* Incentives target non-conventional resources
* State firm to keep majority stake
* latest bid rounds failed to attract investors
(Adds details, background)
By Hamid Ould Ahmed
ALGIERS, Nov 2 Algeria plans to start linking
taxes on foreign energy firms to profits instead of turnover,
according to draft amendments to its hydrocarbons law aimed at
making the sector more attractive to investors.
The draft, obtained by Reuters, also offers fiscal
incentives for companies wishing to invest in unconventional
energy resources and offshore exploration.
The amendments maintain state energy firm Sonatrach as a
majority partner in all upstream and downstream projects.
Algeria's last three rounds of bidding for oil and gas
permits attracted lacklustre interest from foreign firms,
raising questions about whether it has enough new projects
coming on stream to maintain output levels and meet growing
In a 2008 round, just four blocks were awarded, while in
2009 only three were picked up, and last year it awarded two
The goal is "to introduce new incentives to improve the
attractiveness ... so as to intensify the exploration effort and
discover new reserves of conventional and non-conventional
hydrocarbons," the text of the draft read.
In addition to tax incentives, the amendments introduced
specific provisions to support the development of unconventional
Investors in unconventional hydrocarbons would be granted
prospecting licenses for up to 11 years and exploitation
licenses of 40 years for shale gas and 30 years for shale oil.
Conventional resource licenses were kept unchanged at seven
years for prospecting and 25 years for exploitation, with a
five-year supplementary period for natural gas deposits.
OPEC member and gas exporter Algeria seeks to develop
technology-intensive shale gas and offshore production to help
ensure security of supply in the long run. It currently favours
a role for foreign oil majors in helping achieve those goals.
Sonatrach in July this year said it was in talks with Royal
Dutch Shell and ExxonMobil on shale gas
That followed Italy's Eni agreement with Sonatrach
last year to carry out shale gas exploration.
Sonatrach officials earlier this year said shale gas
production could start within the next three years.
The amendments also stipulate that foreign energy firms
interested in partnerships with Sonatrach in the refining sector
are required to have their own storage capacity.
That comes as Algeria plans to build five new refineries
with a total production capacity of 30 million tonnes per year
to increase the country's refining products output to 52 million
tonnes from 22 million tonnes now.
The current output is much lower than demand because of a
growing number of car owners, forcing the government to approve
a plan for importing 2 million tonnes of gasoil and 300,000
tonnes of gasoline this year.
Algeria, whose oil and gas sales account for about 97
percent of total exports, has said it plans to invest $80
billion in its energy sector in the next five years.
The draft amendments, which also give Sonatrach a monopoly
on domestic oil and gas pipeline networks, is due to be
discussed later this year by parliament, in which parties allied
to President Abdelaziz Bouteflika have an overwhelming majority.
(Reporting by Hamid Ould Ahmed; editing by Jane Baird)