Sonatrach Won't discuss algerian windfall oil tax with anadarko

Sonatrach Won't Discuss Algerian Windfall Oil Tax With Anadarko

04-16-2008

Sonatrach says it doesn't discuss windfall oil profits tax with Anadarko Petroleum Corp. to reach a resolution to the dispute between the two companies.

Sonatrach is a state oil company for Algeria and Algeria's government introduced a new tax last year on private companies, including Anadarko - the largest foreign operator in the country - that levies between 5% and 50% on their profits depending on their output, when the price of Brent crude oil rises above $30 a barrel. Brent crude is now above $100.00 a barrel.

Sonatrach Chief Executive Mohamed Meziane said that the state-owned company couldn't negotiate the tax and its applicability.

"We don't have the right to discuss the law," Meziane said, "the law applied to all companies."

The two sides are still seeking a resolution privately and haven't sought international arbitration, he said.

"We hope to end it very quickly, but it depends on both sides," Meziane said.

Anadarko has raised objections to the new tax, which it said last year would cost it $450 million in lost revenue. Anadarko's chief financial officer, Al Walker, said in a conference call in March that he didn't believe a resolution to the dispute was likely this year.

Algerian Oil Minister Chakib Khelil has said that the new tax, which was introduced as part of a revised 2006 hydrocarbons law, wouldn't apply to the new contracts handed out in Algeria's upcoming oil licensing round later this year. The new contracts already will have a mechanism built into them to adjust for changes in the oil price, he said.