The French oil major company, Total, has filed a request for arbitration against Algeria for changing profit sharing terms in oil and gas contracts in the mid 2000s, said company’s CEO, Patrick Pouyanne, reported Reuters. The Algerian national oil company Sonatrach said in a statement that it anticipates the legal action will have little impact, according to recent reports by Reuters.
The Sonatrach statement further read: “We take note of the Total arbitration decision and we will prepare to counter it vigorously.” While a government official confirmed that they are defending the case very hard, he referred to the large amount Total may seek in the case which stands at $200m, the Algerian News Agency, Echerouk said.
On the other hand, Total’s CEO suggested that the potential amount for compensation is less than hundreds of millions of dollars.
Total and its Spanish partner Repsol had initiated litigation at the International Court of Arbitration in May against Algeria and Sonatrach. Pouyanne affirmed that Total has sought arbitration as both parties tried to reach a mutual agreement, but failed.
Algeria’s decision in 2006 to change an oil tax scheme retroactively triggered a dispute with other oil companies moving to claim compensations.
According to Trade Arabia, US firm Anadarko Petroleum Corp and Maersk Oil, a unit of Danish conglomerate A.P. Moller-Maersk, reached settlements in 2012 worth about $4.4b and $920m in oil, respectively. Additionally, the Algerian national oil company, Sonatrach, has a stake of 3.85% in the Spanish gas company Gas Natural, controlled by Caixa and Repsol, as compensation made by Gas Natural for an arbitration ruling in 2010 over a dispute about gas prices.
French Total produces less than 1% of Algeria’s output, which is estimated at 195m tons of oil equivalent.