“I want a strategy for SONATRACH; it never had one before”

The country facing a noticeable fall in oil prices related fiscal revenues has recently engaged into an attempt to accommodate a more flexible approach to somehow help it gather the interest of potential investors. Speaking about the need for a proper strategy for its oil industry sector, the head of its state-owned oil and gas company, Mr Ould Kaddour Abdelmoumen said, back in 2016, “I want a strategy for SONATRACH; it never had one before”. I will publish shortly what I call SONATRACH 2030, a plan that will show us the way for the next decade.

It is in this context that an interview of Dr. Abderrahmane Mebtoul, economist and international expert in strategic management was arranged by Reporters.dz and published on Wednesday, May 16th, 2018 in French and it is reproduced here courtesy to Dr A. Mebtoul.

Accompanied by several senior executives from his company, Abdelmoumen Ould Kaddour, CEO of SONATRACH, the Algerian State oil company presented, last Sunday before the Council of the Nation, the 2017 accounts of the national company. In addition to the proposed figures, SONATRACH’s CEO addressed several other dossiers, including the management, transparency and bureaucracy issues of the company that he manages.

Dr. A Mebtoul, who voluntarily contributed at the request of SONATRACH’s CEO towards the elaboration of his Horizon 2030 Strategy labelled ‘SH2030’, welcomes the initiatives of Mr. Ould Kaddour and calls for more of the same efforts on behalf of the State to achieve the country’s energy goals. 

Reporters.Dz’s Question : Do you share the call of Mr. Ould Kaddour to make SONATRACH an economic enterprise “Relieved of any bureaucracy “?

Dr A. Mebtoul’s Answer : Yes, and I would also like to welcome the equally important efforts of the current Directorate-General. It is the manager who combines the factors of production in a way to achieve maximal profit by notably avoiding bureaucratic constraints.

Bureaucracy does not only curb SONATRACH, there is also the financial system and the educational system that are not adapted. Moreover, the departure of 10,000 executives at retirement age or towards international companies is due to an error, that is of retiring, upon reaching 60, all executives of SONATRACH.

Do you consider that the strategy of the national company of the Horizon 2030 (SH 2030) will have the necessary means to enable it to achieve its objectives?

It takes for SONATRACH, a strategic management and I think its Horizon 2030 strategy goes in the direction that is, to make this company an international level entity, free of all constraints. It is also necessary to apply to all public enterprises the law on the autonomy of enterprises.

How did you greet the will of Mr. Ould Kaddour to present the balance sheet of SONATRACH annually before the two parliament houses?

The idea is very good! Mr. Ould Kaddour Is doing an excellent job with his staff, let him work under the SH 2030 program. The national economy must be reorganized on a transparent basis and SONATRACH is only one element that evolves in a global economic environment.

What are the constraints on SONATRACH that the CEO of the national company alluded to?

The first is to have transparent accounting. Currently, SONATRACH has consolidated accounting, i.e. it is not known whether this or that refinery is profitable. Companies need to be empowered with analytical accounting to know whether they are under good management or not. Another constraint on the management of SONATRACH is the “imposed” prices. The oil company is obliged to sell at a subsidized price while the subsidy must be outsourced from SONATRACH and that it markets in Algeria at market prices.

On the other hand, the renewable energy component did not get much of a response to the Council of the Nation…

While some have considered that this has been tackled in a pithy way, it is important to know that it is not SONATRACH’s responsibility to have a renewable energy strategy but that of the government’s. And in this regard, renewable energies must be left with the Ministry of Energy. In the context of the energy transition, efficiency is a very important element to be taken into consideration by the Government. It is not normal, for example, to continue building in brick and concrete block, that then would require air conditioning while there are nowadays construction methods that could provide up to 30% of energy savings. The Ministry of Housing needs to get in tune and initiate proposal