According to a US Energy International Administration press release the Algerian government is amending its foreign investment laws in hydrocarbons to attract investment and technology. This was in an historic attempt to buoy up declining oil and gas production rates.
As it stands foreign partners have to agree to a mandatory majority share (at least 51%) for any joint projects with Algeria’s Sonatrach. Nonetheless, 33 blocks were offered in an auction by Sonatrach in 2014, resulting in five new contracts with Repsol, Shell, Statoil, and Dragon Oil-Enel for locations in four sedimentary basins with significant shale gas and oil potential.
Sonatrach is also taking other measures to facilitate an attractive investment environment, such as digging exploratory wells – 275 oil and natural gas wells drilled so far – and seismically mapping large areas of the country at a cost of $30 billion. The overall objective, announced by Sonatrach early this year, is to spend $64 billion – 70% of its total investment program from 2015 to 2018 – on upstream activities meant to boost flagging production rates.
Sonatrach has also conducted its own shale resource assessments, drilling two vertical shale exploratory wells in 2012, with a pilot project in 2014 analyzing three horizontal wells with up to 14 hydraulic fracturing stages.
There have been calls before for reforming the “51/49” Law for Foreign Direct Investments (FDIs), reported Huffington Post in an opinion piece, but there has been hesitation to allow foreign firms to own more than 49% of a joint project in such ‘strategic’ sectors as oil.