Law No. 05-07 – Law concerning Hydrocarbons

Last updated: 22 February 2022

Law No. 05-07 covered all matters pertaining to oil and gas activities within Algeria and created the current regulatory authorities in the Algerian government.  It replaced Law No. 86-14.  Under this law, all oil and gas resources in Algeria are owned by the State.


Thus, this regulation created the National Agency for the Valorisation of Hydrocarbon Resources (ALNAFT), which is in charge of promoting the development of hydrocarbon resources in Algeria.  ALNAFT is the exclusive holder of all titles for the exploration of hydrocarbon resources and may award such titles through contracts between ALNAFT, Sonatrech (the national oil company) and a third company, if applicable.


It also created and Hydrocarbon Regulatory Authority (ARH), which maintains regulations concerning technical issues, including safety and environmental standards.  ARH is also in charge of enforcing the principle of free access to transport infrastructure.


The law requires that every oil and gas development is preceded by an environmental impact assessment study and an environmental management plan. These documents shall be presented to the ARH which will liaise with the Ministry for the Environment in order to proceed with the proper authorization. The Ministry for the Environment is also responsible for approving, together with the Ministry of Hydrocarbons, any use or transference of carbon credits.


Furthermore, it defines different taxes pertaining to oil and gas exploration, including royalties on oil income.


With regards to methane, the law does not create environmental standards limiting the release of methane nor recordkeeping/reporting requirements. However, it does establish a prohibition on flaring absent a specific derogation.  Where a derogation is granted, the law applies a tax of DZD 8,000 per thousand normal cubic meters of gas that is flared from a particular site. 


Law No. 05-07 was superseded in December 2019 by Law No. 19-13.  Under the new law, contracts existing under the previous law remained in effect but cannot be extended or renewed.

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