Algeria to implement oil and gas windfall tax

Jul 12, 2006 02:00 AM

Algeria is to retroactively implement a windfall tax on oil and gas contracts signed under the old energy law as part of amendments to the country's new hydrocarbon bill, Oil Minister Chakib Khelil said. The windfall tax will be used as one method to preserve Algeria's oil and gas resources for future generations, Khelil told a briefing at London's Chatham House.
"The contracts that were signed under the old law didn't have a way to capture windfall profits and the new amendments include a clause that will correct that," Khelil said.

Earlier, the Algerian cabinet approved a bill amending the new hydrocarbon law that was approved last year but not signed into law. The amendments need to be passed by parliament and approved by the president before they become law.
Gerry Peereboom, president of BP Algeria said he was worried about the potential tax.
"I'm worried, but we have to wait and see what the new amendments actually say," he said.

The windfall tax could apply to oil major BP that has invested over $ 4 bn on huge gas projects in Algeria's Sahara desert. Other oil companies investing in Algeria include Norway's Statoil, US-based Anadarko Petroleum and Spain's Cepsa and Repsol-YPF.
Algeria's budget is calculated on an oil price of $ 19-$ 22 a barrel. But US oil prices have rocketed this year, hitting a new record high of over $ 75/bbl. As a result Algeria's foreign reserves currently stand at a comfortable $ 66 bn, Khelil said.

Source: Dow Jones Newswires
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