Hydrocarbons law
Draft project

Revised Version as of 15 Dec. 02
 

The president of the Republic

Considering the constitution, in particular its Articles 12, 17, 18, 119, 122-24 and 126;

Considering the Ordinance n° 95-04 of 16 Chaabane 1415 corresponding to January 21st 1995 on settlement of disputes related to investments between states and nationals of other states;

Considering the Ordinance n° 95-04 of 16 Chaabane 1415 corresponding to January 21st 1995 dealing with the agreement setting out the international agency for investments warranty;

Considering the Ordinance n° 95-05 of 19 Chaabane 1416 corresponding to January 10th 1996 on UN. Sea convention;

Considering the Ordinance n° 66-154 of June 08th, 1966 amended and supplemented, dealing with the civil procedure code;

Considering the Ordinance n° 66-155 of June 08th, 1966 amended and supplemented, dealing with the code of criminal procedure;

Considering the Ordinance n° 66-156 of June 08th, 1966 amended and supplemented, dealing with the penal code;

Considering the Ordinance n° 75-58 of September 26th, 1975 amended and supplemented, dealing with the civil code;

Considering the Ordinance n° 75-59 of September 26th, 1975 amended and supplemented, dealing with the commercial law;

Considering the Ordinance n° 75-74 of November 12th, 1975 on the establishment of the general real estate register and the institution of the land book;

Considering the Ordinance n° 76-101 of October 23rd, 1976 amended and supplemented, dealing with the maritime code;

Considering the Ordinance n° 76-80 of December 09th, 1976 amended and supplemented, on the direct taxes and assimilated dues;

Considering the Law n° 97-07 of July 21st, 1979 amended and supplemented, on customs code;

Considering the Law n° 83-03 of February 5th, 1983 related to the preservation of environment;

Considering the Law n° 83-13 of July 02nd, 1983 amended and supplemented related to workman site claims and professional accidents;

Considering the Law n° 83-17 of July 16th, 1983 amended and supplemented, on water code;

Considering the Law n° 84-12 of June 23RD, 1984 amended and supplemented, on the general system of forests;

Considering the Law n° 84-17 of July 07th, 1984 amended and supplemented, related to the finance laws;

Considering the Law n° 86-14 of August 14th, 1986 amended and supplemented, related to the prospecting, research, exploitation and transportation by pipeline of hydrocarbons;

Considering the Law n° 87-03 of January 27th, 1987 on territory land servicing;

Considering the Law n° 88-07 of January 26th, 1988 related to health, safety and professional medical care;

Considering the Law n° 90-08 of April 07th, 1990 related to the commune code;

Considering the Law n° 90-09 of April 07th, 1990 related to the Wilaya code;

Considering the Law n° 90-10 of April 14th, 1990 amended and supplemented, related to the mint and credit;

Considering the Law n° 90-11 of April 21ST, 1990 related to the professional relations;

Considering the Law n° 90-22 of August 18th, 1990 amended and supplemented, related to the trade register;

Considering the Law n° 90-25 of November 18th, 1990 amended and supplemented, related to land orientation;

Considering the Law n° 90-29 of December 1st, 1990 related to land rehabilitation and urban zoning;

Considering the Law n° 90-30 of December 1st, 1990 related to the estate law;

Considering the Law n° 91-11 of April 27th, 1991 setting the rules related to expropriation because of public interest;

Considering the Ordinance n° 95-06 of Chaabane 23, 1415 corresponding to January 25th, 1995 related to land competition;

Considering the Ordinance n° 95-07 of Chaabane 23, 1415 corresponding to January 25th, 1995 related to insurances;

Considering the Ordinance n° 96-22 of Safar 23, 1417 corresponding to July 9th, 1996 related to punishment against violation of the exchanges legislation and regulations and capital assets flows to and from foreign countries;

Considering the Law n° 98-04 of Safar 20, 1419 corresponding to June 15th, 1998 related to the preservation of the cultural property;

Considering the Law n° 01-10 of Rabie Ethani 11, 1422 corresponding to July 3rd, 2001 related to the mining law;

Considering the Law n° 01-16 of 04 Chaabane 1422 corresponding to October 21st, 2001 setting the approval of the Ordinance 01/03 of   August 20Th, 2001 related to the investment development;

Considering the Law n° 01-17 of 04 Chaabane 1422 corresponding to October 21st, 2001 setting the approval of the Ordinance 01/04 of   August 20Th, 2001 related to the organisation, management and privatisation of economic public enterprises;

Considering the Law n°01-02 of the 22 Dhu El Kiida 1422 Corresponding to February 2, 2002 setting the law related to electricity and gas distribution.
 

Now Then,

After recommendation of the council of state;

After adoption by the national popular assembly;

Promulgate the law which content is as follows:

Chapter I
General provisions and definitions

Article 1:

The subject of hereby law is to define:

• The legal system of the activities of research, exploitation, transportation by pipeline, refining, hydrocarbons processing, marketing, storage, oil products distribution as well as the works and facilities enabling their performance.
• The institutional frame allowing the implementation of the activities above.
  The establishment of this institutional frame induces the implementation of such principle as mobility and adjustment that are state performance specifications, helping, thus, to Restore to this latter those prerogatives of its exerted once by SONATRACH S.P.A.
  Hence, relieved from a mission, who contradicts and hinders its natural economical vocation, SONATRACH S.P.A. shall under this same law herein take advantage from an increased reinforcement and from an ongoing extension of its fundamental role in wealth creation for the benefit of the national community.
•   The rights and obligations of such persons performing one or several activities mentioned above.

Article 2:

Hydrocarbons substances and resources, whether discovered or not, located in the soil and subsoil of the national territory and maritime spaces coming under the national sovereignty are national community properties of which the state is the emanation.
These resources should be exploited by the use of efficient and rational means in order to achieve an optimal conservation, while complying with the environment protection rules.

Article 3:

The activities referred to in Article-1 above should be among the vehicles that help foster the use and training of national human resources and shall, therefore, benefit from incentive measures as provided for by the law herein.

Article 4:

-Under the meaning assigned by the present law, we understand by:

"Oil upstream": research and exploitation operations.

"Prospecting Licence/Permit": permit issued by the Agency for the Hydrocarbons resources valorisation which entitles its holder, upon its demand, the non exclusive right to carry out prospecting works in one or several Perimeters.  

"Oil downstream": operations of transportation by pipeline, refining, transformation, marketing, storage and distribution.

"Barrel": a crude oil volume, which under normal pressure and temperature conditions equals 158,9 litres.

"Barrel oil equivalent" (b.o.e): liquid or gaseous hydrocarbon volume which 1.400.000 kilocalories energy value equal that of a crude oil barrel.

"Gathering and injection systems": buried or above-ground flow lines networks, of various diameters that help convey hydrocarbons to a field, between wells and processing and Storage installations within the field, or dispatch the fluids between the reinjection facilities and injections wells.
Are also considered gathering flow lines buried or aboveground pipes that help it convey hydrocarbons between inter-fields Storage facilities and the transportation by pipeline networks. 

"Conservation": Fields exploitation method meant to ensure the highest possible production level compatible with the highest possible reserves recovery rate, at the most reduced cost possible.   
   
"Marketing": hydrocarbons and oil products acquisition and sale.

"Assignment": a deed by which the Minister in charge of hydrocarbons authorises the Assignee to build and operates for a limited period of time Transportation by pipeline works provided this latter implement the obligations contained within said deed, and that are part of his duty.

"Assignee": any Person to whom transportation by pipelines has been assigned, at its own risks and expenses,

"Contracting body/Person": any entity(s) signatory (Es) to the contract of research and exploitation or the exploitation contract.

"Research and/or exploitation Contract, or Contract": contract that allows it the performance of Research and/or Exploitation activities in conformance with the present law. 

"Association Contract": contracts of research and/or exploitation entered into by and between SONATRACH SPA and one or several foreign partners under the law 86/14 above.

"Cycling": operation related to wet gas fields and which consists in the reinjection of the produced gas after liquid fractions extraction (Condensate) and LPG eventually in order to increase the recovery rate of those liquid fractions.

"Distribution": Any oil products marketing activity, whether wholesale or retail.

"Maritime space": The territorial waters as well as the continental shelf and the exclusive economic area, such as defined by the Algerian legislation.

"Exploitation": all works to allow the hydrocarbons extraction and Processing be in strict accordance with the transportation and marketing specifications.

"Exploration": prospecting works, as defined hereunder, as well as drillings set to bring hydrocarbons fields into notice.

"Force Majors": any proved unforeseen, unpreventable and external act or event over which either party that claims the occurrence has no control, and which makes it unable to this latter the momentary or definite performance of one or several of its obligations under the Contract.

"Associated gas": gaseous hydrocarbons in whatever form associated to a reservoir containing liquid hydrocarbons.

"Wet Gas": Gaseous hydrocarbons whose involved quantity of components fraction is sufficient to allow it becomes liquid at ambient pressure and temperature to justify the realisation of such liquids recovery unit.

"Natural Gas or Gas": all gaseous hydrocarbons produced from wells, including wet gas and dry gas that might be associated or not to liquid hydrocarbons, as well as, the residue gas accruing from natural Gas liquids extraction.
The specifications of such Gas should be complying with the Algerian sale Gas specifications.

"Non Associated Gas": all gaseous hydrocarbons whether wet or dry which:

• Are wellhead gases that contain more than 100  Tcf (Trillion cubic-feet) of Gas per crude oil barrel each, or natural Gas liquid produced by said reservoir.
  
• Are produced from a reservoir said to be Gas bearing only, even if this latter is located in a well bore whereby crude oil is also produced internally through a further casing or tubing string.
  

"Liquefied Petroleum Gas" (L.P.G.): hydrocarbons whose basic content is a Butane and Propane mixture, which is not liquid under normal conditions.  

"Dry Gas": gaseous hydrocarbons essentially composed of Methane, Ethane and inert gases.

