The Hydrocarbon Law 05-07

The Hydrocarbon
Law 05-07
2013
The purpose of this presentation is to outline
the main changes and additions made,
notably, to the upstream activities by the
amendments of the hydrocarbon Law 05-07,
In prospecting activites
I
Increase of prospection period,
II Introduction of a preference right,
III
Prospecting expenditures considered as
research investments.
I
Increase of prospection period
Before amendment
ans
22years
After amendment
2 years
2 years
2 years
Possibility of extension for a maximum of 2 years.
II
Introduction of a preference right
A right of preference is given to the
person who carried out prospecting
activities in selected area.
III
Prospecting expenditures considered
as research investments.
Prospecting
expenditures
will
be
considered as research investment after
approval.
Research and Exploitation activites
1
Contractual period,
5
2
Area relinquishment,
6
Competitive bidding,
3
fortuitous or unexpected
discovery,
7
Sonatrach participation,
Unitization,
8
Early production,
4
Transfer of interests
1
Contractual period…
1.1 - Conventional hydrocarbons case,
Research period.
1er Phase
2ème Phase
3ème Phase
Before amendment
3 years
2 years
2 years
After amendment
3 years
2 years
2 years
6 months extension,
2 years
2 years to delineate discovery
1
…Contractual duration
1.1 - Conventional hydrocarbons case,
Exploitation period.
Before amendment
32 – (7) = 25 ans/y
5 ans/y
After amendment
25 ans/y
5 ans/y
+5 years to natural gas.
+ duration of research period not utilized.
1
…Contractual period…
1.2 - Unconventional hydrocarbons case,
Research period : 11 years.
1er Phase
3 ans/y
2ème Phase
2 ans/y
3ème Phase
2 ans/y
Pilot phase
4 ans/y
1
…Contractual period
1.2 - Unconventional hydrocarbons case,
Exploitation period.
5 ans/y
40 years for gas.
30 years for liquids.
5 ans/y
5 ans/y
5 ans/y
2
Rendus
de surface.
Relinquishment
Conventional hydrocarbons :
Relinquishment rate is specified in the contract.
Unconventional hydrocarbons:
Relinquishment terms and conditions are fixed in
the contract.
Preference right:
may be given to the contractor who made
relinquishment surfaces or geological horizons, if
they are put in competitive bidding.
3
Unexpected discovery
The contractor is entitled to an unexpected
discovery made during the implementation of
the development plan within the geological
levels included in the development plan.
4
Unitization
Possibility for commercial discoveries that
extend over free perimeters, to include that
extension.
5
Transfer of interest
The ownership transfer of a company to its
wholly owned subsidiaries is exempted from
the transfer fee of 1%.
6
Competitive bidding
Criterias for offers selection are defined by
ALNAFT for each perimeter.
7
SONATRACH participation
Prior to competition process, SONATRACH
provides ALNAFT its rate of participation as
well as the manner and conditions for
investment financing research (specified in the
contract).
8
Early production
Conventional
HC
:
Early
production
authorization for a maximum of one 1 year
(preparation of POD).
Non-conventional HC : For the pilot phase,
early production authorization (maximum 4
years).
Supplying the domestic market
1
2
Supplying the domestic market
in liquids
Supply the domestic gas market
1
Supplying domestic market
in liquids
Contribution to the domestic market needs :
Supply conditions specified in the contract.
The selling price : “base price” notified by
ALNAFT cf. Articles 90 and 91 of HC Law.
2
Supply the domestic gas market
Contribution to the domestic market needs :
Maximum rate and modalities & conditions are
defined in the contract.
The selling price : Average volume weighted
prices of Algerian gas exports contracts
(contractor).
Fiscal regime
1
Area Tax
2
Royalty
3
Petroleum revenue tax (PRT)
4
Complementary income tax
5
Transfert Right
6
Flaring tax
1
Area Tax
Unconventional HC R&E Perimeters : Zone A tarifs (lowest).
Pilot phase : Third stage tarif.
Extension of research period : Rate of the exceptional extension.
2
Royalty
Unconventional HC : The rate is 5%.
Exploitation perimeters located in weakly
explored areas, with complex geology and/or
lack of infrastructure : The rate is (5%).
3
PRT…
To calculation purpose, the R1 & R2 are défined as :
PRT Rate : Calculated on the basis of the
profitability of the project and not on sales.
3
…PRT
R1 ≤ 1
Taux
TRP
R1>1 et R2<1
R2 ≥ 1
Cas 1
Cas 2
Cas 3
H.N.C
20%
30%
20%
10%
20 + 50 x R2 30 + 40 x R2 20 + 50 x R2 10 + 30 x R2
70%
cas1: Any périmeter with maximum
daily production < 50 000 bep,
70%
70%
40%
Cas 2 : Any perimeter with maximum
daily production ≥ 50 000 bep.
Cas 3 : Perimters located in weakly explored areas,
with complex geology and/or lack of infrastructure.
4
Complementary income tax
Each person participating in the contract is subject to an
additional income tax at the rates set out in the table
below :
Taux
ICR
Cas 1
Cas 3
H.N.C
R2 ≤ 1
19%
19%
19%
R2 ≥ 1
80%*
80%*
80%*
* Applicability of the rate 80 % when the project profitability > 20%.
5
Transfert Right
Any transfer of rights and obligations in a contract :
payment to the public Treasury, by the transferor,
(1%) of the value of the transaction.
The transfer of a company to its wholly owned
subsidiaries and directly: Exemption from payment.
6
Flaring tax…
Any flaring authorization : payment to the public
Treasury a tax fixed at 8,000 DA per thousand Nm3.
Perimeters located in isolated areas, characterized
by a lack or absence of infrastructure for recovery
gas: Specific Pricing.
6
…Flaring tax
Are excluded from the payment of this tax:
-The quantities flared during the startup of the
facilities.
-The quantities flared during the research period
when testing exploration and/or appraisal wells.
Others provisions
Any contractor party to a R&E contract with
ALNAFT, may benefit, through an avenant to the
contract, the conditions applied to unconventional
hydrocarbons.
The parties to an association contract for which no
production is reached at the date of publication of
the amendment (24 February 2013) may ask for the
new provisions under a new contract.