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Algeria Tender to Tempt Oil Firms a Year After Amenas Attack

Source: Reuters 1/16/2014, Location: Africa

Algeria will launch a new oil and gas bidding round in the "coming weeks," its first licenses under a new energy law passed at the start of last year, Energy Minister Youcef Yousfi said.

The announcement came a year after the Islamist militant attack on the Amenas gas facility, which killed 40 oil workers and rattled foreign investors.

"This will not take place in the first six months of the year, but within the coming weeks," the minister told state radio. He said the OPEC member Algeria made 32 oil and gas discoveries last year, some of which are "promising and very important" and the current crude output is 1.2 million barrels per day, unchanged from state energy firm Sonatrach's 2012 estimate.

Algeria's new energy law includes tax incentives for foreign companies, and other benefits for unconventional energy resource investments such as shale oil and gas contracts.

Under the law approved by parliament on January 21, investors in unconventional resources will be granted prospecting Licences for up to 11 years and exploitation Licences of 40 years for shale gas and 30 years for shale oil.

Conventional energy license terms remain unchanged at seven years for prospecting and 25 years exploitation, with a five-year supplementary period for gas deposits.

The minister also said Algeria plans to build five oil refineries to double its production capacity, but did not give details on when construction would begin.

Algeria, supplier of a fifth of Europe's gas imports and trying to reverse declining energy output, faces complaints from foreign energy companies who say red tape and graft exacerbate what they already see as tough contractual terms.

The January 2013 attack on the Amenas plant by Islamist militants who crossed over from remote border with southern Libya, heightened concerns over security for energy producers in North Africa.

BP has yet to send it foreign contractors back to the Amenas gas plant though Algerian officials said new security reinforcements and a new landing pad were in place at the remote desert site.



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