"Deposit/Field": geographic area whose subsoil is formed by one or several stacked reservoirs, and which surface is, according to the geological and engineering surveys results, distinct and segregated from one or many other reservoirs.

"Commercially Exploitable Field": A hydrocarbons field that the Contracting body commits to develop and set in production pursuant to the contract terms and conditions. 

"Hydrocarbons": liquid, gaseous and solid Hydrocarbons, in particular, bituminous sands and oil shale’s.

"Liquids Hydrocarbons": crude oil, natural gas liquids and liquefied petroleum gases.

"Price Indexing": Formula contained in each contract to account for escalation consideration, in order to maintain the original value. The basic indexes will be the ones effective right at the beginning of the year the present law being published.

"Days": calendar days.

"Domestic Market": all hydrocarbons required to cover national Energy and industrial needs, except the Gas meant for Fields’ reinjection and cycling.

"Operator": any person entrusted with the taking over of oil operations.

"Parcel": a square of eight (08) kilometres per side corresponding to a square of five (05) minutes per side in terms of U.T.M. co-ordinates.

"Perimeter": A limited area of the energy mining estate related to Hydrocarbons composed by one of several Parcels.

"Contracting Area": A limited area of the Energy mining estate related to hydrocarbons composed by one of several Parcels such as defined as the Contract comes in force.

"Exploitation/Operation Area": The Contracting Perimeter minus the perimeters subject to relinquishment such as provided for by Articles 35, 36, and 37.     

"Person": any foreign body corporate, as well as, any legal entity of private or public Algerian right, having the technical and financial capabilities to perform an activity as provided for by the Present law and regulations set out for its performance.
With respect to the activities related to retail sale, physical Persons are privy to this notion.

"Point of measurement": The exploitation area provided location whereby extracted hydrocarbons quantities will be determined.

"Third- Parties Free access principle": a policy through which any Third-Party may benefit from a right to access to transportation and storage facilities within the limits of available capacities in return for the payment of a non discriminatory fee and provided the concerned products are consistent with the technical specifications attached to those facilities.

"Oil products": all products recovered from Refining operations, as well as, those products recovered from the separation of liquefied petroleum Gases.

"Prospecting": preliminary works to the exploration activity, which comprises the detection of traces proving hydrocarbons existence, especially by the use of geological and geophysical methods, including stratigraphic drillings.

"Refining": operations that crack oil or Condensate into liquids or Gaseous products immediately available.

"Research": all Prospecting and exploration activities.

"Primary Recovery": hydrocarbons reserves extraction by means of reservoir natural pressure or production drainage mechanisms.

"Secondary recovery": extraction of additional hydrocarbons reserves using improved recovery methods such as gas injection and/or water flooding.

"Tertiary recovery": the additional extraction of hydrocarbons reserves unattained through primary and secondary recovery methods, using any of the following enhanced recovery methods, especially: thermal, chemical or miscible ones.

"Enhanced recovery": the use of secondary and/or tertiary recovery methods to increase hydrocarbons reserves.

"Ultimate reserves": Hydrocarbons that can be produced from any hydrocarbons field irrespective of economical factors.

"Reservoir": the porous and permeable portion of a geological structure that contains a distinct hydrocarbons accumulation characterised by a unique pressure system such that the hydrocarbons production of any portion of the reservoir will affect the reservoir pressure as a whole.

"Storage": Surface or underground oil products storage including, in particular, refined products, butane, propane, and liquefied petroleum Gases that allows it to lay out reserves meant to supply the domestic Market for a determined period of time.
The installations enabling such Storage are neither connected with transportation by pipeline, nor refining facilities, or on-site operations, or those concerning the liquefied petroleum Gases separating units.

"Swap": Process enabling the exchange of gas supplies stocks between various producers on the domestic Market.

"Transportation by pipeline system": one or several pipelines transporting the same effluent, including the annexed installations.

"Mining Title": Any deed/instrument stating authority to assume Hydrocarbons Research and Exploitation, which deed assigns  no ownership right over the soil or subsoil.

"Flaring":  Operation consisting in atmospheric burning of the natural Gas for which no outlet or possible onsite uses avail.

"Annual investment trenches": portion of the investment amount consistent with the percentage stated in Article 83 and 87, meant for the calculation of the oil income tax.

"Transformation": operations meant for separating liquefied petroleum Gases, Gas liquefying, petrochemical and Gas chemical.

"Transportation by pipeline": the liquid and gaseous hydrocarbons transportation of oil products and the storage attached to it, excluding the fields gathering and manifold systems and gas networks strictly dedicated to the domestic Market.

"Up lift": percentage by which are increased the annual investment trenches for the oil income tax calculation (TRP). Such "Up lift" percentage covers all operating costs.

Article 5:

The performance of activities set out in Article-1 paragraph-1 above is an act of merchant.
Any person established in Algeria or there having a branch, or duly organised in any other form that allows him be tax liable, may perform any or several said activities provided the provisions of hereby law are observed, along with the trade code and all other legislation or regulations in force.

Article 6:

The Contracting body, party to a research and exploitation Contract or an Exploitation Contract only, or any Hydrocarbons transportation by pipeline assignee  may be entitled to the following benefits and rights:

• Land occupation and supplement rights, land constraints and acquisition, granted according to the law n° 01-10 dated July the 3Rd, 2001 dealing with the Mining Law and the related legislation.
      
• The expropriation pursuant to the law 91-11 of April 27Th, 1991 setting the rules regarding expropriation due for the purpose of the public interest or all amendment  related to it.

The competent authority shall initiate all proceedings necessary to the grant of the rights specified above through the national Agency for the control and regulation of activities pertaining to the Hydrocarbons domain, should a case of transportation by pipeline arise- or, through the national Agency for Hydrocarbons resources valorisation in the event of a research and/or exploitation contract.

All costs inherent to such proceedings and those accruing there from shall be charged to:

• The Contracting body, in case of a Research and/or Exploitation Contract,
  
• The Assignee, in case of a Transportation by pipeline Assignment.
  

Article 7:

Hydrocarbons and oil products import and Marketing on the national territory are free, should the provisions of the law herein be observed.

Any obligation imposed by the State shall induce an allowance chargeable to the Public Revenue Office.
The Hydrocarbons and oil products sale price shall be free on the Algerian Market.

The establishment of a competitive and free market should be held progressively, with the least possible disturbances over the Algerian Market process.

To such effect, within a maximum period of five (05) years after the publishing of the law herein, the Minister in charge of Hydrocarbons shall, in a timely-manner, propose an adjustment of the maximum prices:

• Inlet refinery, for liquid hydrocarbons;
• Inlet separation facilities,  for LPG meant for the domestic Market;
• Ex-refinery, for oil products meant for the domestic Market.

The purpose of such adjustment is to bring into alignment those  prices to conform to the free market  ones.

Except for the price of power supply-related Gas production meant for export, and the Gas price dedicated to feeding transformation units which production is to be exported, and which are free, The five (05) year duration is extended to ten (10) years  for all   Gas used to meeting domestic Market needs, for which the Minister in charge of Hydrocarbons shall propose periodic adjustment of the maximum ex- Gas pipeline prices in order they agree with free Market conditions.

Mechanisms underlying those adjustments, as well as the administration of the equalisation fund meant to ensure a uniform wholesale price all over the national territory for the liquids and Gaseous Hydrocarbons, shall be defined through legal procedures.

Article 8:

The Administration in charge for Hydrocarbons shall take care of the optimal valorisation of the Hydrocarbons national resources.

It has to propose the appropriate Hydrocarbons policy and ensure its implementation once it has been agreed upon.

To such effect, the Minister in charge of Hydrocarbons shall approve contracts of Research and/or Exploitation, as well as, the Transportation by pipeline Assignments through a bylaw.

Article 9:
 
It is established two independent national entities entrusted with the legal personality called Hydrocarbons Agencies:

• A national Agency for the control and regulation of activities pertaining to the Hydrocarbons domain hereinafter designated "Hydrocarbons regulation Authority";
  
• A national Agency for the Hydrocarbons resources valorisation hereinafter designated "ALNAFT".
  
  The organisation-chart and bylaws applicable to both of these Hydrocarbons Agencies will be set through legal procedures.

The Hydrocarbons Agencies will have full independence to the effect of managing their respective sphere of activities, each.

The Hydrocarbons Agencies are not subject to administration applicable rules, especially in matters related to their organisation scheme, management policy and staff status.

The abilities of these Hydrocarbons Agencies are formed in compliance with Article 12 of the law herein.

They avail of proper assets.

They shall make it available a commercial book keeping operation and a distinct balance sheet.

Trade principles are governing their relationships with third parties.

These Hydrocarbons Agencies are administered by a board of directors composed by five (05) members each, including the (01) Chairman. The Chairman and  the board members are appointed by a presidential decree.

Article 10:

The Hydrocarbons regulation Authority shall, in particular, see to it that respect is observed for:

• Technical regulation applicable to activities governed by the present law;
• Regulation related to the implementation of tariffs and Third-Parties' free access principle to transportation by pipeline and storage facilities;
• Regulation related to health, industrial safety and environment;
• Construction specifications book covering the transportation by pipeline and storage facilities;
• Implementation of established specifications and standards based on the best international practise. Said specifications and standards shall be subject to a legal procedure;
• To apply penalties and fines payable to the Public Revenue Office in case of infraction to :
  
  - the technical regulations applicable to the activities governed by the present law;
  - the regulations related to the implementation of tariffs and third-parties' free access principle to transportation by pipeline and storage facilities;
  - the regulations related to health, industrial safety and environment.

It shall, also, take over:

• The study of applications meant for granting Transportation by pipeline and Storage assignments, and make recommendations to the Minister in charge of Hydrocarbons;  
    
• To recommend to the Minister in charge of Hydrocarbons the cancellation of a Transportation or Storage assignment in case of a serious breach/violation to the Assignment contract stipulations, within terms and conditions defined through regulations.
  

