Merak Fiscal Model Library

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Algeria R/T (2005)

Fiscal Term Description
Fiscal Regime Type Royalty Tax
Governing Legislation 2005 Hydrocarbon Law.
• SONATRACH has option to participate up to 30% (minimum 20% if participating)
State Participation • Contractor carries SONATRACH for its share of exploration costs.
• SONATRACH repays Contractor for carried exploration costs from its share of production.
Signature Bonus Negotiable.
Training Fee Negotiable.
VAT & Import Duties E&A activities are exempt. VAT paid assumed to be recovered therefore not included in the model.
• Amount due in Algerian Dinars per square km based on Contracting Perimeter Area (default $0).
• The Area Rental is Non-tax deductible for IT or PRT.
Zone A Zone B Zone C Zone D
Period
(Dinars/km2) (Dinars/km2) (Dinars/km2) (Dinars/km2)
Area Rentals Exploration Yrs 1-3 4,000 4,800 6,000 8,000
Exploration Yrs 4-5 6,000 8,000 10,000 12,000
Exploration Yrs 6-7 8,000 12,000 14,000 16,000
Development 400,000 560,000 720,000 800,000
Restraint Period 16,000 24,000 28,000 32,000

• Incremental sliding-scale royalty based on production rate and area (Mode Default is Zone A).
Sales Production Zone A Zone B Zone C Zone D
(BOE/d) (%) (%) (%) (%)
<=20,000 5.5 8.0 11.0 12.5
Royalty >20,000 <=50,000 10.5 13.0 16.0 20.0
>50,000 <=100,000 15.5 18.0 20.0 23.0
>100,000 12.0 14.5 17.0 20.0
Royalty basis is Sales revenue less Transportation Costs

• Contractor’s Taxable Income = Revenue – Deductions

Where; Contractor’s Revenue = Contr Net Revenue + NOC Carry Payback
Contractor’s Deduction = Training Fees + Capital Depreciation + Amortized Capital Uplift + Abandonment
Costs+ Gas Injection Costs

Expl G&G and G&A costs are depreciated 6 yr SL from production start.
Petroleum Revenue Tax
E&A drilling costs are expensed.

Development drilling costs are depreciated 4 yr SL from production started.

Development non-drilling costs are depreciated 10 yr SL from production started.

PRT Uplift for deduction is applied to all capital spent in the project. The Uplift rate is
different between zones. The table below shows the PRT Capital Uplift schedule.

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Algeria R/T (2005)

Fiscal Term Description

Zones A & B Zones C & D
Uplift Rate (%) 15% 20%
Amortization 5 Yr SL 8 Yr SL
* Zone A&B capital uplift is the default in the model. If zones C&D are to be modeled, user must override
default settings in the PRT Uplift Rate Add-in (Тах/Тах Side tab) to 20% and override the default settings in
Depr PRT Uplift Add-in columns on the Tax/Tax Side tab and change the method to 8 year straight line.
(Capital uplift is applicable for PRT deduction only, not for Corporate Income Tax.)
• PRT Rate is based on Cumulative Value of Production; Value of Production = Revenue –
Transportation Costs - Royalty – Capital Depreciation – Capital Uplift Depreciation - Training
Costs – Gas Injection Costs - Abandonment. The PRT Rate is shown in the table below.
Cum. Value of Production Applicable PRT Rate
Interpolation
(Billion $) (%)
0–1 20 Flat
1–4 20 – 70 Linear
>4 70 Flat

ALGERIA R/T (2005) PRT RATE

80

70

60
PRT RATE ( % )

50

40

30

20

10

0
0 1 2 3 4 5

CUMMULATIVE VALUE OF PRODUCTION ( BILLION $ )

• Negative Taxable Income will be carried forward until fully recovered.

• Expenditure related to enhanced recovery using horizontal wells is subject to an uplift of 20%
and an amortization period of 5 years.
Note: there are 2 depreciation settings for each capital depreciation group in this model on the Tax tab, including the PRT
Uplift Amortization – one for Project level depreciation, and another for Contractor/Company level. The Project level
depreciation calculation is used for Project’s Cumulative Value of Production calculation for the PRT Rate. The
Contractor/Company (combined) depreciation calculation is used for the PRT and Income Tax calculation at the Contractor
and Company level. If one of the capital depreciation groups need to be changed its method in a case (e.g. due to zone
difference), the change needs to be set in both levels for the capital group.
• Taxable Income as for PRT
Profit Surtax / ICR / • Deductions as for PRT, plus PRT liability and operating costs; not including PRT Capital Uplift.
Corporate Income Tax • 30% Country-wide.
• Negative Provisional Income will be carried forward until fully recovered.
Withholding Tax None.
Ring Fencing Around the Contract Area.
Schlumberger Information Solutions
Merak Fiscal Model Library is licensed and supported by Schlumberger Information Solutions (SIS). SIS is an operating unit of Schlumberger that
provides consulting, software, information management and IT infrastructure services to support the core operational processes of the oil and gas

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Algeria R/T (2005)

industry. SIS enables oil and gas companies to drive their business performance and realize the potential of the digital oilfield. SIS is on the Internet at
www.sis.slb.com 04-IS-171

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