Algeria’s new hydrocarbon law is unlikely to be implemented until after the presidential election next year, according to industry experts. Previously it was expected that the law would be unveiled this year.
"Oil in Algeria is a symbol of national sovereignty. This makes the hydrocarbon law a sensitive issue and the government is likely to want to be 100 per cent sure about its next political steps before it starts changing regulations," said Walid Namane, North Africa analyst at Control Risks in Dubai.
"The president hasn’t yet decided whether he will represent himself for a fifth term in 2019, and the lack of certainty about the president’s intentions is paralysing the law.
"The current political situation is blocking major regulatory changes across all sectors."
Presidential elections are scheduled to be held in Algeria in April 2019. They use a two-round system: a second round is held if no candidate receives a majority in the first.
The amendments to the hydrocarbon law are expected to change the legislation in several areas including altering the rules regarding fiscal caps.
The aim of the overhaul is to make future licensing rounds more appealing to oil and gas companies. In pursuit of this, Algeria is planning to launch a new licensing round as soon as the overhaul of the hydrocarbon law is complete.
In December last year, MEED reported that in the upcoming round, Sonatrach is planning to auction permits where there is potential to develop conventional assets, as well as permits where there is potential to develop unconventional assets.
Over recent years, Algeria has struggled to increase interest from international oil companies due to security problems and restrictive legislation. Only four oil and gas blocks were awarded, out of a possible 31, in its most recent licensing round, held in September 2014.
After those results published officials announced there would be a new round in 2015, but this has been repeatedly delayed.
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