Article 11:

The national Agency for the Hydrocarbons resources valorisation (ALNAFT) shall overtake, in particular:

• To promote investments related to the Hydrocarbons Research and Exploitation;
• To manage and update the Hydrocarbons Research and Exploitation data banks;
• To issue prospecting licences;
• To issue call for bids and evaluate offers related to Research and/or Exploitation activities;
• To grant Research Perimeters and Exploitation ones and enter into Research and/or Exploitation Contracts;
• To follow up and control, as a contracting party, the performance of Research and/or Exploitation Contracts, within terms and conditions provided for by the law herein;
• The study and approval of the development plans and their updating on a timely-basis;
• To ensure that the Hydrocarbons resources exploitation and their Optimal Conservation are implemented accordingly;
• The assessment and collection of royalties and its reverting to the Public Revenue Office the first working day following its receipt, after such amount specified in Article-12 hereunder has been deducted;
• To promote information exchange related to the Gas Market;
• To ensure that the oil income tax, and the area tax provided for by chapter VIII of the law herein are paid by the operator as defined in Article 26 hereinafter, as well as, should the case arise, the settlement of taxes related to Gas flaring and water consumption in accordance with Article 49 and 50 herein under;
• To help promote the national industry;
• To foster research and development activities.

Article 12:

Budgets allotment for both (02) agencies specified in Article-9 herein are covered through:

-  One (01%) percent of the royalties proceeds stated in Articles 22, 23 And 81 of the present law;
-  Service fees generated by both of these Hydrocarbons Agencies;
-  Any other proceeds related to their activities.

These revenues are credited to a special fund to be established in compliance with the laws and regulations in force.

The Minister in charge of Hydrocarbons votes the budgets and balance sheets of both Hydrocarbons Agencies.

The Public Revenue Office will avail a redeemable advance payment to allow these agencies carry out their activities during the first sixth (06) months of their inception.

In addition to the financing of agencies provided for hereof, a ten (10%) percent portion of the royalties' proceeds shall be credited to the benefit of local communities.

Said ten (10%) percent allocation shall be rated by legal procedures.

Article 13:
 
Without prejudice to the provisions further stipulated in laws and regulations in force, the activities governed by the law herein shall be conducted in a manner such to prevent all risks that are inherent to them.
 
Article 14:

Under the carrying out of the activities subject of the present law, the most stringent respect should apply to the obligations and prescriptions related to:

• The personnel safety and health;
• Health and public sanitation;
• Main land or maritime environment characteristics;
• Archaeological interests;
• The provisions of the laws and regulations in force related to the environment protection.
   

Article 15:

Any and all person shall, Prior to the carrying out of such activity subject of the law herein, prepare and submit to the approval of the Hydrocarbons regulation Authority an environment impact study and management plan of same duly comprising the description of such environment risks prevention and management measures associated to said activities.
 

Chapter II
 
Oil Upstream
 
On Prospecting, research and exploitation.
 

Article 16:

For Research and Exploitation purposes, the national mining estate related to Hydrocarbons shall be split into four (04) areas called zones A, B, C, D. Such subdivision shall be specified through legal procedures.

There shall be no retrospective areas delimitation change.

The national mining estate related to Hydrocarbons shall be subdivided into Parcels that are the basic unit for the determination of Perimeters, subject to a Prospecting Licence and Research and/or Exploitation Contract.

The Parcels number,  which composes each Perimeter and the geometry of this latter shall be set out through regulations.
The maximum Perimeters sizes per area and the minimum work programs shall be set out through legal procedures.
 

Article 17:

The Prospecting Licence may be granted by the national Agency for Hydrocarbons resources valorisation (ALNAFT) to any person wishing to perform Hydrocarbons prospecting activities over one or several Perimeters. Such Licence is released for a period not exceeding two-(02) years time, according to terms and conditions set through legal procedures.

Article 18:

The Research and/or Exploitation Contract shall take precedence over the prospecting Licence.

Consequently, any Parcel concerned by a Research and/or Exploitation Contract shall be, prima facie, excluded from the Perimeter(s), subject to the Prospecting Licence.

Article 19:

All data and results arising from Prospecting works shall be made available to the national Agency for the Hydrocarbons resources valorisation (ALNAFT) according to procedures set out by regulations.

Article 20:

The Research and/or Exploitation activities shall only be undertaken on the grounds of a mining Title issued exclusively to the national Agency for the Hydrocarbons resources valorisation (ALNAFT) according to terms set out by regulations.

Prior to the carrying out of said activities; any Person shall enter a Contract with the national Agency for the Hydrocarbons resources valorisation (ALNAFT), within terms and conditions provided by this law.

Article 21:

The Research and Exploitation Contract entitles the Contracting body the exclusive right to undertake in a Perimeter defined by and under any such Contract:

• Research activities;
• Exploitation activities, should a discovery being declared commercially exploitable by the Contracting body, and after the national Agency for the Hydrocarbons resources valorisation (ALNAFT) has approved of the development plan related to said discovery.

The Exploitation Contract related to one or several already discovered Fields entitles the Contracting body to the exclusive right to undertake Exploitation activities within the Perimeter defined by such Contract, and according to the development plan agreed upon by the national Agency for the Hydrocarbons resources valorisation (ALNAFT).

With respect to all contract types defined here above, the Contracting body may undertake Research activities within the Exploitation Perimeter and shall apply the use of appropriate recovery method pursuant to Article-2 of the present law.

Article 22:

All Hydrocarbons extracted under a Research and/or Exploitation Contract are Contracting body's property at the measurement Point and subject to royalties, according to the terms and conditions set out by said relevant contract.

Royalties shall be paid in cash.

Article 23:

Royalties are fixed based on Hydrocarbons quantities produced and deducted at the Point of measurement, after onsite processing operations.

Are excluded in the calculation of these royalties Hydrocarbons quantities that are:

• Either used for direct production requirements;
• Or lost before the measurement Point;
• Alternatively, reinjected in the Field(s), provided such Field(s) are part to a sole and same Contract.

The lost or unused Hydrocarbons quantities, excluded in the calculation of royalties, must be restricted to levels technically allowable and proved.

Article 24:

There is no right of property attaching to a soil defined under a Research and/or Exploitation Contract.

Article 25:

Hydrocarbons Fields and wells are real properties but cannot be subject to a mortgage.

Article 26:

Should the Contracting body be more than one person, the Contract shall specify who amongst the Operator is. Any Operator change shall be subject to the prior approval of the national Agency for Hydrocarbons resources valorisation (ALNAFT).

Article 27:

The Research and/or Exploitation Contract is signed by and between the national Agency for the Hydrocarbons resources valorisation (ALNAFT) and the Contracting body.

Said Contract shall be approved through a bylaw by the Minister in charge of Hydrocarbons, and be fully effective and in force at the date said bylaw is published.

Such date is referred to as "effective date" .

The Contracting body and the national Agency for the Hydrocarbons resources valorisation (ALNAFT) are referred to as "Contracting Parties".

All Contract duly signed and approved can only be modified through a Supplementary agreement signed by the Contracting Parties and approved by the Minister in charge of Hydrocarbons through a bylaw.

Article 28:
 
Persons gathered as "Contracting party" may, severally or jointly, assign to each others or to any other person, all or part, of their Contracting rights and obligations.

To be valid, such assignment shall have the prior consent of the national Agency for the Hydrocarbons resources valorisation (ALNAFT) and borne out through a bylaw by the minister in charge of hydrocarbons.

Any assignment shall be subject to a non deductible tax payable by the assignor(s) to the Public Revenue Office, equal to one (1%) percent of the transaction amount, which calculation procedure is to be specified through regulations.

Article 29:

The Research and/or Exploitation Contract is entered upon through a competitive bidding Process pursuant to provisions set out by legal procedure.

Such legal procedure shall define, in particular:

• Criteria and pre-qualification requisites;
• Selection procedures for perimeters bidding;
• bidding conditions;
• Offers evaluation and contracts agreement procedures.

Based on a detailed and warranted account and owing to common interest reasons related to Hydrocarbons policy making, the Minister in charge of Hydrocarbons may waive such provisions.

Article 30:

Research and/or Exploitation Contracts supplied  for each competitive bidding shall be approved by a decision of the Minister in charge of Hydrocarbons.

For each Perimeter subject to a competitive bidding in view of a Research and Exploitation contract agreement, the national Agency for the Hydrocarbons resources valorisation (ALNAFT) shall determine and specify which of the following will be retained as a sole bidding selection criterion, on a case-by-case basis:

• Minimum works program estimate for the first research phase;
• Non deductible bonus amount to be paid to the Public Revenue Office at the contract signature;
• Proposed above the minimum Royalty’s rate fixed by the law herein.

Bids opening shall be public and the contract concluded forthwith with the higher bidder.

Article 31:

With respect to the conclusion of exploitation Contracts related to existing fields, the national agency for the hydrocarbons resources valorisation (ALNAFT) shall proceed onto a two-phase competitive bidding:

• A first so-called technical phase, meant to define the standard technical offer which will underlay the economical offer, and satisfy the criteria set out by the national agency for the hydrocarbons research valorisation (ALNAFT), and which consists, especially, in :
  - Percentage of in site recovery volumes;
  - Production optimisation;
  - Production facilities capacities;
  - Required investment projects lead time;
  - Investments underwritten minimum amount, based on standards costs issued by the national Agency for Hydrocarbons resources valorisation (ALNAFT).
  
• A second so-called economical phase meant to select a bidder. The national Agency for the Hydrocarbons resources valorisation (ALNAFT) shall determine and specify, as soon as the first phase commences, which among any two of the following shall be retained as a sole selection criterion:
  
  -  The  proposed above the minimum Royalties rate fixed by the law herein, or;
  -  The non deductible bonus amount to be paid to the Public Revenue Office at the contract signature.

The economical phase bid opening will be public and the Contract concluded forthwith  with the higher bidder.

Article 32:

The Research and Exploitation Contract shall comprise two (02) time-periods: a Research period and an Exploitation one.

