Algeria tightens rules for foreign investment

Algeria plans to take a majority stake in any future investment project involving foreign capital, Prime Minister Ahmed Ouyahia said yesterday, outlining a measure which already applies to much of the oil and gas sector. "Regarding investment projects involving foreign capital Algeria intends to take a majority of the capital in accordance with its national interests and means," said a statement from the prime minister's office. It did not say when the measure would take effect nor did it define what types of investment the measure would apply to.

In the energy sector, state energy conglomerate Sonatrach has the right to a 51 per cent stake in any exploration and production and downstream activity. The north African country of 34 million is an important oil and gas supplier to Europe. Outside of the oil and gas sector, foreign investors at present can own a majority stake in their Algeria ventures. Until recently, some of these foreign investors could repatriate 100pc of their profits.

The main non-energy foreign investors are Egypt's Orascom Telecom, Orascom Construction Industries and Qatar Telecommunications.

Analysts said yestereday's statement appeared to be in line with comments made on July 26 by President Abdelaziz Bouteflika in which he attacked poor management of foreign investment and said he had been disappointed by its results. Speaking to local government officials, Bouteflika said weaknesses in the implementation of economic policy had allowed some foreign investors to profit at Algeria's expense and not reinvest earnings in the country.

Africa's second-largest country is struggling to reform a Soviet-style command economy dependent on oil and gas, dominated by loss-making state banks and blighted by red tape, corruption, inadequate access to credit and a weak private sector. Yesterday's statement marks a further tightening of the investment regime in Algeria following the imposition of a requirement on investors last month to reinvest locally a part of their profits to the value of any tax breaks they received. Starting this year, investors have four years in which to make the reinvestment, and those which do not comply will have to repay any tax breaks and be subject to a fine.

Guld-daily

Sonatrach declares not to be affected by EU energy plans

Algeria reiterated on Saturday it is not concerned by European Union's proposals to end the monopoly on its gas and electricity market, saying it aims to remain a major supplier to Europe.

The comments by Mohamed Meziane, Chief Executive Officer of state-owned energy firm Sonatrach, came a week after Energy and Mines Minister Chakib Khelil said the EU's plans would not affect his country's state-owned oil and gas firm.

"Until now, we see nothing indicating that the plans would affect Sonatrach. We need to wait and see the regulation which will be adopted," Meziane told state radio. "Sonatrach wants to be present in supplying the European gas market, which is our natural market," he added.

The European Union executive this month adopted proposals aimed at forcing big utilities such as Germany's E.ON and Electricite de France to separate power generation from their distribution networks.

The new rules will also bar foreign firms from controlling European energy networks unless they play by EU rules and their home country reaches an agreement with Brussels, Commission President Jose Manuel Barroso has said. Algeria is a major supplier of gas to Europe, particularly Spain, Italy and France. Its current output is estimated at 62 billion cubic metres per year, and is expected to reach 85 billion per year by 2015.

Reuters

Sarkozy sounds out basis for Mediterranean Union

French President Nicolas Sarkozy has stepped up efforts to gain support for his idea of a 'Mediterranean Union' in a visit to Algeria and Tunisia last week. However, there are many obstacles on the way to its realisation, scheduled to take place in 2008.
On his visit to Algeria and Tunisia last week, Sarkozy began to test the water for closer co-operation between southern European and North African states. Talking to Tunisian newspaper Assbah, he said that his plans for a Mediterranean Union had received "a warm welcome by our Mediterranean partners within the EU and by countries of the Southern Mediterranean".
The French president had floated the idea of a Mediterranean Union during his election campaign, before coming to office in May this year. However, it remains unclear exactly what shape it will take and how the already existing Euro-Mediterranean relationship can be "beefed up".
According to Sarkozy, five North African countries (Morocco, Algeria, Tunisia, Mauritania and Libya) and five member states (France, Spain, Italy, Portugal and Malta) are intended to be at the core of the initiative, which should be governed by a permanent council, similar to the Council of Europe. Its focus would be on organised crime and terrorism, sustainable development, illegal immigration and energy security.
The issue of energy supply will also feature high on the agenda of the upcoming French-Algerian meeting in November. France is offering a transfer of nuclear-energy technology for civil use, while Algeria, in return, would grant access to its gas supplies. In an interview with Algerian daily El Watan, Sarkozy said that he supported a rapprochement between the French-owned energy companies GDF, Suez and Total and the Algerian Sonatrach.
However, the Euro-Mediterranean Partnership and the so-called Barcelona Process, in place since 1995, have already failed due to low ambitions from the EU's side and a lack of willingness from the EU's southern neighbours to co-operate with each other.
Meanwhile, French Prime Minister Fillon also promoted the idea of a Mediterranean Union on his visit to Italy on 13 July. He said that France, Italy and Spain intended to work on the initiative together. Fillon stated: "There is an urgent need for a large cooperation project for more security and more prosperity."
Sarkozy will first have to convince France's European partners, such as Italy and Spain, to join the initiative. The Commission in particular, which has been eager to underline the equal footing of the EU's partners to the East and South in its re-vamped Neighbourhood Strategy , is unlikely to endorse the plans.

Criticism was also raised by Turkey, which views this initiative as a means to stop the country from realising its EU-membership bid. The US may also fear losing its predominant influence in the region.
Euractive

Algeria and Nigeria seek Europe's support for trans-Saharan gas pipeline

Algeria and Nigeria sought European support Monday as they laid out plans for a trans-Saharan gas pipeline that could supply the EU with 6 percent of its future gas needs. Europe currently depends on Russia for up to two-fifths of its gas and is seeking new sources and new routes as it worries about a growing reliance on oil and gas imports.

Algerian and Nigerian state-owned gas companies Sonatrach and NNPC want to build a US$10 billion (€7.36 billion) pipeline to bring another 20 billion to 30 billion cubic meters of gas to European consumers — mostly in Spain and Italy — starting as early as 2015.
But the European Union's energy chief, Andris Piebalgs, was reluctant to promise much beyond warm words for the project, saying it was possible the EU could allocate funding — but money could also come from the private sector. "We could encourage European financial institutions to look toward the project," he said.

Algeria, Nigeria and their neighbor Niger promoted the event in Brussels to seek future customers and investors. Algeria and Nigeria currently provide western Africa with gas and turn some into easier-to-transport liquefied natural gas. But they are also keen to sell to wealthy European markets if they can get the project up and running.

The 4,300-kilometer trans-Saharan gas pipeline would run from southern Nigeria, through its northern neighbor Niger to Algeria and then under the Mediterranean Sea to Europe. Plans are at an early stage following viability studies.

IHT