Five blocks awarded in second bid round

15 October 2001

Five international oil companies have been awarded exploration blocks in the Berkine basin in the country's second open auction bid round for many years, officials from state energy company Sonatrach confirmed on 2 October. Sonatrach officials had earlier expressed the hope that six licences would be granted through the process.

The Energy & Mines Ministry made the awards at the opening of the bids in Algiers on 1 October and, under the programme for the new licensing procedure, the contracts will be signed by 16 October.

The turnout for the licence round was lower than anticipated, with just five companies participating, all of which are already present in Algeria. Three of the blocks - 405b, 432-444S-403N and 401d - had only one offer apiece and were awarded to their sole bidders, Canada's First Calgary Petroleum, TotalFinaElf of France and Spain's Repsol YPF respectively.

Two US companies, Anadarko Petroleum Corporation and Burlington Resources, both bid for the same block, 406b, as they had done in the first licensing round in April. As with the earlier round, Anadarko was awarded the block. The firm's previous award was cancelled when it sought to renegotiate the contract. In the latest round, Burlington beat off competition from Repsol to win Block 402d, a block that the US company had identified as a priority.

Once they sign the contracts, the selected companies are obliged to drill one to two exploration wells and one to two appraisal wells in the first phase of exploration. They will also shoot 300-500 square kilometres of 2-D seismic and 100 square kilometres of 3-D seismic. Relinquishment after the first phase is discretionary.

In all ten blocks were on offer, including five in the less-explored Cheliff, Timimoun, Djemaa-Touggourt and Illizi basins. There were no bidders for these blocks, which are considered by some analysts to be in high-risk or frontier areas. 'The bidders are mostly Berkine-focused,' says one international oil executive. 'Moreover, the current economic climate and the events of 11 September may well have deterred smaller companies from pitching for the more isolated blocks.'

The unassigned blocks will be retendered with five others within about six months in a third licensing round. However, sources say the repackaging of the blocks will do little to increase their attraction. 'Work needs to be done on improving the quality and vintage of the data available and better defining the prospectivity of the blocks,' says one.

The transparent bidding process was introduced by Energy & Mines Minister Chakib Khelil last year in an attempt to encourage and accelerate investment in Algeria's upstream. Beforehand it could take up to three years of bilateral negotiations to sign a contract (MEED 16:2:01, Cover Story).

International oil companies are now awaiting news on the proposed new hydrocarbons law.

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