American companies stay out of the race
Algeria’s 7th bid round didn’t turn out to be the big bang that the energy press had expected. As it happened, only four bids were received and four awards made. They all went to European companies: OAO Gazprom, Eni SpA, BG Group Plc, and E.ON AG.
At the first announcement in July 2008, more than 50 international companies expressed interest in bidding and numerous firms were pre-approved as operators. Somewhat surprisingly.
However, with the recent economic downturn the actual bidders were few. According to Chakib Khelil, Algeria’s Petroleum Minister, only four of the 16 blocks on offer received bids.
The four licenses went to Russian, European, and UK firms including Russian gas giant Gazprom, who was awarded the El Assel license. BG Group plc won the Guern El Guessa license. Italy’s Eni was awarded an exploration license in Kerza, while E.ON AG’s Ruhrgaz won the Rhourde Yacoub permit.
The 7th international bid round was the first to be held under a 2006 law that gives state parastatal Sonatrach at least a 51% share in every oil and gas exploration contract with foreign partners. This, in addition to the current economic crisis which has E&P company shares trading at a huge disadvantage, and the difficulty in accessing capital, could all have contributed to the low level of participation.
Khelil said the government planned to launch another round in 2010 to award those zones included in the 7th exploration and production licensing round. “We will launch another tender next year after evaluation,” he said after the bids opening ceremony.