US oil companies face tough time in Algeria-oilmin http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-11-30T225344Z_01_N30471560_RTRIDST_0_ALGERIA-OIL-JOINTVENTURES.XML&rpc=66&type=qcna
Thu Nov 30, 2006
By Chris Baltimore
WASHINGTON, Nov 30 (Reuters) - It will be tough for U.S. oil companies to compete with Chinese and Indian counterparts for oil deals in Algeria and other African nations, Algeria's oil minister said on Thursday.
Chinese and Indian oil companies -- some of them state-owned -- are hot on the trail of deals both in Algeria's upstream and downstream sectors, and it will be "very tough" for U.S. companies to compete, Algeria's Energy and Mines Minister Chakib Khelil said.
At the same time Algeria is introducing tougher investment terms for energy multinationals.
"The challenges for U.S. companies are going to be very tough in the future because now we have two big countries -- India and China -- who are seeking to penetrate lots of these markets," Khelil told conference attendees. "I'm concerned about the U.S. companies," Khelil told reporters later. "They have to compete."
U.S.-based Anadarko (APC.N: Quote, Profile , Research) is the biggest foreign operator in Algeria. Others include Royal Dutch Shell (RDSa.L: Quote, Profile , Research), BP (BP.L: Quote, Profile , Research), BHP Billiton (BHP.AX: Quote, Profile , Research) (BLT.L: Quote, Profile , Research), ENI (ENI.MI: Quote, Profile , Research) and Hess Corp. (HES.N: Quote, Profile , Research).
Asked by reporters how U.S. companies can compete with state-owned Chinese companies with access to government coffers, Khelil said perhaps the U.S. government should offer a pool of money to help U.S. oil companies win foreign deals.
"You shouldn't be talking to me," Khelil said, but instead to Bush administration officials.
"Tell them, 'look, make us a big fund for oil companies, American companies, to help them move into these countries,'" he said. Algeria, for decades a Soviet-style command economy, began to liberalize its power sector in 2002 and has permitted foreign participation in upstream energy ventures since the 1980s, while preserving a dominant role for state energy giant Sonatrach.
But this year Algeria reversed a hydrocarbons law passed with Khelil's backing in 2005 that was meant to overhaul the oil and gas industry and turn Sonatrach, Africa's biggest company by revenue, into a purely commercial entity.
A new law passed by Algeria's parliament grants Sonatrach at least 51 percent share in every oil and gas exploration contract awarded to foreign companies.
U.S. companies should offer joint-venture deals with Algerian oil companies outside Algeria, Khelil said
"We have passed the stage where we're looking for attracting companies into Algeria," he said. "We would like to see joint ventures with U.S. oil companies in other countries."
U.S. companies have been slow to extend such offers, Khelil said, even though Sonatrach has partnered with other international oil companies off their home turf. He cited a joint project with Italy's ENI in Mali.
A tax on windfall foreign oil company profits that could earn Algeria an extra $1 billion in 2007 could take effect as soon as this week, he said, once it is published in an official government gazette. "Once published we start applying it," he said.
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