April is an important month for Algeria's economic reform program.
After urging foreign oil companies to invest in further development of the country's oil and gas reserves, the Algiers administration will learn how many oil groups are prepared to put money into the North African state.
Undeterred by political unrest earlier this year, 21 companies sent representatives to look at assets on offer in an international tender program.
OUTSIDE HELP SOUGHT
Algeria wants foreign money and technology to improve recovery from its oil fields. Foreign companies would have to pay front end bonuses in return for a share in existing production as well as production increases from new investments.
Whether in the current industry downturn these companies have the resources, financial and technical, for new investment in Algeria will be known when bids are submitted this month.
Algerian Oil Minister Nordine Ait-Laoussine reckons that with outside help and the latest technology, Algeria's reserves could be hiked substantially.
Included in the first bidding round are Algeria's biggest oil field, Hassi Messaoud, currently producing about 400,000 b/d, along with Haoud Berkaoui, Ben Kahla, Guellala, Rhourde El Baguel, El Gassi, Zarzaitine, and El Adeb Larache oil fields and the oil rims at Hassi R'Mel and Rhourde Nous.
Lump sum, up front payments will depend on the size of the field. Ait-Laoussine said in some bonus payments would be quite substantial, and there would have to be negotiations over how they could be phased in.
He acknowledged that the size of the bonuses would depend on perceptions of future oil prices, duration of the contract, type of fiscal package agreed, participation level in current production, and whether bonuses can be amortized.
A second bidding round covering 10 more fields probably will open at least 6 months after the first. A third round will cover a number of marginal fields that are either shut in or producing poorly because of lack of investment and maintenance.
The bidding process was made possible by last December's amendments to the state's hydrocarbon laws. The amendments also provided new exploration incentives.
Algeria has signed 16 new production sharing contracts and aims to increase the number to 100. More agreements are expected shortly.
SPEEDIER SYSTEM
Ait-Laoussine said state owned Sonatrach will speed procedures for acquiring new acreage by introducing a bidding system. Currently, negotiations over new deals get bogged down because Sonatrach has only one team operating in this area.
Drilling activity is expected to increase as a result of award of more licenses. This year about 40 wells are expected to be drilled, compared with 33 last year and only an average 15-20 in the 5 years to 1990. Most of them were drilled by Sonatrach.
Exploration has centered on the search for oil. But Ait-Laoussine said there is a need to find added gas reserves to enable more gas to be exported.
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