Algeria working on windfall profits tax

By OGJ editors
HOUSTON, July 13 -- Algeria is working toward implementing a windfall profit tax retroactively on oil and gas contracts signed under an old energy law. The proposed change would be made through amendments to a new law.

Chekib Khelil, Algeria's energy and mines minister, mentioned the proposed changes during a July 12 briefing at Chatham House (Royal Institute of International Affairs) in London. He did not outline specifics about the suggested tax.

In response to questions, Khelil acknowledged that "it's possible" the proposed change could discourage investment by international oil companies. "It's a political decision."

Algeria's cabinet approved a bill earlier this month to ensure state oil company Sonatrach keep a major upstream role. The amendments must be passed by the parliament and approved by President Abdelaziz Bouteflika to become law.

Algeria's reformist hydrocarbons law, passed in 2005, reduced the level of participation Sonatrach could claim in production-sharing agreements. The amendment is aimed at preserving hydrocarbons for Algeria's future generations, Khelil said.

"One of the amendments makes sure Sonatrach has a more important role," Khelil said. Another change would be the windfall profits tax.

"Contracts that were signed under the old law did not really have a way to capture the windfall profits," Khelil said. "The amendments include a clause that will correct for that."