The Research and Exploitation Contract duration shall be of thirty-two (32) years and will comprise:

• Without prejudice to the provisions of Articles 34 and 39 here under, seven (07) years Research period commencing on the date the Contract comes into effect, including a three (03) years initial phase. Such initial phase shall be referred to as first Research phase, and will be followed by  a subsequent second and a third Research phase of  two- (02) years' duration, each;
• An Exploitation period corresponding to the Total Contract duration less the Research period effectively used;
• The maximum thirty-two (32) years duration shall be extended to Any withheld period used in compliance with Article- 39 hereunder;
• For Dry Gas Fields, an additional five (05) years extension will be adding to the Exploitation period.
  

Article 33:

With respect to an Exploitation Contract related to an already discovered Field, the duration period is of twenty five (25) years commencing the date the Contract inures. Such duration is of thirty- (30) year period for a Dry Gas Field.

Article 34:

Pursuant to Article 39 hereinafter, the Research and Exploitation Contract shall be automatically terminated by right and without further enquiry, should the Contracting body fail to advise the commercially of a Field or select a Perimeter.

The Contracting body may ask for an exceptional additional Research period of six-months (06) duration, To allow him complete any Exploration well drilling and/or evaluation which have been currently initiated the last three (03) months prior to the expiration of the Research period. ALNAFT shall grant such extension of time upon Contracting body's justified demand expressed before the end of the research period.

Article 35:

Save Exploitation Perimeters or Perimeters for which Article-39 hereunder applies, the Research and Exploitation Contract Perimeter shall be thirty (30%) percent reduced at the end of the Research period first phase. The remaining Perimeter, excluding the Exploitation ones and those to which Article-39 hereunder applied, shall be thirty (30%) percent reduced at the end of the Research period second phase.

Article 36:

Upon the closing of the research period or the exceptional extension of time defined in Article-34 hereof, the Contracting body shall make it available to the national Agency for Hydrocarbons resources valorisation (ALNAFT), the whole Contracting Area, save the Exploitation Perimeter(s) or the one/those where Article-39 hereunder applied.

Article 37:

The Contracting body may waive, whole or part, of his Contract during the Research period provided he had already fulfilled the conditions and obligations of said Contract and the conditions and obligations arising from the present law and documents considered for its performance.

Article 38:

The selection and delimitation procedures related to:

• Perimeters upon which hereinafter Article 39 shall apply;
• Exploitation Areas;
• Relinquished Perimeters.

Shall be determined through regulations.

Article 39:

In the event the contracting body discovers one or several Hydrocarbons Fields for which he is unable to produce a Field notice of commercially  during the Research period, owing to ascertained restriction or absence of Transportation by pipeline facilities, or provable absence of Gas production Market, he may, Prior to the Research period closing, give written notice to the national Agency for the Hydrocarbons resources valorisation (ALNAFT) of his decision to secure an area encompassing said Field(s) for a   restraint period of:

• Three (03) years maximum starting from such notification receipt date for any Oil  or  Wet Gas Fields;
• Five- (05) years maximum starting from said notification receipt date for all Dry Gas Fields.

The determination of the Perimeter delimiting said Field(s), as well as those studies showing the absence or restrictions of the Transportation infrastructures and the absence of Gas outlets shall be approved by the national Agency for Hydrocarbons resources valorisation (ALNAFT).

The restraint period effectively used can only be adding to the Research period.

Article 40:

The Research and Exploitation Contract shall specify the minimum works program the Contracting body is committing to achieve under each of the Research period phases.

The Research and Exploitation Contract shall, also, specify the amount of the performance bond guarantee payable in Algeria on a simple demand from the national Agency for Hydrocarbons resources valorisation (ALNAFT), as established by a financial institution agreed upon by the same ALNAFT, and covering the amount of the minimum works to be carried out by the Contracting body for each nominated research phase.

Article 41:

With respect to the Contract performance, in no case shall the state authority overtake financing obligation or financing warranty, or be accountable to third parties either.

The contracting body shall ensure, at its own expenses and fees, that all technical and financial resources and equipment necessary to the Contract implementation are mobilised.

Article 42:

The Contracting body shall, in particular, comply with the specifications and standards stated by the regulation related to:

• Industrial safety;
• Environment safeguard;
• Operational technology.

He should, also, provide on a timely basis and without delay, the national Agency for Hydrocarbons resources valorisation (ALNAFT) with all data and results achieved under the Contract performance, as well as, all reports required by said agency (ALNAFT), within forms, terms and frequencies to be specified by the published procedures pertaining to the national Agency for the Hydrocarbons resources valorisation (ALNAFT).

Article 43:

The contracting body having made a field discovery may be entitled to benefit from an authorisation of anticipated production from one or several wells for a period not exceeding twelve (12) months commencing on the date said authorisation is  being granted by the national agency for the hydrocarbons resources valorisation (ALNAFT).

This authorisation shall enable the Contracting body to further identify the characteristics necessary to the making of the development plan.

Pursuant to chapter VIII hereinafter, such early production shall be liable to taxes and duties.

Article 44:

The Contracting body shall, along the commercially presentation, submit to the national Agency for Hydrocarbons resources valorisation (ALNAFT) a development plan project, together with a development costs estimate and the delimitation of the Exploitation   area. A budget shall be appropriated on a yearly basis.

To be completed, said project should be approved by the national Agency for Hydrocarbons resources valorisation (ALNAFT). Any proposed development plan change shall also be subject to a prior approval of the same (ALNAFT). The annual budget shall, yet, be subject to the approval of the national Agency for Hydrocarbons resources valorisation (ALNAFT).

The development plan shall specify the Measurement Point(s), within the exploitation area, whereby  hydrocarbons volumes secured for royalty’s calculation are determined.

Article 45:

SONATRACH S.P.A. shall, for and on behalf of both Hydrocarbons Agencies set out under the present law, be relieved from the public capacities it has provisionally been entrusted with.

In order that such perennial primary role of SONATRACH S.P.A. in the Hydrocarbons sector be time-honoured as a wealth creator to the benefit of the national community, it shall be included in each Research and Exploitation Contract a clause entitling SONATRACH S.P.A.-when not Party to a Contract- to take an Exploitation option attaining up to thirty (30%) percent and no lesser than twenty (20%) percent.

Such option opened to SONATRACH S.P.A. shall be  Implemented within thirty (30) days after the national Agency for the Hydrocarbons resources valorisation (ALNAFT) has approved the development plan of the commercial discovery.

SONATRACH S.P.A. May not, wholly or partly, assign part of its interest granted under such option before a five-year (05) period commencing the date the option applies.

For each commercial discovery where the option applies, SONATRACH S.P.A. shall, in proportion to its percentage of shares, overtake all investment and Exploitation costs related to the development plan approved by the national Agency for the Hydrocarbons resources valorisation (ALNAFT).

In the case that valuation works undertaken by the Contracting body result in a discovery, SONATRACH S.P.A. shall reimburse to this latter all such costs and expenditures incurred by the discovery well and said works corresponding to its contracting percentage of interests, as previously agreed by the national Agency for the Hydrocarbons resources valorisation (ALNAFT).

within a period not exceeding thirty (30) days after the implementation of this option, an agreement shall be concluded between SONATRACH S.P.A. and the contracting body to define SONATRACH S.P.A. payments terms for its shares in the contract, as well as, those covering the reimbursement of the research costs mentioned in the foregoing paragraph. Said agreement which will also, set forth the rights and obligations of SONATRACH SPA and the Contracting Body shall have the prior approval of the national Agency for the Hydrocarbons resources valorisation (ALNAFT), and agreed upon by the minister in charge of hydrocarbons.

The agreement binding upon SONATRACH S.P.A. and the Contracting body shall formerly include a joint Marketing clause to export the Gas extracted from the discovered field, Should such Gas be Marketed abroad.

Article 46:

The Contracting body shall apply the appropriate rules and methods to ensure Optimal Fields Preservation.
To such effect, each Field development plan shall include the works and fees commitments aiming at optimising the production during the whole Field life cycle.

The contracting body shall, therefore, apply statutory prescriptions as regard the Conservation and the valuation of Hydrocarbons reserves, especially, those related to Ultimate Reserves.

Article 47:

Owing to considerations related to national Energy policy objectives, Fields’ production limitations might eventually apply.

Such limitations shall be subject to a decision of the Minister in charge of Hydrocarbons who shall agree the limitations quantities, intervention date and duration.

Said limitations allotment shall be applicable on a fairly basis to all Contracting bodies, each for its respective share in the production, by the national Agency for the Hydrocarbons resources valorisation (ALNAFT).

Article 48:

Domestic Market Gas supply procedures and Gas export ones, as well as, the role ascribed to the national Agency for the Hydrocarbons resources valorisation (ALNAFT), are provided for in chapter-III of the law herein.
With respect to the domestic Market, the national Agency for the Hydrocarbons resources valorisation (ALNAFT) may ask Gas producers contribution to help answer such Market requirements, each in proportion to his share in the Gas production subject to royalties.

Article 49:

Gas flaring is prohibited.

The national Agency for the Hydrocarbons resources valorisation (ALNAFT) may, exceptionally and for very restricted periods, upon Operator demand, grant a flaring authorisation.

Without prejudice to hereinafter Article 106, the Operator asking for such exception shall be liable to a specific, non deductible tax of eight thousand (8000 AD) Algerian Dinars per thousand Normal Cubic Meters (Nm3), payable to the Public Revenue Office.

The national Agency for Hydrocarbons resources valorisation (ALNAFT) shall overtake the control of flared quantities and see to it that the Operator pays such tax to the Public Revenue Office. This tax shall be updated according to the following formula:

• Sale Exchange rate of the United States of America Dollars in Dinars, of the calendar month preceding each payment as published by the "Banque d'Algerie" (Algeria's Bank), divided by eighty (80) and, multiplied by the tax amount set above. 
• This specific tax shall be yearly adjusted, on each first (01) of January.
  

