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HomeLatest NewsCepsa and Sonatrach squabble over renegotiation of their 900 million union in...

Cepsa and Sonatrach squabble over renegotiation of their 900 million union in Algiers

Sepsa and Sonatrach revisiting the future of their “star” alliance in the North African country, a joint project for the exploration and production of crude oil in the Berkin Basin, known as RKF, according to sources familiar with these conversations, contacted by La Información. Both historical partners are pursuing conflicting interests at a particularly challenging time, given growing gap in relations between Spain and Algeria comes from an agreement between Pedro Sanchez and Morocco in the Sahara.

Cepsa, which declined to answer questions from this media outlet, is trying to reach an agreement with an Algerian state-owned company to reduce the scope and scope of the field project de Rhoude el Krouf (RKF), in which the Spanish company controls 49%. Cepsa’s commitment is in line with its 2030 Strategy, in which the energy company stepped up its environmental ambitions. This roadmap, developed under the leadership of the new CEO, Marten Wetselarinvolves an investment of 5,000 million euros for sustainable projectsas well as the gradual separation of the “brown” business of the group.

Sonatrah is interested in something else. The Algerian state monopoly insists on maintaining the original scope of its alliance with Cepsa for this still-under-development asset, whose sales have exceeded 99 million euros last year at the end save investment committed within the agreed timeframe, the expected amount of which is 1 billion dollars (more than 900 million euros at the current exchange rate). Sonatrach does not want to cut the project, which could create up to 1,500 jobs at its most active stage of construction.

In favor of Sonatrach speaks significant fiscal pressure, which the Spanish company is subjected to in the country of the Maghreb. Since 2006, Algerian law has applied a tax on exceptional profits that oil companies receive when the base price of Brent crude in Europe exceeds a ceiling of $30 per barrel. In the first quarter of 2022, Brent traded at an average of $102.2 a barrel, compared to $61 in the same period last year.

The historic rise in hydrocarbon prices exacerbates the impact of this tax on companies such as Cepsa and strengthens Sonatrach’s position in the negotiation process in the aforementioned area, as Algeria will reward the Spanish oil company’s strong investment efforts with certain benefits to prosecutors, according to sources contacted. Last year, the company managed by Wetselaar poured into the Algerian treasury more than 143 million euros in tax liabilities.

The heavy tax burden faced by oil companies in Algeria is working against Cepsa in negotiations with Sonatrach.

Cepsa, Sonatrach and Alnaft, Algerian National Agency for the Evaluation of Hydrocarbon Resources, signed a 25-year operating contract extension in 2018 RKF fields. The agreement provided for the drilling of 30 new wells, the commissioning of a liquefied petroleum gas (LPG) processing plant and the construction of LPG pumping facilities.

The Algerian giant has an opportunity to put pressure on Cepsa to keep the original terms of the agreement. According to sources consulted, the Algerian state-owned company routinely includes a clause in its contracts that any conflict between the parties must be resolved at the International Court of Arbitration in Paris. Historically, this body has always ruled in favor of the Algerian company in its conflicts with companies such as the former Natural gas (today Naturgy) or Repsol.



Source: www.lainformacion.com

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