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Khelil, speaking at a public forum organised by newspaper El Moudjahid, added foreign companies had not sent him any signal that they were worried about the law, seen by critics as part of a resource-nationalism trend sweeping the energy sector. "I’ve seen no sign of worry from the (international) companies. The law remains attractive. I’ve not been approached by them," he said. "Even if informally they are not happy to be taxed on the large profits, it’s the law of the republic and it guarantees them an adequate profit." Khelil declined to give a date for the next exploration and production bidding round for foreign investors, which had been expected before the end of 2006, but said he was confident it would be a success whenever it took place. "We are not going to decide on it (the round) soon," he said. "I know that a lot of companies want to participate; that signifies that the Algerian market remains interesting for them." The oil and gas producer last month enacted a law giving state-owned company Sonatrach, Africa’s biggest company by revenue, a more central role and introducing a windfall tax on international oil companies. The move, a reversal of previous legislation for planned energy liberalisation, is popular with a population suffering deep unemployment following years of political conflict and resentful of foreign participation in the Saharan oil and gas riches. But the change has received a guarded reception in private among foreign oil firms, which have steadily increased their share of Algerian production over the past 15 years. The firms had applauded the earlier hydrocarbons legislation, passed in 2005, that was meant to overhaul Algeria’s oil and gas industry and to turn Sonatrach into a purely commercial entity. Khelil had championed that liberalisation, but on Sunday he defended the about-face, voicing understanding for the cabinet’s official explanation that Algeria needed to conserve oil reserves for future generations. REFORMS "This was a decision by the state, not a decision by our sector," he said. The cabinet has said that Algeria’s still-backward financial system lacks the capacity to process efficiently the large volume of petrodollars it receives every month. Until Algeria has that ability, it is better to keep the oil and gas in the ground, it decreed. The country expects to earn more than $50 billion in energy earnings this year, up from $45.6 billion in 2005. "The law is coherent," Khelil said. "Our problem is the capacity to digest the funds at the moment. This is why we must at first implement reforms in banking, in the judiciary, in all sectors in order to have a capacity to digest." "If in the future we improve the management of our economy, our policy would orientate the (energy) sector towards more business." Foreign oil companies working in the country have declined to comment on the latest changes until an appendix detailing practical measures is published. Among the details they will be seeking are a definition of the excess profits that will now be subject to a windfall tax in any month in which Brent crude averages over $30/barrel. The rate at which the tax is applied has an enormous margin of variation, from five to 50 percent. Again, companies will be looking for an explanation of how that rate will be set. It is only when the appendix is published that the next investment round can go ahead, as the detailed measures will provide the legal and commercial framework for new investments. The country aims to increase oil output to two million barrels per day (bpd) by 2010 from around 1.4 million bpd now and to produce 85 billion cubic metres (bcm) of gas per year in the next five years from 62 bcm now. The biggest foreign operator is U.S. Anadarko Petroleum Corp . Others include Royal Dutch Shell, BP, BHP Billiton, ENI and Hess Corp.. By Lamine Chikhi © Reuters 2006 | ||||||||||||||||||
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Algeria says new oil law gives firms adequate profit