Country
Assessment
A development plan needs to be approved by ALNAFT, according to Law No. 19-13, 2019 . There is no explicit requirement for this plan to include associated gas disposal, but the plan must cover all commercially exploitable hydrocarbons (Article 106). According to Article 107, the plan must also include measurement and delivery points for all extracted hydrocarbons and allow for production optimization throughout the life of the asset.
Article 67 of Law No. 19-13, 2019 , requires both participation contracts and PSCs to include a joint marketing clause for natural gas to be exported. Sonatrach may market the gas on behalf of the partners if all parties agree. Article 121 states that serving the national market is a priority. Partners’ share of gas, or a portion of it, is transferred to Sonatrach if ALNAFT—in consultation with Sonatrach and the Electricity and Gas Regulatory Commission (Commission de Régulation de l’Electricité et du Gaz), which is responsible for forecasting demand—decides that these volumes are necessary to serve the national market (Article 123). Article 131 grants open access to the gas transmission pipeline infrastructure. The ARH sets the tariff. Article 146 allows gas prices to be negotiated by the sellers (Sonatrach or its upstream partners) and the buyers for volumes above the national needs, as determined by the Ministry of Energy and Mines. The ARH sets the price of gas sold to power plants and distribution companies. It must cover costs and fiscal and other charges and provide a reasonable rate of return (Article 147). Gas prices in the domestic market are heavily subsidized. Domestic gas demand increased from about 25 bcm in 2010 to about 45 bcm in 2019, driven largely by subsidized pricing. The government has been pursuing a gasification strategy. There are programs to convert light-duty vehicles to liquefied petroleum gas (LPG) and buses and trucks to compressed natural gas (CNG) to reduce the consumption of oil products. Still, most of the demand growth reflects increased power generation and distribution in cities. Phasing out energy subsidies is seen as necessary to avoid a demand-supply imbalance and encourage further development of nonassociated gas fields. All pipelines are developed and operated by Sonatrach under concessions granted by the Ministry of Energy and Mines (Article 127). Sonatrach delivers gas to liquefied natural gas (LNG), petrochemical and fertilizer plants, and refineries. A state-owned company, Sonelgaz, builds and operates distribution networks and serves other gas consumers.
No evidence regarding the use of market-based principles to reduce flaring, venting, or associated emissions could be found in the sources consulted.
Sonatrach, in alignment with Algeria’s NDC, targets less than 1 percent of total associated gas to be flared by 2030. Law No. 19-13, 2019 , prohibits flaring and venting except under certain conditions but does not specify any targets or limits. Executive Decree 21-330, 2021, repeals Executive Decree 13-400, 2013, regarding conditions for allowed flaring. There are limits on the duration of flaring (see section 10 of this chapter). Article 9(d) limits flaring during production to 1 percent of total volumes produced but Article 9(e) allows, subject to regulatory approval, for 12 months of flaring in the case of infrastructure bottlenecks. Article 19 limits flaring during midstream activities to 1 percent of the hydrocarbons transported via pipelines or entering processing or refining facilities.
Article 160 of Law No. 19-13, 2019 , states that ALNAFT and the ARH regulate flaring operations and volumes flared. The ARH develops technical regulations for oil and gas activities; ALNAFT is primarily responsible for efficient oil and gas project development. According to Article 22, both regulators are legally independent and financially autonomous. Before 2005, Sonatrach was the regulator despite also being the national oil company.
According to Article 159 of Law No. 19-13, 2019 , flaring for safety does not require prior authorization. However, operators must provide a detailed report of the flare to the relevant regulatory agency within 10 days. Articles 7 and 18 of the Executive Decree 21-330, 2021 , codify these requirements for upstream and midstream operations, respectively. As per Article 26, venting for safety during pipeline transport is treated the same way. Neither the law nor the executive decree defines technical reasons for flaring for safety. However, Article 43 of Law No. 19-13, 2019, charges the ARH with developing regulations concerning industrial safety, well integrity, and prevention of risks to the health and safety of employees. At the time of writing, the ARH had not published relevant regulations for Law No. 19-13, 2019.
Article 158 of Law No. 19-13, 2019 , prohibits flaring and venting. According to Article 3 of Executive Decree 21-330, 2021 , flaring is allowed, with prior application to ALNAFT, under certain conditions. Such conditions include: during well testing and debottlenecking; at the start-up of new facilities; at facilities built before July 19, 2005, and waiting to be retrofitted (per Article 235 of Law No. 19-13, 2019); or in the absence of sufficient takeaway pipeline or processing capacity. However, there are limits. For example, during exploration (Article 8 of the Executive Decree 21-330, 2021) the following limits are listed: 24 hours within 5 days for delineation wells, 48 hours within 10 days for wells exploring new horizons, 15 days or 5 million cubic meters (m3) for pilot wells, and 12 months or 50 million m3 for remote wells expected to produce oil and gas. Upstream flares require authorization from ALNAFT; midstream or downstream flares require authorization from the ARH. In exceptional situations, venting during pipeline activities may be allowed, but authorization from the ARH is required.
Article 226 allows ALNAFT to suspend or cancel authorizations for upstream prospecting or concessions if a licensee violates any provision of Law No. 19-13, 2019 . No evidence of nonmonetary penalties for violating flaring and venting regulations could be found in the sources consulted.
According to Article 210 of Law No. 19-13, 2019 , there is a tax on flared volumes. This tax is nondeductible for the purposes of calculating other payments under the upstream fiscal regime. The tax is 12,000 Algerian dinars (about US$90 as of September 2021) per 1,000 cubic meters (m³). ALNAFT can adjust this tax at the beginning of every year based on the national inflation index. The tax increases by 50 percent if an operator flares without authorization (except for flares for safety reasons as stated in Article 159) or flares more than the volumes allowed in the authorization (Article 213). According to Article 215, the tax is not due under the following conditions: during exploration activities or well testing during the start-up period, the duration of which is set by ALNAFT or ARH in the absence of capacity for gas recovery or takeaway (pipeline) infrastructure at facilities built before 2005. According to Article 11 of Executive Decree 21-330, 2021 , in case of delays in the start-up of new facilities, the national company or contractors must include a justification along with a request for permission to extend flaring; additional volumes flared will be subject to tax. Article 21 stipulates the same requirements for flaring at midstream facilities and Article 26 for venting during pipeline transport. Article 29 requires that an annual declaration to the fiscal authority on flare taxes must include all information necessary to calculate the taxes. According to Article 30, ALNAFT and the ARH are required to provide the fiscal authority a report on each flaring operation. The report must include actual flared volumes.
No evidence regarding specific performance requirements could be found in the sources consulted. However, the ARH is empowered to develop environmental regulations (including emissions from oil and gas operations) under Law No. 19-13, 2019 (see section 7 of this chapter, and footnote 5). However, implementing regulations had not been published at the time of writing.