Sonatrach issued the following announcement on Jan. 7.

The new law governing hydrocarbon activities, which introduces a revision of the fiscal, legal and institutional framework relating to this sector, was published in the Official Journal (n 79).

This new law was adopted on November 14 by the National People's Congress (NPC) and on November 28 by the Council of the Nation before it was signed on December 11 by the former head of the State, Abdelkader Bensalah.

The text determines the legal regime, the institutional framework, the tax regime applicable to upstream activities, as well as the rights and obligations of people carrying out hydrocarbon activities.

Regarding the institutional framework, three forms of contracts are introduced in the new law to ensure more attractiveness in the sector and save SONATRACH's financial resources, in terms of investment.

These are the participation contract, the production sharing contract and a risk services contract.

For the conclusion of hydrocarbon contracts, the National Agency for the Development of Hydrocarbon Resources (ALNAFT) now grants, by an act of award, the right to contracting parties to carry out research and / or exploitation activities on a perimeter.

Furthermore, in article 54 of the law, it is stipulated that hydrocarbon contracts are governed by Algerian law. They contain a clause providing for the use of a method of amicable settlement of the various before referral to the competent court.

They may contain an arbitration clause allowing, if necessary, the settlement of various by international arbitration.

“The hydrocarbon contract is concluded for a period of 30 years from its date of entry into force. This duration includes a research period which cannot exceed 7 years from its date of entry into force, unless extended in accordance with the provisions of the bill ”, stipulates article 56.

As for the duration of the contract, it can be extended for a period not exceeding 10 years, according to the same article.

Regarding the tax regime applicable to upstream activities, excluding prospecting activities, it consists of a royalty on Hydrocarbons of 10%, a tax on Hydrocarbon Income varying between 10 and 50% depending on the effectiveness of the project, an income tax, the rate of which is set at 30%, and a tax on the Remuneration of the foreign co-contractor, fixed at 30% of the gross remuneration.

In the field of unconventional and offshore hydrocarbons, the potential of which is promising in Algeria, the new law provides for reduced rates of the Hydrocarbons royalty which cannot, however, be less than 5%, as well as tax on Income capped at 20%.

This new legal framework has, on the other hand, widened offshore operations and ensured the preservation of the environment and health, with regard to the exploitation of unconventional hydrocarbons (APS)

Original source: https://sonatrach.com/actualites/1545

Original source can be found here.