In 1956 the first commercial quantities of oil were discovered in Algeria and, a few years later in 1963, the state-owned oil company, Sonatrach, came into existence. Half a century later, Algeria is now the ninth-largest gas producer and the sixteenth largest oil producer in the world. In 2013, Sonatrach's export revenue exceeded US$ 63 billion, thus making it the largest company in Africa. The legal framework governing oil and gas activities in Algeria has developed and evolved considerably since oil was first discovered. Currently, the cornerstone of Algerian hydrocarbon-related legislation is Law 05-07 of April 28 2005, which has been amended and supplemented by Ordinance 06-10 of July 29 2006 and by Law 13-01 of February 20 2013 (the Hydrocarbon Law). The Hydrocarbon Law provides a comprehensive legal framework for hydrocarbon-related activities. One of the defining characteristics of the system created through the Hydrocarbon Law is that Sonatrach holds a majority shareholding in all exploration and production projects in Algeria.
After providing an overview of the situation with regard to oil and gas resources in Algeria, we will discuss the history of the legal framework governing oil and gas activities. We shall then present an analysis of the legal framework currently applicable to hydrocarbon-related activities in Algeria, including a description of the key players in the industry, the most prominent of which is the company Sonatrach, as well as the applicable tax regime. We will also focus on the specificities of the recent amendments to the Hydrocarbon Law that came into force in 2013, creating more attractive contractual and financial conditions for exploration and production activities with respect to unconventional reserves. Lastly, we will reflect on the future development of Algeria's oil and gas activities.
View full article, “Algeria,” in African Upstream Oil and Gas, A Practical Guide to the Law and Regulation