Page 8 - AfrElec Week 43

AfrElec COMMENTARY AfrElec
Sonatrach weighs in on draft energy law
The national oil company has spoken out in favour of the caretaker government’s plans, but the matter is far from settled
ALGERIA
WHAT:
Sonatrach has called the draft energy law an “essential” measure for the oil and gas sector
WHY:
The company’s assertions are not likely to sway critics of the interim president
WHAT NEXT:
Algeria’s parliament
is not likely to adopt
the legislation before elections on December 12
ALGERIA’S national oil company (NOC) Sonatrach has waded into a dispute between the caretaker government, headed by interim President Abdelkader Bensalah, and protesters concerned about the lingering influence of the previous regime.
Bensalah came under fire on October 13, when his cabinet endorsed a draft version of the new energy law. The next step will be to sub- mit the legislation to Parliament, which must approve it before it can take force.
At the time, the interim president called the measure a necessary move, saying that the legis- lation would put the country’s oil and gas sector on a more solid footing. “The draft will allow us to start deep reforms in the energy sector and implement a development plan for Sonatrach,” he said.
Protesters took a different view. Some com- plained that Bensalah and his allies were moti- vated less by the desire to reform and more by the desire to ensure the support of Western coun- tries with an interest in Algeria’s crude oil and natural gas.
Others argued that the caretaker government was not entitled to make permanent changes to Algerian law, given that it does not have an elec- toral mandate.
Bensalah took office in April, after the North African state’s long-time President Abdelaziz Bouteflika stepped down. Since then, his cabi- net and the army have scheduled elections for December 12.
Sonatrach’s position
On October 20, Sonatrach spoke out on the dis- pute – and came down in favour of Bensalah.
In a statement posted on its website, it said that the caretaker government had been justi- fied in drawing up the new energy law. It called the draft legislation “essential to restore the attractiveness of the [oil and gas] sector in the context of low oil prices and increased competi- tion among producing countries to attract new investors.”
It added: “The revision of the current legal and fiscal regime is no longer a choice, but a necessity, to adapt to the new global energy order characterised by abundant supply, lower prices and a gradual introduction of renewable ener- gies into the energy mix.”
Taxes and contracts
Reform is necessary partly because Algeria’s current tax regime undercuts the viability of efforts to exploit new fields, the company said. The proposed law offers foreign investors more favourable terms, it noted. “The new law is vital for Sonatrach to enable it to develop the discov- eries made in recent years,” the statement read.
Sonatrach also pointed to problems with existing contract law, saying that investors were having to wait too long – 10 years, on average – to bring new fields through the exploration stage and into production. It suggested that conditions would improve under the draft law, which revises the terms of production-sharing deals and offers
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w w w . N E W S B A S E . c o m Week 43 30•October•2019