Article 50:

In the event the development plan proposed by the contracting body and approved by the national Agency for Hydrocarbons resources valorisation (ALNAFT), provides for the use of drinkable or irrigation water to ensure enhanced recovery, a specific non deductible tax shall be levied on the Operator to conform to the legislation in force.

The rate of such specific tax, payable to the Public Revenue Office on a yearly-basis, is eighty (80 AD) Dinars per used cubic meter. ALNAFT shall overtake the control of quantities used and ensure that the Operator settles said tax.

This tax shall be updated according to the following formula:

• Sale Exchange rate of the United States of America Dollars in Dinars, of the calendar month preceding each payment as published by the Banque d'Algerie (Algeria's Bank), divided by eighty (80) and, multiplied by the tax amount set above.  
• Said specific tax shall be yearly adjusted, on each first (01) of January.
   
  

Article 51:

Should a Field declared commercially Exploitable encompass at least two areas subject of distinct Contracts, the parties to the Contracts shall set out a joint Field development and Exploitation plan, once they are notified of such by the national Agency for Hydrocarbons resources valorisation (ALNAFT). This plan shall be referred to as "unitization plan". It is subject to the approval of the national Agency for Hydrocarbons resources valorisation (ALNAFT).

In the event the Contracting bodies do not agree on a unitization plan within a six (06) months period after being so notified by the national Agency for Hydrocarbons resources valorisation (ALNAFT), or if this latter does not approve the unitization plan proposed by the Contracting bodies, it shall, at Contracting bodies charges and expenses and based on a list contained within the Contract, commit an independent expert to work out said unitization plan, which shall become effective as it is completed.

In the event such Field encompasses one or several other non contracting Perimeters, the national Agency for the Hydrocarbons resources valorisation (ALNAFT) shall proceed onto a competitive bidding to enter into an Exploitation contract covering such Field extension.

The  signatory(es) to such Contract shall conform to the Unitization Plan lay out Process as defined herein above.

Article 52:

The Person, as defined by the present law, may or may not be a resident.
 
Is considered non-resident any Person whose registered-office is headquartered abroad.

A non- resident Person acquiring an interest in an Algerian right Company Capital Equity shall be released through a convertible currencies import duly established in compliance with the exchange regulations in force.

The inception in Algeria of all such branch by a Person headquartered abroad is considered non-resident under the exchanges regulation.

The equipment of this branch office shall be financed through convertible currencies import.

Provided the non-resident Person has hedged its Research expenses through duly established convertible currencies import, it shall benefit from the following:

• During the exploitation period, it is allowed to maintain abroad the hydrocarbons exports proceeds earned under the Contract. It shall, however, repatriate to Algeria amounts in convertible currencies necessary to hedge its development, eventual research, Exploitation, Transportation by pipeline and management costs, as well as, those monies that are required for the payment of royalties, taxes and fees owed.
  
• It is allowed to freely use Hydrocarbons domestic Market sale products acquired under the Contract, and may convert and transfer abroad the surplus stocks amounts in Dinars.

It shall make it available to the national Agency for the Hydrocarbons resources valorisation (ALNAFT) a quarterly statement of these convertible currencies imports and transfers.

The resident Person shall repatriate its Hydrocarbons exports proceeds in accordance with the exchanges regulation in force. It may freely transfer shares pertaining to its non-resident partners.

The resident Persons may, as well, freely undertake any transfer that might enable them to perform abroad activities subject of the law herein.

Article 53:

The Contracting body shall, pursuant to the legislation and regulation in force, keep for each fiscal year a separate account per Exploitation Perimeter that makes it possible to set "added value" and "operating results" accounts and a balance sheet showing the results of the said activities, the assets and liabilities factors either assigned or related directly to it, as well as, the gross result accruing to these operations.

Any investment, inventory stock or spare part paid directly in foreign currencies or locally with imported currencies shall, however, be registered in United States Dollars. Each annual investment trenche shall be considered at its Algerian Dinars counter-value in the U.S.Dollars buying rate fixed by the "Banque d'Algérie" (Algeria's bank) on the fiscal year closing day.

Article 54:

Without prejudice to the provisions of hereinafter Article 55, when the Contracting body does not comply with the subscribed commitments or when it does no longer satisfy the conditions and obligations arising from the present law and documents related to its performance, the Contract may be terminated, after failure of this latter to abide by a thirty (30) Days formal notice made to its attention, and which was effective upon its receipt date.

Article 55:

Disputes arising out of the contract interpretation and/or performance or the implementation of the present law and/or to the documents issued in this regard between both of the national Agency for Hydrocarbons resources valorisation (ALNAFT) and the contracting body, shall be subject to a prior conciliation according to Contracting terms and conditions. If the matter fails to be settled amicably, the contracting parties shall, then, refer to an international arbitration of the dispute, in due compliance with the terms set in the contract.

The applicable law for the substance of the disputes is the Algerian law, especially the law herein together with the texts set for its performance.

Chapter III

on Gas 

Article 56:

The national Agency for Hydrocarbons resources valorisation (ALNAFT) is entrusted with the task to:
1.      Keep and update statements related to Gas reserves, domestic Markets supply Gas requirements and export Gas availability’s.
2.      Periodically determine a Gas reference price, referred hereto as “benchmark price”, in accordance with Article 58 herein under.
3.      See to it that the Contracting bodies ensure domestic Market supply
4.      Issue Gas Flaring exceptional authorisations and make sure that the specific tax is paid as provided for in Article 49 herein above.
5.      Supply and publish Gas Market analysis intended for the various Contracting bodies.
6.      Organise, periodically, Gas market consulting fore and information exchanges to which shall be invited to attend all Gas producers, whether in Algeria or abroad, Contracting bodies having discovered still untapped Gas reserves, as well as, representatives from the Hydrocarbons regulation Authority and the electricity and gas regulation committee (C.R.E.G), set out by herein above Electricity and Gas distribution law.

Article 57:

In order to allow it set out a benchmark price, the national Agency for Hydrocarbons resources valorisation (ALNAFT) shall be provided with all Gas sale Contracts currently in force at the date the present law is published, together with any of its supplementary agreements hereof, as well as, the contracts and agreements committed after such publication. Said contracts shall include, in particular:

• The client name;
• The total Gas quantity estimated for the transaction;
• Contract duration;
• Delivery conditions and rhythms;
• Client’s delivery Points and conditions;
• Gas cash Market;
• Price;
• Price calculation formula, parameters and price revision conditions;
• A seller commitment letter specifying that no dependency relations are binding upon him and the client.

All information contained within those Contracts and supplementary agreements shall be strictly confidential.

The national Agency for Hydrocarbons resources valorisation (ALNAFT) shall periodically publish statistics on Algerian Gas sales abroad provided that each of those contracts and supplementary agreements confidentiality is strictly abided by.

On the other hand, and all due consideration for the confidentiality of the Contracts and supplementary agreements, the Electricity and Gas regulation committee (C.R.E.G.) shall, periodically, publish statistics on Algerian domestic Market Gas sales.

Article 58:

The national Agency for Hydrocarbons resources valorisation (ALNAFT) shall, on a timely manner, determine a benchmarking sale price to be approved through a bylaw by the Minister in charge of Hydrocarbons.

The initial benchmark price calculated upon the law publication date shall be the weighted average price of the previous semester obtained from various Algerian export Gas sale Contracts.

The benchmark price shall be subject to prices resulting from the previous Algerian Gas exports.

Prices used in the calculation of the benchmark price shall be the highest among the following:

• Prices resulting from each Contract;
• Reference price of the previous  period.

The benchmark price in b.o.e. shall not be lesser than a percentage of “Sahara blend” FOB average price of the previous quarter as published by an established specialised review.

Such percentage shall be timely fixed and readjusted through a bylaw issued by Minister in charge of Hydrocarbons according to Gas Market data.

Article 59:

The national agency for hydrocarbons resources valorisation (ALNAFT) shall, at the beginning of each year, set an updated decennial sliding plan which comprises:

• Developed Gas reserves;
• Still untapped Gas reserves;
• Domestic Market Gas needs;
• Gas requirements for enhanced recovery and cycling;
• Gas volumes available for export.

Article 60:

• The maximum price for the Gas intended to the domestic market is fixed for a maximum period as provided for by Article 7 here above.
• With respect to domestic market gas requirements, SONATRACH SPA shall ensure and maintain the supply within extents similar to those prevailing   before the publication of herein law.
  

Article 61:

1. no later than one hundred and eighty (180) Days prior to the commencing of each calendar year, the electricity and gas regulation committee (C.R.E.G) shall provide, in writing, the national agency for hydrocarbons resources valorisation (ALNAFT) with:

a) A decennial program reflecting quantity estimates deemed to answer domestic Market needs, on a yearly basis;
b) Quantities needed to ascertain domestic Market needs on the subsequent year and which exceeds those to be supplied by SONATRACH SPA and its associates, as provided for in Article 60 here above;
c) Gas contracted quantities comprised in such volume surplus;
d) Gas quantities not yet contracted that are part of such surplus and for which a recourse shall be provided by the national agency for hydrocarbons resources valorisation (ALNAFT) to the effect of implementing Article 48 here above.

The bases and methods for quantity estimates calculation required to meet domestic Markets needs are set through legal procedures.

2.  In the event the information defined in point 1- above are not made available within the prescribed period of time, the national Agency for Hydrocarbons resources valorisation (ALNAFT) shall avail the use of all such information contained in the previous decennial program.

3. In order that such requirements specified in sub-paragraph 1.d- here above be met, the national Agency for Hydrocarbons resources valorisation (ALNAFT) shall determine and keep each Contracting party informed of the allowed Gas quantity, calculated in proportion to its annual production, it is entitled to directly take out with the entity (Es) in charge of the Gas distribution activity, no later than fourteen (14) days after the receipt of the information defined in point 1- above.

4. Within a period not exceeding sixty (60) days after the receipt of a notification made by the national Agency for Hydrocarbons resources valorisation (ALNAFT), the entity (Es) in charge of the Gas distribution activity shall, as defined in point 3-above, enter into a Gas buying contract with each Contracting body as specified by the national Agency for Hydrocarbons resources valorisation (ALNAFT).

