* Algeria to start new oil and gas bidding round
* OPEC member looks for foreign investors to developreserves
* Security a concern for foreign firms since Amenas attack (Adds background)
By Hamid Ould Ahmed
ALGIERS, Oct 29 (Reuters) - Algeria is preparing a newauction of oil and gas blocks, an official said on Wednesday,after the North African country awarded just four of 31 fieldslast month in the first attempt to lure foreign investors since2011.
Algerian officials described last month's result asacceptable but analysts said the OPEC member needed to do moreto improve conditions and attract more foreign oil operators.
"We are preparing a new bidding round. It will be launchedwithin weeks," Sid Ali Beta, head of hydrocarbons agency ALNAFTwhich oversaw the bidding, told reporters at the signing ofcontracts with the winners of the Sept. 30 auction.
He gave no details.
One of the winners, Italy's Enel, plans to invest$700 million at its four oil and gas blocks in Algeria in thenext five to six years, Marco Arcelli, the company's executivevice president for upstream gas, said at the signing ceremony.
The Italian utility's consortium with Dragon Oil wontwo new blocks, adding to two existing ones.
Beta said the first phase of operations at the four blockswill include drilling around 11 wells at an estimated cost of$150 million.
He said around $270 million will be invested in the secondphase to drill 15 wells.
Said Sahnoun, interim chief of state-owned energy firmSonatrach, said he is looking forward to "profitable results"from the contracts.
"This is the beginning of a new adventure that I hope willbe fruitful. This partnership is based on sharing of know-howand risks," he said.
Spain's Repsol in partnership with Royal DutchShell won the Boughezoul area in the north of thecountry, while Shell and Norway's Statoil won theTimissit area in the east.
"It's a challenge to start this project. We will begin a newphase. We will start working tomorrow," Gabino Lalinde, Repsol'shead of affairs unit for Algeria, said at the same event.
In a disappointing 2011 auction, Algeria secured bids forjust two fields out of 10 -- one from Spain's Cepsa and theother from Sonatrach. But a new hydrocarbons law passed in 2013offers tax and contractual incentives and benefits forunconventional energy investments.
SECURITY WORRIES
Algeria supplies a fifth of Europe's gas needs, but itrelies on mature fields for most of its energy output and looksto foreign explorers to help develop new reserves and increaseflagging production.
Foreign oil executives have in the past complained aboutAlgeria's tough contract terms, often difficult businessenvironment and security worries, especially after a 2013 attackon the Amenas gas plant killed 39 foreign contractors.
Officials were optimistic before last month's bids, havingdelayed the auction twice after foreign players asked for moretime to study the fields. They reported initial interest from 50companies and cited incentives under a new oil law, improvementsin security and the potential of the fields on offer.
An increase in output is vital for a government that reliesheavily on energy exports for state income and to pay for socialprogrammes, including food and fuel subsidies that have helpedkeep it stable amid turbulent times in North Africa.
Analysts say rising domestic energy consumption will also bea concern should Algeria fail to draw the kind of investmentrequired to bolster its production. Oil output last year was 1.2million barrels per day, about the same as in 2012.
Security has been a concern since the 2013 Amenas attack,which prompted BP and Norway's Statoil to pull workers out. Thekidnapping and beheading of a French tourist last month was areminder of risks in the North African country, which fought awar against Islamist extremists in the 1990s.
Still, Statoil this month said the Amenas plant, whichproduced 11.5 percent of Algeria's gas output before the attack,was due to return to full production soon after improvements insecurity. (Reporting by Ahmed Hamid Ould; Writing by Ulf Laessing;Editing by Emelia Sithole-Matarise, David Evans and Dale Hudson)
