Algeria's Energy Future was launched at a half-day round-table seminar at Chatham House, London, on Wednesday 6 April.
The report was presented at the seminar by its lead authors, Jon Marks and John Hamilton, and critically assessed by Algerian and international experts. Read more
The African Energy Atlas has established itself as an indispensable resource for energy industry professionals.
The 2011 edition features more than 45 maps and charts drawn with expert care by journalist cartographer David Burles. Read more
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A detailed and frank analysis of Libya’s energy sector
Published in July 2010, Libya's Energy Future provides authoritative, independently sourced analysis of Libya’s energy sector policy and history, examines the country’s governance and financial record and assesses the potential for international partners to do business with its institutions and interest groups.
Algeria's Energy Future was launched at a half-day round-table seminar at Chatham House, London, on Wednesday 6 April.
Based on African Energy's unparalleled track record in following Algeria’s energy sector, with additional originally sourced journalism from both within the country and from global markets, Algeria’s Energy Future features political analyses and insights based on decades of reporting experience in the country.
It is essential reading for anyone considering doing business in the Algerian energy sector.
The report profiles key players in the energy and political spheres and examines in detail – with supporting maps, graphics and project-by-project listings – the prospects for the power and renewables sectors, and upstream and downstream oil and gas operations.
Sonatrach forecasts confirm gas field declines as Algeria confronts difficult political future
Algeria’s Energy Future brings rare and detailed data into the public domain that reveal how Sonatrach planners expect output from the giant Hassi R’mel and other gas fields under its management to decline in coming years. The estimates clearly indicate that the mainstay of gas production for the past half-century may be largely depleted in two decades’ time.
In researching AEF, African Energy unofficially obtained a Sonatrach internal assessment of the production capabilities for the 67 producing fields it operates (excluding a handful of inter national oil company-controlled fields). The Algerian authorities are notoriously reluctant to release detailed data about production and reserves, so although the information is problematical in some respects (starting in 2006, it suggests an old line of data), it significantly adds to the knowledge of what is happening.
It describes a clear and worrying trend of falling output and sounds a vivid and pessimistic warning of the challenge now facing the state energy giant as it plans its future.
Excerpt from Algeria’s Energy Future:
Highly personalised system on a knife-edge as neighbours fall
Algeria’s highly personalised politics are dominated by a relatively small elite of décideurs and professional politicians. Promotion can take many years and informal relations are often more important than policy-making
Algeria’s ruling elite was looking exposed even before the regimes in Tunis, Cairo and Tripoli started to fall. After a year of bitter infighting between the presidency and the Département du Renseignement et de la Sécurité (DRS – military intelligence service), a great deal of dirty washing had been aired in public. The level of social discontent is high, thanks to official incompetence and economic mismanagement, but no one wants another civil war. The result is a repressed, but simmering anger which has manifested itself in frequent strikes and disturbances – exemplified by the more than 30 desperate souls who have self-immolated in the example of the Tunisian fruit and vegetable seller Mohammed Bouaziz, whose death sparked the riots which led to the fall of the regime there. These frequent demonstrations of deep frustration are separate from the underwhelming weekly protest marches organised by the copycat and now split opposition group the Co-ordination Nationale pour le Changement et la Démocratie (CNDC),whose leaders are mostly compromised by their past co-operation with
the regime.
The sense that it could be next has galvanised the regime to protect itself and its interests via a mixture of judicious concessions and firm policing. The 19-year old state of emergency law has now been lifted – only to be replaced by a raft of other security legislation. This has gone down well abroad, but real engagement in politics is still effectively prohibited. It has nevertheless reduced the pressure, wrong footing the CNDC at an early stage. Its protest in Algiers – policed by many thousands of officers attracted just dozens of participants.
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London launch, 6 April, Chatham House
Algeria's Energy Future was launched at a half-day round-table seminar at Chatham House, London, on Wednesday 6 April.
The report was presented by its lead authors, Jon Marks and John Hamilton, and critically assessed by Algerian and international experts, including Dr Claire Spencer, Head, Middle East and North Africa Programme, Chatham House, and Dr Hakim Darbouche, Research Fellow, Oxford Institute for Energy Studies.