During the period defined by Article-7 herein above, the Gas sale price shall be the maximum price at delivery point ex-gas pipeline, timely adjusted through regulations.

After which period, Gas sale price at delivery point ex Gas pipeline specified by point 1.d here above, shall be equal to  eighty (80%) percent of the benchmarking price as periodically set out by the Minister in charge of Hydrocarbons. 

The contract, entered into by and between the entity (Es) in charge of the Gas Distribution activity  and the contracting body (Es), and to which reference is made in point-4 above shall comprise a "take or pay" clause covering an obligation to lift a Gas contracted quantity, that cannot be lesser than  eighty-five  (85%) percent.

Article 62:

Except those amounts meant for reinjection and Cycling needs, any Gas production carried out from a Contracting Area dedicated to Market supply shall be compliant with Algerian sale Gas specifications fixed through a bylaw by the Minister in charge of Hydrocarbons.

Article 63:

In order to meet the domestic Market needs in as best conditions, a free terms swap procedure might be negotiated and applied between the various suppliers. In no case shall such procedure have an adverse impact on tax proceeds level.
A copy of each swap contract shall be made available to the national Agency for Hydrocarbons resources valorisation (ALNAFT), which confidentiality it has to strictly abide by.

Article 64:

Any credit use, transfer or assignment related to greenhouse Gas emission shall be approved by a joint bylaw of the Ministers in charge of Hydrocarbons and of environment.
Said approval will bring about the payment of a specific tax to be settled to the Public Revenue Office by the Contracting body, and which corresponds to such credit this latter might secure on the international Market. 

Chapter IV

on

Transportation by pipeline.

Article 65:

Activities related to Transportation by Pipeline may be carried out by any person having been granted an assignment given through a bylaw of the Minister in charge of Hydrocarbons.

Article 66:

The application for assignment of transportation by pipeline shall be submitted to the Hydrocarbons regulation Authority approval which will express a  recommendation to be addressed to the Minister in charge of Hydrocarbons, namely:

• To allot said Assignment, if the application arises from a Hydrocarbons producer wishing to evacuate its production, provided that the implementation of the concerned infrastructure be awarded through a competitive bidding, or;

• To  issue a competitive bidding for the purpose of awarding said Assignment.

Under the national infrastructures development plan, the Hydrocarbons regulation Authority shall propose to the Minister in charge of Hydrocarbons to appeal to a competitive bidding for all  such Assignment not subject to an  application.

Gaseous Hydrocarbons pipelines pertaining to the Hydrocarbons sector and pipelines that are part of the Gas grid exclusively dedicated to the domestic Market shall be respectively defined through a bylaw of the Minister in charge of Hydrocarbons.

Article 67:

For the grant of transportation by pipeline assignment, the Hydrocarbons regulation Authority shall issue a two-phase competitive bidding :

• a first so-called technical phase meant to define the standard technical offer that will serve as a basis for the economical offer and which should be compliant with the specifications stated by the Hydrocarbons regulation Authority and, in particular:
  1.      transportation by pipeline installations capacity;
  2.      necessary investments completion schedules;
  3.      investments amount based on standards costs issued by the Hydrocarbons regulation Authority;
  4.      service continuation;
  5.      fuel gas consumption.

• A second so-called economic phase meant to select a bidder. The transportation tariff shall be the selection criterion.
  Bids opening related to the economical phase shall be public and the assignment awarded forthwith to the higher bidder.
  

Article 68:

Assignments referred to above are allotted for a fifty -(50) years maximum duration.

Article 69:

Based on the Third-Parties free access principle and in return for a non-discriminatory tariff payment, the Transportation by pipeline infrastructures right of use is guaranteed.

In this respect, a Transportation by pipeline fund has been created under the responsibility of the Hydrocarbons regulation Authority.
Such fund takes over the Transportation by pipeline tariffs equalisation.

All of the third parties free access principle, Transportation by pipeline tariff calculation method, organisation of the Transportation by pipeline fund, its management process, shall be specified through regulations.

Article 70:

The following criteria shall be considered when setting out tariffs principles for Transportation by pipeline:

• Granting the users with the most reduced Transportation by pipeline facilities tariff while complying with the regulation in force and ensuring the service continuity;

• Improving operations efficiency;

• Reducing operation costs;

• Based on a rational and prudent management, to help the assignee covers his operation costs, settle his taxes and duties, depreciate his investments, financial fees and benefit from a reasonable output rate.
  

Article 71:

Are subject to regulations for all Transportation by pipeline Assignment:

• Application procedures for a transportation by pipeline assignment;

• Competitive bidding procedures;

• Procedures meant to obtain construction and operations permits;

• Market pricing;

• Third-parties free access principle regulation;

• Technical specifications and standards;

• Industrial safety specifications;

• Environment protection measures;

• Penalties and fines provided for by Article 10 here above;

• Provisions  meant for revamping.
  

Article 72:

Force Major occurrence excepted, and without prejudices to the provisions provided for by the legislation in force, in no way shall the assignee suspend the performance of his activity.

Chapter V

On Hydrocarbons refining and transformation.

Article 73:

Any Person may be entitled to undertake refining and transformation activities.

The procedures meant to obtain the required authorisations for works construction and Exploitation shall be defined through regulations.

Chapter VI

On Oil Products storage and distribution.

Article 74:

Any person may be entitled to perform oil products storage and distribution activities.

The procedures meant to obtain the required authorisations for works construction and Exploitation shall be defined through regulations.

Article 75:

Based on the third-parties free access principle and in return for a non-discriminatory fee payment, any Person may use storage infrastructures.

All the storage activity shall be regulated through legal procedures and managed by the Hydrocarbons regulation Authority.
 

Chapter VII

Transfer of ownership

upon termination of contract or assignment.

Article 76:

Upon completion of a Research and/or Exploitation Contract, the ownership of all works enabling the ongoing obligations performance shall be transferred to the state. The national agency for hydrocarbons resources valorisation (ALNAFT) shall notify the contracting body with a list of facilities and works for which the state propriety interest is to be disposed of within a period of time not exceeding three (03) years before the termination of such Research and/or Exploitation Contract.

Said ownership transfer to the state shall be an unencumbered property.

All ownership portions of the works to be transferred by the Contracting body shall be in actual operating condition and in a satisfactory state of work at the time said transfer is held.

Pursuant to the Contract provisions, especially those related to industrial safety and environment, all site relinquishment and/or rehabilitation costs that become due with regard any work whose ownership transfer is not contemplated by the state shall be taken over by the contracting body.

Article 77:

At the closing of a period of transportation by pipeline assignment, all works and facilities enabling the performance of operations shall become state property without encumbrance and freehold. 

The Hydrocarbons regulation Authority shall notify the Assignee with a list of facilities and works for which the state propriety interest is to be disposed of within a period of time not exceeding three (03) years before the termination of such Assignment.
All ownership portions of the works to be transferred by the assignee shall be in actual operating condition and in a satisfactory state of work at the time said transfer is held.

Pursuant to the assignment terms and conditions, especially those related to industrial safety and environment, all site relinquishment and/or rehabilitation costs that become due with regard any work whose ownership transfer is not contemplated by the state shall be taken over by the Assignee.

Article 78:

The Contract or Assignment shall set out the terms and conditions enabling the Contracting body or the Assignee to collect provisions before the termination of said Contract or Assignment, in order that he may answer the site relinquishment and/or rehabilitation costs in compliance with Articles 76 and 77 here above.

Chapter VIII

Research And/Or Exploitation Tax System

Taxation Statute

Article 79:

The tax system applicable to the Research and/or Exploitation activities defined by the provisions of the law herein consists on:

• A non deductible area (land) tax to be paid on a yearly basis to the Public Revenue Office;

• A royalty payable on a monthly basis to the national Agency for Hydrocarbons resources valorisation (ALNAFT) as provided for in Article 22 and 23 hereto;

• An oil income tax (T.R.P) monthly payable to the Public Revenue Office;

• An Additional tax on the result (I.C.R.) paid on an annual basis to the Public Revenue Office;

• Land tax on properties others than the exploitation ones, as provided for by the internal revenue regulation.
  

Article 80:

The area tax is payable by the operator annually in Algerian Dinars or in U.S.Dollars at the foreign currencies buying rate fixed by the "banque d'Algerie" (bank of Algeria) on the day of settlement, such as defined by Article 26 here above, as the Contract comes into force.

Said tax calculation is based on the Contracting Perimeter area at each payment maturity date.

The formal tax amount due in A.D. per square kilometre (km2) is fixed as follows:  

Those amounts shall be updated according to the following formula:

Sale Exchange rate of the United States of America Dollars in Dinars, of the calendar month preceding each payment as published by the Banque d'Algerie (Algeria's Bank), divided by eighty (80) and, multiplied by the tax amount set above. 

Cost indexing shall apply to the tax amount owed, each year on the first of January.

Alnaft shall see to it that said tax is paid to the Public Revenue Office.

Article 81:

Are subject to royalties, all Hydrocarbons quantities extracted from each Operation Perimeter and determined in compliance with Article 23 here above.

The royalty amount for a given month shall be equal to the sum of each production bracket value of said month, multiplied by the royalty rate applicable to such bracket.

The production value is calculated as specified in Articles 86 and 87 hereinafter, and all applicable royalty rates are those contained within each Contract.

Royalties shall be monthly determined on hydrocarbons quantities extracted from the exploitation perimeter and measured by the basic price monthly average such as provided for in Article- 23 here above, and processed as defined by Articles-86 and 87 herein under. 

