Algeria Awards Only Two Energy Permits in Bid Round

Source: Reuters 3/17/2011, Location: Africa

Algeria awarded only two out of 10 oil and gas permits on offer in its licensing round, increasing pressure on the government to make terms more attractive to foreign oil companies.

The bid round was the third in a row to see lacklustre interest from foreign firms, prompting some analysts to question if Algeria can meet its targets for bringing new production on stream.

The winning bidders were Spain's Cepsa and Algerian state energy firm Sonatrach, the regulator said at a ceremony to announce the results of the bid round.

Sonatrach was awarded the Rhourde Fares contract area and Cepsa won the Rhourde Rouni area.

Both are in the Berkine basin in the Sahara desert, where Russia's Gazprom announced last year it had discovered oil and gas reserves on its permit.

Algeria is the world's eighth biggest exporter of crude and the fourth-biggest exporter of natural gas, most of it shipped via pipelines under the Mediterranean Sea to Spain and Italy.

A large proportion of the oil and gas production comes from mature fields, and Algeria needs foreign investment and know-how to find and develop new reserves.

However, many western oil company executives say the financial terms for the latest bid round as with the previous two were unattractive.


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