State Takes Greater Oil Role

July 2006 | Economic Alert

The Algerian government announced two major amendments to its oil law yesterday, according to quotes from the oil minister Chekib Khalil in today's edition of the El-Watan newspaper. Firstly, the state-owned firm Sonatrach is now required to hold a majority share (of 51%) in all exploration and drilling contracts. Secondly, a new tax is going to be imposed on profits made by oil companies - which will apply to contracts already in force but will not apply to future oil contracts. The reason for this seemingly odd policy is that the bulk of existing contracts were agreed under a 1986 law which applied a tax of 48%, whereas any new contracts will be governed by the oil law of 2005, which applies a tax of 62%.

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