When Hydrocarbons quantities extracted from the Exploitation Perimeter, expressed in barrel oil equivalent (b.o.e.), are lesser or equal to 100 000 b.o.e /Day, calculated on a monthly average, the royalties rate per production bracket contained in each contract cannot be lesser than the levels showing in the table below

For hydrocarbons quantities higher than 100 000 boe per Day determined on a monthly average, the royalties rate applicable to the whole production and specified in each Contract cannot be lesser than the levels showing in the table hereunder:
                                                             

Pursuant to Article 26 herewith, in the event the Contracting body is more than one person, the Operator shall pay the royalties amount for the whole production to the national Agency for Hydrocarbons resources valorisation.
 
For TRP calculation consideration, the royalties shall be deductible.

 
Article 82:

The Operator is liable for the payment of a monthly oil income tax (TRP).

This oil income is equal to the annual Hydrocarbons production calculated value provided for in Article 87 hereunder, minus the annually authorised deductions.

Pursuant to Article 23 herein above, the Hydrocarbons production cumulative value (PV), since the exploitation start-up, is equal to the hydrocarbons quantities proceeds extracted from the Operation Perimeter subject to royalties by the price used for the calculation of royalties.

The authorised deductions are composed of the following:

• Royalties;

• Development annual investment trenches through the implementation of the Up lift rules specified in Article 83 here under. Those investments shall apply to Operation Perimeters only and be agreed in annual budgets;

• Exploration annual investment trenches through the implementation of the Up lift rules specified in Article 83 here under, and such being the case;

• Provisions to meet relinquishment and/or rehabilitation costs pursuant to Article 78 here above,

• National human resources training costs;

• Enhanced recovery gas price cost.

In no case shall interests and overheads be part of the investments.

The national Agency for Hydrocarbons resources valorisation (ALNAFT) shall see to it that the operator has settled the oil income tax due to him pursuant to Article 26 herein above.

For I.C.R. calculation, the T.R.P. tax shall be deductible.

Article 83:

The rates appearing on the following table shall be used for the T.R.P calculation:
 

 
The rates set up in the table above shall apply to the T.R.P. calculation through their implementation to the oil income as provided by Article 82 heretofore.

The Thresholds  S1 and S2 set in the table above and hereinafter, shall be updated according to the following formula:

U.S. Dollars exchange rate in Dinar, of the calendar month preceding each payment issued by the bank of Algeria, divided by seventy (70) and multiplied by the sum of the Threshold shown in the table above.

When the P.V. is lesser or equal to threshold S1 the T.R.P. is calculated by using the first level-related rate,

When the P.V. is greater than threshold S2, the T.R.P. is calculated using the second level-related rate,

When the P.V. is greater than the threshold S1, and lesser or equal to the threshold S2, the following formula for the calculation of the oil income tax will apply:
 
             

Percentage (%) TRP = 40 × [( PV - S1 ) / (S2 – S1)] + 30

 
The Annual Exploration and development Investment Trenches, except those concerning enhanced recovery, shall benefit from an Up lift set as follows:

Zone A   And   Zone B :   UP lift rate 15%  Investment annual trench: (20%)corresponding to a  depreciation period of five (05)Year                  

Zone C  And  Zone D :     UP lift rate 20%  Investment annual trench: 12,5% corresponding to a depreciation period of Eight (08)Years

For enhanced recovery investments, a twenty (20%) percent annual investment trench corresponding to a five (05) years depreciation period and a twenty (20%) percent Up lift rate shall be applied to all Zones.
 
The Gas cost price meant to cover gas reinjection and cycling operations, training costs for national human resources and, should the case arise, relinquishment costs shall be deductible for TRP calculation considerations, at no Up lift.

Article 84:

Each Person party to a contract is liable to an I.C.R. processed on the IBS corporate tax rate according to the prevailing terms and conditions, and the depreciation rates appended in the annex of the present law.

To such effect, each Person may reconcile the results of its global activities in Algeria, subject of the law herein.

For the purpose of I.C.R. calculation, each Person investing in activities Pursuant to the law related to the Electricity  and Gas distribution herewith may benefit from a reduced rate of the IBS in force.

Article 85:

Research or Exploitation activities are exempted from:

• the value added tax (VAT)on goods and services related to Research and/or Exploitation activities;
• the tax on professional activity (TAP),
• customs taxes, fees, royalties and duties on imports of capital goods, materials and products intended to be assigned and used in the Research and/or Exploitation activities of the Hydrocarbons fields,
• any current or future tax or duty, other than those described in herein above Articles 28,49,50 and 64 under this chapter, imposed on the operation proceeds and set for the benefit of the state, public bodies and any legal entity of public right.
  Capital goods, services, materials and products specified in this Article, are those in the list set up through legal procedures.

 
Article 86:

The base prices, used for royalties, taxes and duties calculation and specified in Article 87 hereafter are the average amounts of the calendar month prior to the one for which there are dues :

a) FOB prices for the oil, LPG, butane and propane produced in Algeria, as published by an established specialised review.
b) FOB prices for the condensate produced in Algeria, such as published by an established specialised review, or if such publication is not available, those prices notified by the national Agency for the Hydrocarbons resources valorisation (ALNAFT).

These reviews shall be specified in the contract.

Failing such availability of publication for any of the defined products above, the national Agency for Hydrocarbons resources valorisation (ALNAFT) shall see to it that the current prices of these same at the nearest delivery points shall be used through a countdown calculation Process, or any other method the national Agency for the Hydrocarbons resources valorisation (ALNAFT) deemed necessary to identify said FOB prices.

However, for domestic market needs and during such time-frame as defined by Article -7 here above, the base price used for liquid hydrocarbons and oil products shall be such maximum timely adjusted price to conform to mechanisms fixed through legal procedures.

With respect to Gas, the base price used for the calculation of Royalties, taxes and dues shall be the one defined as follows:

• In the case of an export Gas sale Contract;
  
  Subject to herein above Article 58, the Contracting price whenever this price is higher or equal to the benchmark price, which base price will however be equal to the reference one in the opposite case;

• In the case of a Gas sale Contract intended to the Domestic Market.

Subject to herein above Article 66, the maximum price at delivery point ex Gas pipeline pertaining to the Hydrocarbons sector periodically adjusted during the period defined by herein above Article 7. Once any such defined period is lapsed:

- The price freely negotiated between the seller and the taker, if no dependency relations are binding upon them;
- A price equals to eighty (80%) percent of the benchmarking price should any dependency relation exists between the seller and the taker;
- With respect to Gas sale contracts and owing to their peculiarity, as defined in sub-paragraph 1.d of Article 61 above, the base price shall be the one defined by the point 4, third paragraph of same Article 61 above;  
- In the case of Gas acquisition for enhanced recovery requirements, the base price shall be the One freely negotiated between the seller and the taker.
When the base prices are expressed in the United States of America Dollars, the corresponding average sale exchange rate in Dinars of the month for which they are due, as published by the Banque d'Algérie ("Algeria's Bank") shall be used for their translation 

Article 87:

The value of hydrocarbons production extracted from Field(s) contained within the Operation Perimeter, is equal to the product of hydrocarbons quantities which are liable to royalties by the basic prices, defined in Article 86 here above, minus the transportation by pipeline tariff between the point of measurement and the Algerian port of loading or the Algerian export border, and should this being the case, between the measurement Point and the Marketing  point in Algeria.

In the very case of gas sold under a liquefied form, and of LPG sold under Butane or Propane forms, a workmanship cost processed on investments only shall be deducted. The Annual Investment Trenches shall benefit from an Up lift  fixed as follow :

¨      Up lift rate twenty (20) percent;
¨      Annual Investment Trench: ten (10%) percent corresponding to ten -(10) years duration. 

Article 88:

Royalties payments shall be made monthly before the tenth (10th)of the month which follows the production month, to the national agency for hydrocarbons resources valorisation (ALNAFT).

Should a delay in royalties payment occur, the amounts due shall be increased by one per thousand (1°%) by day of delay.

However, the minister in charge of finances may grant a remission or abatement of mark-ups described in this Article, after decision of the minister in charge of hydrocarbons.

Article 89:

The fiscal year term shall not exceed twelve (12) months. If this period is a twelve -(12 )month term, the fiscal year shall coincide with the calendar year. If it is less than twelve (12) months, the fiscal year shall be comprised in the same calendar year.

Article 90:

In order that amounts liable to the oil income tax be determined, established national or international professional expertise shall be called for by the national agency for hydrocarbons resources valorisation (ALNAFT), for the purpose of auditing the contracting bodies’ accounts.

All costs incurred by those experts shall be borne out by the contracting bodies.

Article 91:

The T.R.P. of a fiscal year is paid in twelve (12) provisional payments as instalments on the due tax during this fiscal year.

The calculations methods for the settlement of the provisional monthly amounts shall be determined through regulations.
 
Instalments are paid without notice before the 25th day of the month following the one for which they are due.

The settlement of the oil income tax is made by the Operator and the amount so paid by this latter, less the accounts already paid, at the latest, on the ultimate day of the allowed period of time set to hand over the annual income return of the financial year proceeds.

Should any delay in payment occur, the amounts due shall be increased by one per thousand (1°%) by Day of delay.
However, the minister in charge of finances may grant a remission or abatement of mark-ups described in this Article, after decision of the minister in charge of hydrocarbons.

Article  92 :

The supplementary income tax shall be settled at the latest, on the ultimate day of the allowed period of time set to hand over the annual income return of the financial year proceeds.  

Should any delay in payment occur, the amounts due shall be increased by one per thousand (1°%) by Day of delay.

However, the minister in charge of finances may grant a remission or abatement of mark-ups described in this Article, after decision of the Minister in charge of Hydrocarbons.

Article 93: 

The tax system applicable to the activities other than those related to the research and Exploitation is the one enacted by the common law in force.

The Persons are authorised to reconcile the results of their activities subject of the present law and the law related to energy and gas distribution by pipeline, as provided for by the Article 84 here above.

Article 94:

Activities of Transportation by pipeline, gas liquefying, and liquefied petroleum gases separation, are exempted from: 

• the value added tax (VAT)on goods and services related to the foregoing activities;
• customs taxes, fees, royalties and duties on imports of capital goods, materials and products intended to be assigned and used in the above-cited activities,

Capital goods, services, materials and products specified in this Article, are those in the list set up through legal procedures.

