants who crossed over from the remote border with southern Libya, heightened concerns over security for energy producers in North Africa.

BP has yet to send foreign contractors back to the Amenas gas plant, though Algerian officials said new security reinforcements and a landing pad were in place at the desert site.

"It is not up to me to decide when they will return," the minister said. "It is up to them."

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