The new law will strip Sonatrach of its role as the state’s hydrocarbons regulator and its responsibility for the tendering process, end the company’s monopoly over oil distribution, storage and refining and remove the obligation of international oil companies (IOCs) to form a partnership with Sonatrach when taking on research and exploration contracts.

‘This law is a clear signal to foreign investors that there is a clear split between the state and Sonatrach,’ said Khelil in late March. His predecessor at the Energy Ministry, Nordine Ait-Laoussine, now president of Geneva-based Nalcosa Energy Consulting, agrees: ‘It is one of the most liberal hydrocarbons laws in the non-OECD.’

IOCs have every reason to look forward to the bill’s entry into the statute books. At the end of 2003, Algeria had proven hydrocarbon reserves estimated at 11,300 million barrels of oil and 4,520 billion cubic metres of gas, and the Energy Ministry is looking to boost oil production capacity to 2 million barrels a day (b/d) by 2010 from 1.4 million b/d.

Significant progress has already been made in attracting international investment into the sector since it was denationalised in 1991. In particular, considerable energy has been directed into upstream exploration. Whereas an average of only two concession agreements were signed each year in the late 1990s, this year three international licensing rounds are planned, each offering about 10 concessions.

Some of this momentum was lost in 2003 when Khelil’s hydrocarbons law was derailed by opposition from the unions, which suspected creeping privatisation and huge job losses. At the time, Bouteflika was unable to face down the unions - in particular the Union Generale des Travailleurs Algeriens (UGTA) - whose support he needed for the 2004 election campaign. When the elections returned the president with 85 per cent of the vote, however, his hand was strengthened.

Union concerns have been successfully allayed in a series of private meetings earlier this year, and the bill, unaffected by any of the amendments proposed along the way, has passed both houses of parliament. The only consolation for the unions has been the dropping of a clause in the original bill to gradually introduce a free market for energy prices, which they fear would undermine the viability of national companies dependent on subsidised prices.

For their part, most IOCs are cautiously optimistic about the bill. ‘The breaking of Sonatrach’s monopoly will certainly have a positive impact for international companies,’ says Juan Mas, gas procurement director at Spain’s Gas Natural. ‘I think the new law will have a fairly big impact,’ agrees Total director Jean-Philippe Magnan. ‘It will be seen as an opening up of Sonatrach to international competition. The minister [Khelil] is expecting the law to have a major impact on Sonatrach, and, given his determination to push the law through, we can expect there to be real changes.’

The law has its sceptics, however. In particular, there are concerns over the extent to which the new agencies tasked with taking over Sonatrach’s regulatory and tendering roles will be genuinely independent. Although the draft bill stipulates their independ