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International oil companies (IOCs) operating in Algeria have been increasingly vocal on the need to improve contract and fiscal terms, if the north African country wants to remain attractive and address serious supply and revenue issues at the same time. With the new Sonatrach team saying it wants a more open cooperation with foreign partners (MEES, 23 December 2015), IOCs will no doubt voice their concerns. But this is not the only problem.
Despite its huge reserve potential, Algeria is also known for its bureaucracy, lengthy procedures and unpredictability in applying contractual terms. This is impacting on operational efficiency, and on IOCs’ budgets as a result, especially as lower oil prices have led most to reduce their upstream spending. This has been exacerbated since the corruption probe in 2010 that saw the removal of Sonatrach’s top management team, which created multi-year delays in sanctioning and delivering projects.
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