Sonatrach Signs Several MOUs with International Oil Companies Under New Hydrocarbon Law
Algerian national oil company Sonatrach SpA has signed a slew of agreements with international oil & gas companies under the provisions of its new hydrocarbon law, which aims at boosting foreign investment in the country’s oil & gas sector.
Earlier this week, Sonatrach signed a Memorandum of Understanding (MOU) with supermajor Exxon Mobil Corp., having entered into similar agreements with the Russian state-owned Zarubezhneft JSC and Turkish Petroleum Corp. (TPAO) last week. In mid-March this year, Sonatrach had also signed an agreement with the U.S. major Chevron Corp.
“The signing of these MOUs confirms the renewed dynamism of the Algerian mining sector, within the framework of the new attractive provisions introduced by the law on hydrocarbon activities,” Sonatrach said in a press statement.
In November last year, Algeria passed new legislation that reduces taxes and local content requirements for Sonatrach’s international partners, while preserving the state-owned company’s 51% equity position in all upstream oil & gas contracts in the country.
The country’s upstream sector has been grappling with the rapidly declining production, coupled with rising domestic demand that has eroded export earnings from oil and natural gas, a critical source of revenue for the government. The new legislation marks a return to certain provisions in the country’s 1986 hydrocarbons law which had led to significant discoveries in the 1990s, before certain unfavorable changes to regulations in the mid-2000’s led to a significant decline in upstream investment.