The importance of shale gas as a global commodity has been enhanced after Algeria announced plans to entice foreign companies to invest, according to published remarks from the state controlled energy firm in Algeria, Sonatrach. The incentives will include tax breaks and the sharing of costs and risks between investors, including foreign oil companies, and the state oil company, Sonatrach. This will be a marked differentiation between conventional gas, where the state takes no exploration risk.

OPEC member and gas exporter Algeria wants to develop technology-intensive shale gas and offshore production to help ensure security of supply in the long run. It currently favours a role for foreign oil majors in helping achieve those goals.

Algeria intends to introduce amendments to its hydrocarbons law later this year. The amendments will include definitions of shale resources and rules for investors who make a shale discovery while seeking conventional hydrocarbon resources.

Our April 2012 report on legal development relating to shale gas in the UK, Algeria, USA, Poland, Canada, Germany, China, Ukraine and Israel can be found here.