Algeria adopts a new hydrocarbon law that is controversial

In the making since 2017, the new Algerian draft law on hydrocarbons was adopted on Sunday 13 October by the Council of Ministers. A legislative system that is more favourable to foreign interests and that does not go well with public opinion.

The new text, which, in the words of Petroleum Minister Mohamed Arkab, is characterised by more « flexibility », is a response by the authorities to attract more foreign investors into the oil sector (1.2 million barrels/day), which accounts for more than 95% of the country’s export earnings and contributes half to the state budget. In particular, the provisions of the new law should make it possible to significantly strengthen offshore operations, an activity in which Algeria is just beginning and for which it will need experienced partners with the necessary technology and financial resources. Quoted by the local media, Mustapha Hanifi, Vice-President Business and Marketing of the state-owned oil and gas group Sonatrach, explained that foreign partners had been asked « to assess the strengths and weaknesses and also to measure the attractiveness of the new law », while adding that it was « national competences that had drafted this law ». Moreover, in order to preserve national sovereignty, the so-called 51/49% rule governing foreign investment in Algeria (non-Algerian operators cannot be in the majority in the capital of a company, NDLR), has been maintained for « all contracts, national wealth being the property of the national community which must be exploited for its benefit, in an optimal way », specified the director of the Algerian oil company.

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Hydrocarbons, a crucial sector for the Algerian economy
Source : Banque mondiale

However, these precautions did not convince public opinion, which was very upset against the adoption of the new bill. On Sunday, October 13, throughout the country, thousands of Algerians took to the streets to protest against this text, which they consider harmful to the country’s interests.