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* Gas plant siege stirs fear of rising costs
* Parliament votes in long-awaited oil, gas law
* Costs seen rising across North African oil sector
By Emma Farge
GENEVA, Jan 21 (Reuters) - Investment in Algeria's oil andgas sector may fall as concerns about the costs of securityafter a bloody siege at a desert gas plant eclipse the impact ofa hydrocarbon law designed to win over foreign firms, executivesand analysts said on Monday.
Algeria's parliament acted quickly on Monday to endorse anoil and gas law, cancelling a windfall tax on foreign firms, ina move seen as a bid to reassure foreign investors and reversedeclining interest in the OPEC member.
But executives say the attack, which left more than 60people dead including many foreign workers, could mean thatinvestment in Algeria and other oil-producing neighbours such asLibya and Mauritania lags behind other regions.
"Costs that are already extremely high will become evenhigher," said Repsol's Algeria country manager Gabino Lalinde ina telephone interview.
"Security risks and this new cost escalation will makeAlgeria less attractive to international oil firms," he added.
The Spanish firm produces around 8,500 barrels of oilequivalent per day in the country and has facilities deep in thesouthern Algerian Saharan desert and near BP's In Amenas site.
Algeria's oil and gas sector, which accounts for 98 percentof the country's exports, has struggled to lure in investment inrecent bid rounds as executives eye the booming sectors of Iraqand east Africa.
Analysts said that Algeria's new law could be too late toreverse the investment trend.
"The change in the hydrocarbon law has come two-three yearstoo late. They've already had unsuccessful bid rounds and theIOCs (international oil companies) have been voting with theirfeet," said Charles Gurdon, managing director of MenasAssociates, a political risk consultancy.
Libya and Algeria are Africa's third and fourth largest oilproducers with Libya also the largest oil reserves holder on thecontinent.
Together with Egypt, they are important gas suppliers toEurope.
BALANCING ACT
Alone among its neighbours, Algeria has so far been largelyuntouched by uprisings in 2011 that ousted leaders in Egypt,Libya and Yemen.
Any drop in Algerian investment could have seriousconsequences for a country which relies heavily on oil and gasrevenues to pay for its 6 million tonnes a year of grainimports, seen as vital to ensuring domestic stability.
Oil majors such as BP and Total have been gradually reducingproduction in Algeria by either selling assets or lettingexisting investments lapse, raising concerns that there will notbe enough new projects to maintain output.
Edward Bell of the Economist Intelligence Unit said thatdeclining investment in Algeria's the oil and gas sector couldaffect spending on infrastructure and social projects.
"For now Algeria has comfortable reserves, but in the longerterm its fiscal position could be impacted," he said, addingthat youth unemployment - a feature of Arab Spring countries -also plagues Algeria.
Libya ranked 12th and Algeria 13th out of 17 major economiesin the Middle East and Africa in a survey by the EconomistIntelligence Unit.
Algeria needs an oil price of $121 to balance its books,according to a November estimate from the International MonetaryFund, as falling oil production and low gas prices hit earnings.
CROSSROADS
The chief executive of Statoil, which is still missingworkers at the Algerian gas facility, said on Monday that theattack represented a "crossroad" for the global oil and gasindustry that would raise many questions.
"We have a responsibility to run our business and supportdaily operations ... we cannot and will not let a terroristattack interfere in our determination," Helge Lund told a newsconference.
BP has evacuated workers from Algeria and an industry sourcesaid that other firms had taken steps to remove foreignemployees from desert sites.
Neighbouring Libya has also beefed up security in its oilfields and energy firms were considering similar measures inEgypt as Islamist militants threatened to attack newinstillations in north Africa.
The In Amenas attack, which occurred close to the borderwith Libya, could also have implications for that country's oiland gas sector as long-standing clients begin to showfrustration at supply disruptions caused by protests andstrikes.
"The industry is going to assume that everything in NorthAfrica is affected in terms of security, including Libya andalso Morocco and Mauritania," said Gurdon.
Some Libyan oil fields such as Italian group Eni's Elephant are located several hundreds of kilometres across thedesert from In Amenas, where the hostage tragedy unfolded thisweek.
Several U.S. oil firms have yet to return to resumeexploration in Libya after the 2011 conflict due to securityconcerns.
"Should Libya be subject to similar attacks by Al Qaeda inthe Islamic Maghreb, we see a particular downside risk to Libyanoutput prospects for this year and for longer-term productionprospects, as foreign firms will be reluctant to resumeexploration and return expatriates to Libya," said Amrita Sen,Chief Oil Analyst at consultancy Energy Aspects in London.
