Algeria has finally unveiled details of its long-awaited seventh licensing round, which will set the basis for IOCs’ co-operation with a resurgent Sonatrach.
The Ministry of Energy and Mines (MEM) has issued the timetable for the seventh licensing round, inviting prequalified companies to bid for acreage in “different Algerian sedimentary petroleum basins offering a high potential in petroleum resources.” The schedule, with bids due by 3 December, will allow MEM and regulator Agence Nationale pour la Valorisation des Hydrocarbures (Alnaft) to meet their target of completing the round this year (AE 142/17, 140/1).
As Energy and Mines Minister Chakib Khelil told African Energy earlier this month, companies will not now be asked to offer technology or downstream assets in exchange for upstream territories, as originally mooted, as the authorities have found it too difficult to make comparisons between different offers. However, some of the acreage – for example in Ahnet and the Berkine Basin – may prove very attractive to IOCs looking to book big oil and, particularly, gas reserves, and thus could be linked to parallel offers of assets and investment to help state company Sonatrach develop its expansion and diversification strategy.
The 71 prequalified companies can bid for acreage in some 16 zones containing 45 blocks; the bidders are split into different classes: operators, investors and investor-operators in onshore and offshore. The deadline for bids is 09.00 GMT on 3 December, and the winners will be announced two hours later. Contracts will be signed on 17 December. Prequalifiers will receive a general technical presentation on 26 July at the Sheraton hotel at Club des Pins near Algiers. Data rooms giving detailed information on each block will be open from 2-13 August and 1 September-15 October.
The acreage on offer is of varying quality, and includes some discoveries made by Sonatrach, indicating that the state oil company has been unable to develop some of the many finds it has reported in recent years. For some of the contracts, Sonatrach is ceding an interest, as Khelil has suggested in the past it might do. “We are not talking about wildcats or pure exploration. Sonatrach is transferring discoveries to partners,” Khelil told African Energy at the World Petroleum Congress in Madrid. “There are other blocks where you don’t have discoveries, maybe some seismic or dry wells,” he added – in which case Sonatrach is transferring information rather than resources via the bid round.
The round is the first to be offered under the revised hydrocarbons law that gives the state oil company a mandatory minimum 51% share in every permit. But Khelil has previously said that Sonatrach would not keep a majority stake in all acreage. Khelil’s original 2005 law had reduced Sonatrach’s stake to 20-30%, and the 2006 revisions are seen as returning the parastatal giant to centre stage, shifting power from the regulator Alnaft. The government has overseen a significant expansion of Sonatrach’s responsibilities recently, arguing that it is one of the few national institutions with the respect and talents necessary to promote Algeria’s rekindled ambitions to invest its significant foreign reserves in becoming a major industrial power.
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