ALGERIA - Alnaft.

Under the 2005 hydrocarbons law, Sonatrach was no longer the sole agency in charge of the E&P sector. Formed in its place is Alnaft (Agence Nationale pour la Valorisation des Resources en Hydrocarbures). Alnaft, an offshoot of the Energy and Mines Ministry, is headed by Sid Ali Betata who on Dec. 8, 2006, was quoted as saying: "Staffing [of Alnaft] is almost complete and recruitment is underway for the remaining positions. 2007 will be the year Alnaft effectively takes over the public power prerogatives targeted by the new law".

Alnaft will award and regulate oil and gas E&P contracts. MEED quoted Betata as saying: "Many of the application texts have been finalised and others are with the government secretary-general to be finalised". Alnaft will handle the seventh international oil and gas licencing round.

In parallel, a new regulatory authority has been established to oversee contract compliance. Also attached to the Energy and Mines Ministry, this is called Agence Nationale de Controle et de Regulation des Activites dans le domaine des Hydrocarbures.

The hydrocarbons law introduced a sliding scale of royalties and taxes, making them less onerous for areas considered less prospective. The main oil income tex under the new law is also applied on a sliding scale, from 30% up to 70%, replacing the erstwhile minimum of 42% and the prevailing rate of 85%. Again, this encourages the development of marginal fields.

The October 2006 amendments did not apply to the right of IOCs to take a majority stake in downstream projects. Sonatrach is still proposing to allow IOCs to take a majority stake in its proposed greenfield petrochemicals projects and in its landmark gas-to-liquids project in Tinhert.

Sonatrach's final restructuring phase was announced in February 2006 with the creation of two main units: the Division for Co-ordination of International Group Activities (INT) will be in charge of "developing the policies, strategy and monitoring of the implementation of development of all activities abroad" (see Part 4 in OMT 8); and the Central Division for Technical Co-ordination and Development (JEC) will take charge of "development of the strategy and policies of the Group for studies, engineering, implementation and management of investment projects".