Algeria has the institutions that it needs to energize if it wants a State with the rule of Law; a sine qua non condition for a sustainable development and above all for its credibility at both national and international levels. Could Re-activating Algeria’s National Energy Council for a robust energy strategy be an absolute necessity and at the earliest of times?
For starters, the National Energy Council (CNE) alone could set Algeria’s energy strategy but it is itself  in great need to be, as it were, re-energized.

This contribution looks in depth at the National Energy Council and the management of SONATRACH (SH).  

Legal texts are a necessity but an insufficient condition: the important thing is to act on the functioning of Algerian society, as a function of the power relations of the various political, economic and social components, themselves as linked to the world economy so that these laws are applicable.

The National Energy Council

The National Energy Council, as a supreme organization for the country’s energy strategy, set up by Presidential Decree on April 8th, 1995, in its Article 6, stipulates

·      “The Council shall meet periodically on the convening of its president”, the President of the Republic whose secretariat (article 5) is provided by the Minister of Energy and composed of the so-called sovereignty ministers (National Defence, Foreign Affairs, Energy and Finance), the Governor of the Bank of Algeria and the planning delegate.  This Article 6 states also that:

  • ·      The National Energy Council is responsible for monitoring and evaluating the long-term national energy policy, including the implementation of a long-term plan to ensure the energy future of the country.
  • ·      An energy consumption model to be based on all national energy resources, external commitments and the country’s long-term strategic objectives;
  • ·      The preservation of the country’s strategic reserves in the field of energy; Long-term strategies for the renewal and development of national oil reserves and their recovery;
  • ·      The introduction and development of renewable energies; strategic alliances with overseas partners involved in the energy sector and long-term trade commitments.

As far as prerogatives are concerned, it is no longer SH to grant the operating perimeters under the new Oil Act of April 28th, 2005 as amended on July 29th, 2006 together with January 2013 Law extending the rule of 49/51% ownership and Introducing the exploitation of Shale Gas and reconducting the same procedures but onto ALNAFT, a Ministry of Energy dependent agency, thus maintaining functional relations with this structure as well as with another agency, the Authority of Regulation to monitor prices mechanisms.

The new law established at least 51% of SONATRACH’s shares of the perimeters granted by ALNAFT and less than 49% to the various other oil companies.

Other SONATRACH’s organizations

The General Assembly Is composed of the Minister of Energy and Mines, the Minister of Finance, the Bank of Algeria’s Governor, the delegate from the Planning Department, a representative of the Presidency of the Republic.

Article 9.3 specifies that the General Assembly shall meet “at least twice a year in ordinary session” and in “special session on the initiative of its Chairman or at the request of at least three of its members, of the auditors or of the President and CEO of SH”. At the end of each session, the General Assembly is required to send its report to the President of the National Energy Council, who is the President of the Republic.

The Board of Directors is composed of the President and chief executive officer of SH, the CEO of SONELGAZ, the utility provider the vice-president of pipeline Transport, vice-president of marketing, the department’s director general of hydrocarbons, another departmental representative and of two representatives of the SH Union.

The Executive Committee is the real working ankle of SH and comprises the CEO of SH, the secretary general of SH, the Vice-Presidents of upstream, downstream, pipeline and marketing-of the executive director of Finances, the director Executive of Human Resources and of the executive director of all central activities (DAG), the Director of strategy, Planning and Economics-of the Executive Director Health, safety and environment. And not to mention the holdings that are annexed to the Vice-Presidents. Thus, upstream is attached to the holding oil and paratanker services; For downstream, holding refining, chemical hydrocarbons (example Naftec) ; For the commercialization of the holding Sonatrach, it is attached to it the holding Sonatrach/valuation of hydrocarbons (example Naftal). At the international level, the Sonatrach group has set up a system of reorganization of its activities through the grouping of subsidiaries abroad around an international holding company (S.I.H. C) created in July 1999 which operates in different countries.

For a new strategic management of SH

Transparency in the management of SH should be based on a scientific and operational approach, from the general to the particular, to seize the interactions and be able to carry out actions through successive steps. 

Making SH more efficient would imply several strategic actions: starting with repositioning it in the international and national context immediately followed by a system of real-time organization based on networks and no longer on the current hierarchical vision type of organization. Transparent cost centers including the management of any partnership; rational management of human resources, an essential element of strategic management, involving executives listening to the collective of workers through a permanent and constructive dialogue.

All these actions refer in fact to the establishment of the rule of law and the urgency of renewed governance. If we want to fight against overbilling, illegal transfers of capital, make more efficient control of SH (this concerns all sectors), there is an urgent need to revive the now completely collapsed information system, posing the problem of transparency of accounts and accounts. Having had in the past, lead a financial audit on SH with an important team of executives of SH and experts, it was impossible for us to accurately identify the structure of the costs of Hassi R’mel and Hassi Messaoud whether for the barrel of oil and the MBTU of gas as delivered to ports, because of all those consolidation and transfer accounts of SH distorting any visibility.

In any case, the business management is inseparable from global internal and global governance.  The growth or not of the world economy in the field of hydrocarbons, the geostrategic factors and the new model of global energy consumption play as an essential vector in the increase or decrease in revenue from SH, to avoid isolating the micro-governance of the national and global macro-governance that are inextricably linked. That is why it is necessary to revise the current ‘oil law’ which has not attracted potential foreign investment, for it is unsuitable for the new economic and to rethink the strategic management of SH in order to reduce costs by better management and hopefully position amongst the TOP global companies.