Article 95:

Salaries and wages related to foreign oil corporations or companies employees shall be exempted from national workers' insurance contributions when any such employees are still depending on the social insurance foreign body they subscribed to before their being in Algeria.

Article 96:

Besides buildings, are also considered as real properties the machines, equipment, materials and tools for drilling and other works fixed permanently and used for the exploitation of fields, storage and the transportation of the extracted products.

Are also fixtures, the machines, engines, materials and tools directly affected to the exploitation of hydrocarbons fields.

Are considered personal estate the extracted or produced materials, supplies and other furniture’s, as well as, shares, participation and interests in a corporation, a company or a joint-venture or partnership for the activities of research, exploitation, transportation by pipeline, refining, transformation of hydrocarbons and oil products distribution.

Chapter IX

Interim provisions

Article 97:

Pursuant to the provisions of hereby law, SONATRACH SPA shall, upon the demand of the national Agency for Hydrocarbons resources valorisation (ALNAFT) assign part or whole of the elements constituting the data banks it detains, and the technical data related to the activities of research and exploitation of hydrocarbons over the national mining estate.

Such-unencumbered- assignment, for the national Agency for Hydrocarbons resources valorisation (ALNAFT), shall be completed no later than six-(06) month after the publication of the present law.

SONATRACH SPA may retain a copy of whole or part of the information that are subject of such assignment.

Article 98:

The association contracts entered into prior to the date of publication of the present law, as well as, said contracts' supplementary agreements entered into prior to same date shall remain in full force and effective until their expiry date.
 
The law herein safeguards the free will of the parties to the contract of association.

Article 99:

For each of the association contracts mentioned in Article 98 above, and in compliance with Article 20 above, within a time frame not exceeding ninety (90) days after hereby law has been published, a parallel Contract shall be entered into by and between the national Agency for Hydrocarbons resources valorisation (ALNAFT) and SONATRACH SPA. Once the parallel Contract is being signed, SONATRACH SPA shall restore to the Ministry in charge of Hydrocarbons such mining titles in its possession to the effect of allocating them to the national Agency for Hydrocarbons resources valorisation (ALNAFT).

The duration of such Contract shall be equal to the association Contract remaining term.

This Contract shall, in particular, set out the terms and conditions of the payment in cash by SONATRACH SPA:

1.When Dealing with Profit Sharing and Risk Services Contracts.

- To the national Agency for Hydrocarbons resources valorisation (ALNAFT) the royalties on the whole production, calculated in conformity with Article 81 here above,
- Of the (land) area tax calculated according to Article 80 herewith,
- Of the oil income tax (TRP) according to the rates provided for in Article 83 when SONATRACH SPA is involved in investments financing, or to the maximum rate of seventy (70%) percent when SONATRACH SPA is not backing any investments,
Oil income is the production value calculated in conformance with Article 87 here above, from which is deducted: 

• The royalties value;

• UP lifted investment trenches for research and development;

• The production value, calculated by applying the basic price defined in Article 86 hereto, of a profit sharing part due to the foreign associate as a remuneration;

• The tax on the proceeds paid by SONATRACH SPA on behalf of its foreign partner as provided for by the law 86-14 here above, and as the case may be:

• Costs for training national human resources;

• Enhanced recovery gas cost price;

• Provisions to meet relinquishment/Rehabilitation costs in compliance with Article 78 herewith.  

Besides deductions authorised in conformity with Article 81 and 83 above, are also deductible for the additional income tax calculation (ICR): 

• The value, calculated by applying the basic price defined in Article 86 hereto, of a production part due to the foreign associate as a remuneration.

• The tax on the proceeds paid by SONATRACH SPA on behalf of its foreign partner as provided for by the law 86-14 here above.

2. When dealing with particular partnerships:

- Pursuant to the provisions of hereby law, SONATRACH SPA alone is liable for the payment of taxes and duties relating to his share in the production.
- The production share of the foreign associate shall be subject to tax arrangements agreed upon in the partnership Contract.

Article 100:

Within a period not exceeding thirty (30) days after the publication of the present law, SONATRACH SPA shall provide the national Agency for Hydrocarbons resources valorisation (ALNAFT) with the following:

1.The delimitation of research perimeters operated by SONATRACH SPA to date and in which it wishes to detain a property interest,
2.The delimitation of exploitation perimeters operated by SONATRACH SPA to date and in which it wishes to detain a property interest,

Said delimitation shall be compliant with the provisions of the law herein.

Article 101:

Research Perimeters that SONATRACH SPA wishes to dispose of, shall be subject to competitive bidding in view to entering a Research and/or Exploitation Contract.

Perimeters currently under operation, that SONATRACH SPA wishes to dispose of in respect of point 2- Article 100 herein above, shall be subject to competitive bidding in view to entering into an exploitation contract. SONATRACH SPA shall continue to operate on those perimeters until the transfer of its activities to the new Contracting body.

If the competitive bidding does not allow it to attain a new Exploitation Contract, the national Agency for Hydrocarbons resources valorisation (ALNAFT) shall   provide for the cession of the considered areas. SONATRACH SPA shall, therefore, take over all the operations necessary to such cession pursuant to Article 78 here above.

In any case, SONATRACH SPA shall restore to the Ministry in charge of Hydrocarbons such mining titles in its possession related to these perimeters over which it detains a property interest, to the effect of allocating them to the national Agency for Hydrocarbons resources valorisation (ALNAFT) pursuant to Article 20 hereof.

Article 102:

Within a period of ninety (90) days upon the receipt of the items mentioned in Article 100 here above:

1. For each Research Perimeter specified above in sub-paragraph-1 of Article 100, a Contract of Research and Exploitation shall be entered into by and between the national agency for hydrocarbons resources valorisation (ALNAFT) and SONATRACH SPA, or any of its affiliates it chooses to appoint pursuant to the provisions of herein, and including, in particular, the minimum work program to achieve during each research phase.

Prior to the conclusion of said contract, the contracting body shall, in respect of its commitments, benefit from a three (03) years period credit corresponding to works already completed.

2. For each operation perimeter specified in Article 100.2 above, an Exploitation contract shall be entered into by and between the national Agency for Hydrocarbons resources valorisation (ALNAFT) and SONATRACH SPA, or any of its affiliates it chooses to appoint pursuant to the provisions of the law herein.

Such contract shall define, in particular, the threshold to consider for the TRP calculation, in order to allow the Contracting bodies carry on with their Exploitation.

Upon the signing of the contracts mentioned above, SONATRACH SPA shall return to the ministry in charge of hydrocarbons the mining titles it holds in its possession and related to these perimeters subject of the contracts mentioned herewith, and which shall be handed over to the national Agency for Hydrocarbons resources valorisation   (ALNAFT) pursuant to  Article 20 here above.

Article 103.    

For each Exploitation contracts mentioned in paragraph 2 of Article 102 herein above, SONATRACH SPA shall, within a time-frame not exceeding 180 days from the effective date of said contract, submit to the approval of the national Agency for Hydrocarbons resources valorisation (ALNAFT), a development plan such as defined in the contract, along the financial estimates required for its implementation, in due compliance with the provisions of Article 2 herewith.

Should SONATRACH SPA and the national Agency for Hydrocarbons resources valorisation (ALNAFT)not agree on said plan within a time-frame not exceeding 360 days after said contract comes into force, the Minister in charge of Hydrocarbons shall decide which plan SONATRACH SPA shall carry out to conform with Article-2 of the law herein.

Article 104:

During the interim period, in between the date of publication of this law and the effective date of the contracts as defined in Articles 99 and 102 above, SONATRACH SPA shall still be subject to the taxation statute prevailing before the publication of the law herein.

All down payments made in this respect are considered instalments.

Once the Contracts come into force, the fiscal provisions provided for in this law are applicable from its date of publication, inclusive of all amounts already paid by SONATRACH SPA as instalments.

Article 105:

Within a period of ninety (90) days after the publication of this law, and for each Transportation by pipeline systems, the Minister in charge of Hydrocarbons shall allocate SONATRACH SPA or any of its affiliate this latter chooses to appoint, with a Transportation Assignment pursuant to the provisions of the present law and regulations contained in the chapter IV herein.

Each Transportation by pipeline system, as well as, each refining and Hydrocarbons transformation installation shall be subject to a distinct book keeping operation by SONATRACH SPA, related to the exploitation accounts.

Transportation by pipeline costs accruing from transportation by pipeline agreements effective at the date the law herein is published shall not be modified by the provisions of chapters IV and IX of the law herein.

Article 106:

A seven-year (07) period of conformance starting from the publication date of hereby law shall be granted so as the activities, subject of the present law, be in keeping with the legal procedures which provide for technical specifications and standards related to the industrial safety and environment protection.

Besides and in derogation with Article 55 above, whenever SONATRACH S.P.A is the sole Contracting body or assignee, any dispute arising from the interpretation and/or performance of any Contract or Assignment deed shall be settled through the arbitration of the Minister in charge of Hydrocarbons, in the absence of any amicable settlement. 

Chapter X

Specific legal provisions

Article 107:

Any authorisation or consent application made by the contracting body or the assignor, for its own benefit and in accordance with the present law and/or the texts provided for its performance, and which is necessary for the performance of the contract or the assignment, shall be subject to an approval decision or justified reject, once the filing documents related to it are completed.

Such decision of approval or reject shall be notified in a period of time not exceeding ninety (90) days.

Article 108:

The tax provisions provided for by the present law are applicable from the date of its publication.

Article 109:

The terms and conditions of this law application shall be defined by legal procedures, as and when needed.

Article 110:

All provisions contrary to the present law shall be cancelled, in particular the law 86/14 here above, following Article 98 herein above.

Article 111:

The present law shall be gazetted in the "journal official" of the democratic and popular republic of Algeria.
 

Done in Algiers on the ------ 1423
Corresponding to ---------------2002
 
 
Abdelaziz  BOUTEFLIKA