Anadarko Petroleum Corporation announced it has reached an agreement with Sonatrach to resolve the dispute regarding Sonatrach’s implementation of Algeria’s 2006 exceptional profits tax (TPE). The parties’ agreement will become effective upon approval by Algerian government authorities, estimated to occur within the next four months. Upon such approval, the existing arbitration proceeding between the parties will be dismissed.
“We are very pleased to have reached a fair and balanced resolution that will return significant value to Anadarko,” said Anadarko President and Chief Operating Officer Al Walker. “This amicable solution maintains our long-standing partnership with Sonatrach that has achieved tremendous success in Algeria, surpassing 1.5 billion BOE (barrels of oil equivalent) of cumulative production and advancing the El Merk mega project toward first production.”
The agreement, based on reciprocal concessions, provides for delivery to Anadarko of additional crude oil volumes in the amount of approximately $1.8 billion over a period of 12 months from the effective date. Additionally, the parties have agreed to amend the existing Production Sharing Agreement (PSA) to provide that Anadarko will receive a higher volume of profit barrels. The effect of the amendment will, using current commodity prices and discounted at 10 percent, provide Anadarko with approximately $2.6 billion of additional net present value over the remaining term of the PSA. The amendment also confirms the term for each development license granted under the PSA will be extended, in accordance with the terms of the PSA, and as a result, will now be 25 years from the original effective date.