Trained Engineer Takes On Algeria's Energy Monolith

Trained Engineer Takes On Algeria's Energy Monolith
The scene revealed the scale of the challenge facing Abdelmoumen Ould Kadour.

In December Ould Kadour revived ties in December with Total, ENI and Saipem, but his ability to nurture those relationships and reverse years of stalling production will depend on how his company's 40,000 employees respond to his message of change.

He is an unlikely manager in a country known for secrecy and a suspicion of Westerners dating from ties to the Soviet Union and the trauma of the 1954-1962 independence war with France.

But energy revenues have halved since 2014 and President Abdelaziz Bouteflika, the 81-year old leader who might run for a fifth term next year, is struggling to maintain a welfare state necessary for social stability.

The government has launched austerity measures, banning the import of 900 goods and freezing public sector hiring and development projects.

Doctors and teachers have been on strike in several cities for three months demanding better pay and conditions and the state has been unable to end dissent by paying out as it did when a barrel of crude cost $100 instead of $70 as now.

This has turned improving the efficiency of the state oil company into a political imperative. "Ould Kaddour has no choice but to succeed as Sonatrach's CEO," a former energy minister told Reuters.

Critics of the CEO say he has only been appointed because of Bouteflika and will last no longer than his many predecessors.

"If Bouteflika quits, Ould Kaddour would be sacked in the next five minutes," a former Sonatrach executive said.

Balancing Act

With the presidential election looming, Ould Kadour has sought to cut Algeria's import bill by recruiting oil trader Vitoil to swap crude for the petrol in growing need at home.

"The strategy was to show that Algeria, which is a big oil producer, is not spending gigantic sums on imports of products," an oil insider said.

One delayed gas field was brought online last year with three more slated to start producing this year, lifting annual gas output of 94 billion cubic metres by 9 billion cubic metres.

Sonatrach has signed a $1 billion deal with Turkey to build a petrochemical facility, discovered crude in Niger and explored cooperation with Iraq. It is also considering shale, but protests in 2015 from Algerians fearing environmental damage have made that politically unpalatable for now.

In further signs of a balancing act, company sources say Sonatrach will offer more flexible short-term gas contracts on terms of 10-15 years or less instead of 20-25 and invest $250 million in the Tinhert gas field project using Algerian firms.

Ould Kadour's sentencing by a military court in 2007 on charges working for a foreign country was part of an internal regime conflict typical for Algeria, observers say.


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