* Foreign firms showing little interest in bid rounds
* Company executives blame tough tax terms
* Algerian officials until now denied tax was the problem
By Lamine Chikhi
ALGIERS, March 31 The lacklustre interest from
energy majors in Algerian oil and gas acreage is due to the
country's tax rules, a senior energy official said, in the first
public acknowledgement of the problem.
In a licensing round completed earlier this month, Algeria
awarded only two out of 10 oil and gas permits on offer, raising
questions about whether it has enough new projects coming on
stream to maintain output levels. [ID:nLDE72G0XO]
The bid round was the third in a row that has shown flagging
investor interest since a new law imposed tougher financial
Foreign energy executives have said the tax terms are not
attractive enough, but until now Algerian officials have blamed
the global economic downturn for discouraging investment.
"We know that they (investors) are unhappy with our tax
system," said the energy official, who asked not to be named
because he is not authorised to speak to the press on the
"We knew that the licensing round would not be a success,
but we were forced to go forward to show that Sonatrach is not
weak, and that the scandals and change of leadership did not hit
it," the official told Reuters.
He said Algerian energy officials would be meeting early
next week to discuss how they can revive investor interest.
Algeria is the world's fourth biggest exporter of natural
gas -- most of it going to Spain and Italy -- and it is also a
major exporter of crude.
Its energy sector was rattled last year when the chief
executive of state energy firm Sonatrach was removed from his
posts and put under investigation over corruption allegations.
The energy minister was also replaced last year.
The two firms which were awarded permits in this month's bid
round, Sonatrach and Spain's Cepsa CEP.MC, signed the
contracts at a ceremony on Thursday. The combined value of the
two permits is $220 million.
Cepsa acquired blocks 401d, 401c and 403f in the Rhourde
Rouni II license area in south-eastern Algeria's Berkine Basin,
covering an area of 3,034 sq km.
At the same ceremony, Algeria has also signed five gas sales
agreements for exports to be shipped via the newly-completed
Medgaz pipeline to Spain. Officials said the pipeline was to
start commercial operations on Friday.
The sales agreements were concluded with Cepsa and fellow
Spanish firms Iberdrola (IBE.MC) and Endesa (ELE.MC) (ENEI.MI)
and France's GDF Suez GSZ.PA.
(Editing by William Hardy)