Total, Sonatrach End Dispute, Agree New Terms
Algeria’s state energy company Sonatrach and French major Total said they had signed April 10 a "comprehensive agreement strengthening the existing partnership between the two companies."
The announcement comes on the eve of a European Union-Algerian energy summit that will discuss greater future inward energy investment in Algeria, which the host country deems so far inadequate.
The agreement enables Sonatrach and Total to expand their partnership by progressing new upstream projects – notably with a new contractual framework for the Timimoun project – plus continued joint operations for the TFT field under a new agreement and joint development of a new project, as well as the amicable settlement of outstanding differences between the two companies.
The accord also enhances co-operation in other areas including exploration, petrochemicals, solar and international developments. The agreement underscores the willingness of Sonatrach and Total to continue to work together to further develop and strengthen their historic partnership.
The two had been locked in two tax disputes; the first one having been arbitrated in Sonatrach's favour last year. The expectation was that the second case, in which Spanish Repsol is also a partner, would also go in Sonatrach's favour.
Total signed its first agreement to develop Timimoun in 2009, along with Cepsa, Sonatrach and the Algerian oil and gas development agency Alnaft. It was then expected to produce 1.6bn m³/yr.
Algeria seeks more investment
Algeria's minister of foreign affairs and international co-operation Ramtane Lamamra called on the European Union to get more involved in terms of direct investments in Algeria to "balance" the economic relations between the two parties.
"Algeria has regularly supplied Europe with energy over more than four decades, without flinching. In return, it expects from the European partner to recognise this position and thus to heighten this strategic relation to higher levels of mutual trust," he told a news conference in Algiers April 9, with visiting EU High Representative for Foreign Affairs and Security Policy, Federica Mogherini, who is also a European Commission vice-president.
Aside from tax issues, some other investors have been put off by the contract terms weighted so heavily in the host's favour that licensing rounds drew very little interest despite the size of the reserves.
Algeria's energy minister Noureddine Boutarfa is due in Brussels April 11 to meet EU energy and climate change commissioner Miguel Arias Canete.
William Powell