Algeria vows tax reform in energy sector, eyes shale gas cooperation

The headquarters of Algeria’s state-owned energy giant Sonatrach in the capital Algiers. (AFP)
Updated 25 March 2018
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Algeria vows tax reform in energy sector, eyes shale gas cooperation

ORAN, Algeria: Algeria plans to offer tax incentives in a planned new energy law to attract more investment and is in discussion with foreign energy firms including BP and Anadarko to exploit its shale gas reserves, officials said on Sunday.
OPEC member Algeria is a key gas supplier to Europe, but growing domestic consumption has been hitting energy exports, the main source of the state budget.
In a bid to reverse the fall, the energy ministry has started drafting amendments to the energy law, promising more incentives for foreign investors.
“We will remove all obstacles, wage a battle against bureaucracy and change tax procedures,” Energy Minister Mustapha Guitouni told a gas and gas conference in the western city of Oran.
“The amendment is required by our energy security,” he said. “The current system must change. We will intensify consultations with our partners.”
The law has been in the works for years and is seen as key to attracting more investment but no draft or details have been presented yet.
In the latest bidding round in 2014, Algeria awarded only four of 31 blocks on offer after a disappointing auction in 2011 as foreign firms balked at the terms.
Algeria was already preparing to exploit shale gas to boost output after failed attempts in the past years due to protests by residents of affected areas over fears of pollution.
“Evaluation studies on shale gas potential are going on. This will take 5 to 10 years,” he said, without providing further details.
Arezki Hocini, the head of the National Agency for the Valorization of Hydrocarbon Resources (Almaty), said Algeria had already started discussions with oil majors including BP and Anadarko to help evaluate and exploit shale gas.
“We hope these discussions will lead to talks over possible contracts,” he told reporters, without providing details.
While seeking to attract foreign investors state-run oil and gas company Sonatrach is also trying to expand abroad, mainly in the Middle East, Guitouni said.
“Egypt is interested in working with us,” he said, without elaborating.
Sonatrach earlier this year signed an agreement with Iraqi companies to form joint ventures for gas projects.
Sonatrach had already started operations in Peru and neighboring Libya, Niger and Mali.


Iraq parliament approves 2019 budget, one of largest ever

Updated 24 January 2019
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Iraq parliament approves 2019 budget, one of largest ever

  • The budget will be largely funded by oil revenues
  • The 2019 budget is almost 45 percent higher than last year’s budget

BAGHDAD: Iraqi lawmakers on Thursday approved the government’s 2019 budget, which at $111.8 billion is one of the oil-rich country’s largest ever spending bills.
It represents a nearly 45 percent increase from last year and awards even more money for public salaries, including those of the northern Kurdish region.
Nearly 90 percent of the budget comes from oil revenues.
Iraq expects to export 3.9 million barrels per day in 2019, including 250,000 bpd from the Kurdish region, at an average of $56 per barrel.
The current price of crude sits at $63 per barrel.
The deficit is expected to more than double to $23.1 billion, while investments increase to $27.8 billion.
The draft bill was originally submitted to parliament in October but has been fiercely debated since then.
MPs from provinces ravaged by the fight against the Daesh group criticized it for not allocating enough reconstruction funds to their regions.
Another debate raged over the share that would be allotted to the administratively autonomous Kurdish region.
MPs had originally scheduled a session for 1:00 p.m. on Wednesday but delayed it to 7:00 p.m. and voted article by article, finishing just after midnight.
The government proposed $52 billion in salaries, pensions, and social security for state workers — a 15-percent jump from 2018 and more than half the total budget.
Notably, parliament passed a budget measure to fund salaries for the Kurdistan region’s state workers and armed forces, the peshmerga.
The budget also stipulates the Kurdish Regional Government must export 250,000 bpd of crude through state-owned companies and deposit the revenues in federal coffers.
If it didn’t, MP Sarkawt Shamsaddin told AFP, Baghdad would continue to pay salaries but would not disburse other funds to the Kurdish region.
“The good thing is public servants’ salaries and peshmerga are not subject to political disputes,” said Shamsaddin, representing the northeastern Kurdish city of Sulaymaniyah.
Relations between Baghdad and Irbil, the capital of the Kurdish region, soured in 2017 after Kurdish authorities held an independence referendum.
Last year’s budget was approved by parliament in March.
Parliament had also scheduled a vote on two of the five remaining empty cabinet posts in Prime Minister Adel Abdel Mahdi’s government but adjourned without holding it.