Algeria’s Sonatrach faces struggle to satisfy clients: CEO

Sonatrach copy

ALGIERSE / Reuters

Algeria’s state energy company Sonatrach is facing difficulties meeting clients’ demands for gas exports, its chief executive said, citing unwieldy beaucracy and the need to attract more foreign expertise.
Sonatrach, Algeria’s cash cow and a major gas supplier to Europe, has been shaken by corruption scandals, the frequent departure of top executives and bureaucratic inefficiencies that have hindered development of new oilfields.
“The period between November and March is going to be difficult,” Ould Kaddour told his managers at a briefing open to the media, referring to gas exports.
“But we will find the resources to respect our commitments thanks to the genius of young engineers.”
He did not elaborate on specifics but said that Sonatrach needed to reform and cut down on red tape to become more competitive.
The sprawling company has been hit by delays in launching new fields because foreign businesses have been reluctant to invest because of tough contractual terms. Sonatrach has also had seven CEOs in 10 years.
Kaddour, who was appointed in March, said he would undertake the necessary reforms.
“I have the support of the President and the Prime Minister to do my job,” he said at the briefing dubbed as a “brainstorming session”, where he gave a rare insight into the secretive state company.
“When I arrived at the office six months ago, I found a pile of documents and letters that needed to be signed on a daily basis. This my job,” Kaddour said.
“No long-term vision, no communication.”
Algeria remains dependent on oil and gas earnings that provide 60 percent of the state budget, with Sonatrach’s performance key to the health of the economy.
The North African OPEC member has sought to address its difficulties attracting oil investment and last year began to take a more flexible approach to bilateral talks with foreign partners.
However, there have been divergent views within Algeria’s ruling elite over how hard to push for foreign investment and domestic economic reform to boost revenue and spur growth.
One senior Sonatrach source told Reuters last week that Algeria wanted to introduce a new energy law before the end of the year to offer tax incentives for investors and to facilitate oil and gas exploration including untapped shale prospects.

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