National oil companies won't be favored in Algeria's upcoming licensing round, which will also draw up new contracts for the winners with a windfall oil tax already built into them, Algeria's oil minister said Tuesday.
Algeria is currently prequalifying companies to bid for 15 new oil and gas blocks in the country's seventh licensing round expected to be held later this year.
Russia's OAO Gazprom (GAZP.RS) is one of 64 companies, which have asked to be prequalified for the round, Algerian Oil Minister Chakib Khelil told reporters on the sidelines of an oil conference in London.
But Khelil added that "we don't give preference to NOCs (national oil companies)" and that both private and state-controlled oil companies "from all over the world" were welcome.
Khelil also said that a windfall oil profits tax that was introduced as part of a revised 2006 hydrocarbons law would not apply to the new contracts, which would already have a mechanism built into them to adjust for changes in the oil price.
"The windfall profit tax doesn't apply," to contracts drafted under the new hydrocarbons law, Khelil said. "Contracts under the new law, (the) share of benefits will adapt depending on prices rising and lowering."
The new tax took effect last year and levies between a 5% and 50% tax on companies - depending on their output - when the price of Brent crude oil rises above $30 a barrel.
Anadarko Petroleum Corp. (APC), the largest foreign operator in Algeria, has been locked in a dispute with the Algerian government over the tax, which it said would cost the company $450 million in lost revenues a year. Anadarko's Chief Financial Officer Al Walker said in a conference call in March that he didn't expect a resolution to the dispute was likely this year either.
Despite tightening terms and a deteriorating security climate, the licensing round is expected to attract significant interest as many still consider Algeria relatively unexplored, while the country's oil sector is open and welcoming compared to most other oil producers in the Organization of Petroleum Exporting Countries.
Algeria, an OPEC member, produces around 1.45 million barrels a day of oil and plans to raise that to 2 million by 2010.