Topics discussed included:
Political stability – The uprisings against the regimes in both Tunisia and Egypt have raised the question of whether Algeria could follow. Discussion will focus on the moves made by the Bouteflika presidency to shore up its position, the role of the military and state security within the pouvoir, and the social and economic pressures which are building for change.
Key institutions – The sprawling empire of Sonatrach is responsible for two-thirds of Algeria’s exports. After a year of damaging corruption allegations, the corporation is attempting to regroup and reform. We assess the challenges and difficulties ahead.
Energy policy – Published in February 2011, the new energy policy calls for more exploration, greater use of renewables and increased investment in electricity infrastructure. We analyse whether the fundamental problems have been addressed.
Decline in gas reserves and their impact on Algeria’s place in global markets – The decline of the massive Hassi R’Mel field is placing huge pressures on policy makers. This will be discussed with reference to the most detailed unpublished official production forecasts, obtained by African Energy.
Trajectory of nationalist investment policies – As the political and social pressures have mounted, the government has taken refuge in ever more nationalist approaches to investment and resources. Economically unsustainable in the long term, these policies are nevertheless hard to retreat from. We ask what the future holds for foreign-owned businesses.
Security and the Sahel – Low-level social unrest is troubling many towns and wilayas throughout the country and Al-Qaeda in the Islamic Maghreb continues to operate in the hinterland of Algiers and the Kabiliye areas. A spate of kidnappings in the Sahel have also been linked to the terrorist group. Are political and social reform possible while the shadow of violence remains?
Excerpts from Algeria's Energy Future
Leadership grapples with policy challenges to rebuild social contract and investor confidence
Algeria’s energy industries cannot be understood without a grasp of local political realities and a power structure in which personal connections and entrenched ideological positions play a critical role in shaping policy and business outcomes. Algeria’s Energy Future seeks to provide a rounded view of this complex polity and the energy industry that generates the bulk of its income, with insights into the challenges of maintaining oil and gas production, coping with fast-rising demand for electricity, and into the decision-making processes that underpin them
Overview: Yousfi confronts past errors while setting new policy direction
Following the crisis that beset Sonatrach last year, the new minister is looking to overhaul industry structures and practices to better meet rising domestic demand and accommodate evolving export markets. Meeting the energy industry’s various challenges will require significant policy shifts, which in the Algerian context means winning some
heated political battles as well as producing coherent technical arguments
Algeria’s energy sector has yet to regain its sense of purpose in the aftermath of the ‘Sonatrach affair’. The dismissal of president director general (PDG) Mohammed Meziane and almost the entire executive committee in early 2010 – followed some months later by the sacking of energy and mines minister Chakib Khelil – left the sector traumatised and disoriented. Over the past six months, new minister Youcef Yousfi has been putting in place a strategy to both heal the wounds and set a new direction. This is an effort to rectify what many Algerian analysts see as Khelil’s policy errors, but also to
reset the way that Sonatrach operates.
The region’s volatile political context appears to have lent the reforms added momentum as the regime looks to its future. Additionally, a range of sources in Algiers and elsewhere believe that the ‘clan’ of President Abdelaziz Bouteflika – which included his friend since childhood Khelil – may have made peace with General Mohammed Tewfik’ Mediene’s powerful Départment du Renseignement et de la Securité (DRS) military
intelligence service towards end-2010 (see Policy and Politics).
