Country
Assessment
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 the use of market-based principles to reduce flaring, venting, or associated emissions could be found in the sources consulted.
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 targets and limits could be found in the sources consulted. However, there is a de facto zero-flare policy for all new fields.
The MMRPG, created in 1978, oversees petroleum activities. It focuses mainly on coordination and cooperation with other entities. Its statute is provided under Presidential Decree 12/2018 as amended by Presidential Decree 159/2020. Other ministries, such as the Ministry of Environment and the Ministry of Finance, also have some degree of oversight and regulatory powers.
Law 5/2019 created a new regulator, the National Oil, Gas and Biofuel Agency (Agência Nacional de Petróleo, Gás e Biocombustíveis). Presidential Decree 49/2019 provides the organic statute of this regulator, which took over from Sonangol as the exclusive holder of mineral rights for oil and gas exploration and production. Law 5/2019 granted Sonangol preferential acquisition and operational rights in oil and gas concessions and operations.
Article 73 of the Petroleum Law, 2004 , expressly forbids natural gas flaring except for short periods for testing or other operating reasons, which require special permission from the MMRPG.
Article 73 of the Petroleum Law, 2004 , states that when gas flaring is authorized, the supervising authority may determine that a relevant fee be charged in accordance with the quantity and quality of the gas flared and its location. No evidence could be found in the sources consulted on enforcement of such a fee. In the case of marginal or small deposits, the MMRPG may authorize the flaring of associated gas to make its exploitation viable. Flaring authorizations may be granted only upon submission of an EIA.
Article 73 of the Petroleum Law, 2004 , states that the development plans for petroleum deposits should always be formulated in such a way as to allow for the use, preservation, or commercial exploitation of associated gas. Article 22 of the Regulation on Petroleum Operations, 2009 , states that the general development and production plan must include a plan for utilizing the associated natural gas. Article 23 states that annual production plans must include a provision for flaring and venting of natural gas and estimated volumes of special fluids to be injected for enhanced recovery.
Flaring authorizations may be granted only upon submission of a substantiated technical, economic, and environmental impact evaluation conducted by Sonangol that demonstrates that it is not feasible to exploit or preserve the natural gas.
Metering and recording practices have to follow methods and use instruments certified under the legal standards in force and in compliance with good technical standards. Article 34 of the Regulation on Petroleum Operations, 2009 , states that operators must propose to the MMRPG the measurement system, equipment, and procedures for measuring oil and gas production and sales. Article 39 lists the gas measurement system components; Article 40 describes the requirements for measurement facilities. Article 24 requires operators to submit a report providing information on all activities related to natural gas by December 30 of each year. Article 44 requires the quarterly submission to the MMRPG of a report on the systems for measuring, testing, and calibrating the equipment. The reports must include information related to daily production and respective shipments.
For PSCs, contractors are required to record the monthly quantities of crude oil, natural gas, and water produced from each development area. These data must be sent to Sonangol within 30 days of the end of the month reported on.