* Changes aimed at reviving flagging foreign investment
* Minister says planned gas route to Italy under review
* Equipment fault reducing Arzew refinery output:minister
By Christian Lowe
ALGIERS, April 11 OPEC member Algeria plans to
change the way it levies tax on some energy projects so that
foreign oil companies pay tax on profits they make from the
projects and not on turnover, a newspaper quoted Energy Minister
Youcef Yousfi as saying.
The minister also said a decision would be made on the
planned Galsi gas pipeline to Italy by the end of the year after
a review of its feasibility and that technical problems would
reduce output for up to three months at the Arzew refinery.
Algeria has promised changes to its tax regime to make the
country more attractive to foreign energy companies after three
consecutive bid rounds for oil and gas acreage failed to attract
Yousfi, quoted by the online edition of the El Khabar
newspaper late on Tuesday, said the new tax mechanism would
apply only to oil and gas projects that are not currently in
production and are considered high risk.
"The tax imposed will be based on their profitability of the
projects, not as before, based on turnover," the newspaper
quoted Yousfi as saying in an interview.
The changes are included in draft amendments to the
hydrocarbons law drawn up by the energy ministry.
A ministry working group has now finished drafting the
amendments, Yousfi said, and presented them to the government
for approval. The next stage will be for parliament to vote
through the amendments.
Foreign energy executives have said the terms stipulated by
the current hydrocarbons law are not attractive enough for them
to buy into Algerian acreage.
The shortage of new exploration projects has led some
analysts to question whether Algeria can meet its natural gas
export targets over the next few years and fill new pipeline
capacity which is scheduled to come on stream.
In the interview, Yousfi suggested there were now serious
questions over the Galsi pipeline.
The 8 billion cubic metre pipeline had been scheduled for
start-up in 2014, but since it was given the go-ahead, European
demand for natural gas has slumped, changing the economics of
The project is not canceled but the partners need to "know
the scale of demand in Italy and the size of the market," the
newspaper quoted Yousfi as saying. "We hope there will be a
final decision on the project by the end of the year."
The project has already faced delays because of concerns
about the route and hold-ups in obtaining approvals from the
Italian government and local authorities.
Partners in the Galsi project include Algerian state energy
firm Sonatrach and Italian utilities Edison, Enel
, and Hera.
Algeria already provides Italy with about 35 percent of its
imported gas. Most of it comes via an existing pipeline, which
passes from Algeria into neighboring Tunisia and then under the
Mediterranean Sea to Italy.
Yousfi was also quoted as saying that Algeria's Arzew
refinery will operate below full capacity for another two to
three months because of problems with equipment used for
The refinery, which also produces diesel, was partially
closed for several months for maintenance and improvement work.
Energy officials previously said it would re-start around the
middle of February.
Yousfi said work was under way to repair the faulty
equipment at the refinery. Refinery outages in the last few
months have prompted Algeria to increase the number of shipments
of refined products it imports.