Who’s who in the energy sector: key players in a hierarchical and often personalised system
In May 2010, everything changed in the energy sector when the entire cast of senior officials and executives was replaced. African Energy profiles the main players, their backgrounds and responsibilities
YOUCEF YOUSFI: Energy and mines minister ALI HACHED: Ministerial adviser SID ALI BETATA: Alnaft secretary-general NOUREDDINE BOUTERFA: Sonelgaz PDG ABDELHAK BOUHAFS: Technocrat in waiting NORDINE CHEROUATI: Big return as crisis PDG SAÏD SAHNOUN: Upstream vice president ABDELKADER BENCHOUIA: Downstream vice president ALLAOUA SAÏDAN: Pipelines and transport vice president YAMINA HAMDI: Marketing vice president ABDELHAMID ZERGUINE: Subsidiaries and holdings executive director ABDELMAJID ZEBIRI: Human Resources executive director YOUNES HEGUEHOUG: Central activities executive director FATMA-ZOHRA BENOUGHLIS: Strategy, planning and economics executive director FARID BOUKHALFA: Finance executive director NAIMA BOUTEMEUR: Health, safety and environment central director
Huge new investment planned to meet rising demand for electricity
The power sector is dominated by a single overwhelming priority – to keep pace with the country’s rapidly increasing and unchecked demand for electricity. But other issues are intruding, such as concerns over the long term viability of Algeria’s current gas reserves and the fact that no one pays a realistic amount for the electricity they consume. Nevertheless, the new energy strategy includes a further massive investment programme ingeneration, transmission and distribution
Renewables development ambitions hinge on large-scale industrial partnerships
The government is more committed to promoting large-scale renewables schemes than was previously the case – when policy-makers were firmly commited to the carbon economy at the expense of everything else. Algiers has ambitious plans for solar development, wedded to a renewables industrialisation drive. The clear message from Algiers is that projects won’t happen unless they are linked to investments that create jobs and transfer technology
Three recent unsuccessful rounds have severely contracted IOCs’ contribution to new exploration, and a prospective fourth round will have to significantly improve conditions if it is to attract international interest
Lack of gas puts downstream plans into question
The Algerian government and Sonatrach are deciding whether to risk a potentially bruising series of legal challenges if they decide to scrap a number of downstream petrochemicals projects. The general manager of a Sonatrach subsidiary who attended a meeting with energy and mines minister Youcef Yousfi at which the contracts were
discussed told African Energy that a number of options were being considered
Algeria holds firm on long-term take or pay
The Algerian authorities are unwilling to compromise on long-term gas supply agreements, in spite of pressure from the market to sell some output at a rate closer to the spot price
Who’s who in Algerian politics
African Energy profiles some of the prominent personalities on the contemporary political scene
Abdelaziz Bouteflika
Mohammed ‘Tewfik’ Mediène
Saïd Bouteflika
Ahmed Ouyahia
Dahou Ould Kablia
Mouloud Hamrouche
Abdelaziz Belkhadem
Abdelmalek Sellal
Mohammed Betchine
WikiLeaks exposes corruption and division at highest level of government
Controversial cables confirm damning assessment of most powerful forces in the land
The publication by Julian Assange’sWikiLeaks organisation of secret US embassy cables in early December exposed the government in Algiers to its fair share of unwanted
intrusion. In common with many governments in the Middle East and elsewhere, a significant gap has been demonstrated to exist between what it says and what it actually thinks. The Algerian press eagerly republished cables analysing the presidential succession, the President himself and the security services – topics which could previously have resulted in jail terms or worse for journalists who wrote on them.
The most controversial cables by US ambassador Robert Ford provide a highly critical outline of the Algerian social and political environment and a damning assessment of the most powerful forces in the land, particularly the military and security establishment. Ford knew Algeria well, having held the fort in Algiers during the difficult early 1990s, when he took a deep interest in Islamic radicalism as one of the few expatriates left in
the city. His genuine insight into the country lent an undiplomatic edge to his assessments, even when speaking on the record. In his private cables, he describes a deep social malaise; the sense of a country “drifting”; a failure by the regime to tackle systemic economic problems; a weakened president; and a sclerotic and paranoid military intelligence service.
Embarrassingly for both sides, a December 2007 cable by Ford, provides a rare view of what Departement de la Renseignment et du Securité (DRS) chief General Mohammed ‘Tewfik’ Mediène was thinking before the constitutional changes to allow President Bouteflika’s third term.
Economic nationalism continues to drive policy
Revisions to the liberal 2005 hydrocarbons law that effectively restored Sonatrach’s control over the industry proved to be a key indicator of a wider trend in the Algerian economy – towards primacy of the state over private enterprise and the promotion of populist ‘resource nationalist’ policies. This has made life harder for investors
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