Monday, 4 August 2014

Algeria: Sonatrach's latest scandal

Algeria: Sonatrach's latest scandal
On 30 July we reported that Sonatrach’s CEO, Abdelhamid Zerguine, had been sacked and replaced by Said Sahnoun, the former Vice President for Production. Sahnoun will be Sonatrach’s ninth CEO since President Abdelaziz Bouteflika first took office in 1999 and the fifth in the last four years.

Although no reasons have been given for this surprise move, which adds to the reputation of Sonatrach’s management instability, it had been hypothesised that the open conflict between Zerguine and Energy Minister, Youcef Yousfi, over divergent visions for the exploitation of shale gas and the marketing strategy for natural gas in Europe was the primary cause. 

Our sources in Algeria indicate, however, that Zerguine was sacked because he resisted pressure from above to conduct corrupt under-the-counter deals of the kind that gave rise to the “Sonatrach scandal” in 2010.

The key name in this new scandal appears to be Ali Haddad, an extremely wealthy and powerful businessman who is a close friend and associate of the president’s brother, Saïd Bouteflika. Ali Haddad played a key role in financing and thereby ensuring Bouteflika’s re-election for a fourth term in April 2014.  

The price for his support now appears to be that his massive construction company, Groupe ETRHB, is given more Sonatrach contracts.

It is too early to know how foreign IOCs will react to this sudden development.  If it deters them from participating in the current licensing round and Algeria’s much-trumpeted unconventional oil and gas exploration and development, the cost and damage to Algeria will be no less great than the original 2010 scandal.

For a comprehensive analysis of this emerging scandal please refer to Algeria Politics & Security – 01.08.14

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