Saturday, June 24, 2017

Sonatrach CEO Urges Simplifying Business, Focus On Output

Posted by May 12, 2017

The new chief of Algeria's state energy company Sonatrach has urged employees to simplify bureaucracy, and focus on the core business of production as the North African state deals with lower oil prices, an internal company letter shows.

The message from new CEO Abdelmoumen Ould Kadour was sent to Sonatrach employees just over a month after he took the job as the oil giant's sixth chief executive in seven years, a period marked by instability and a collapse in global crude prices.

It appeared to be another sign of flexibility from Sonatrach as it looks to increase oil and gas production and work with foreign partners to open up delayed projects and increase energy production to offset lower prices.

Algeria has seen its energy revenues halved since the oil price drop began in mid-2014, forcing the government to cut budget spending and start small reforms to the vast social welfare system financed by energy earnings.

"We need to simplify the way we work, review our procedures, make a qualitative leap and focus our efforts on the core business of our company namely production, the development of our activities," Ould Kadour said in the message, a copy of which was seen by Reuters.

It is not the first time Sonatrach has pushed to streamline its operations in the last three years, but the new CEO's call comes as Sonatrach looks to better bilateral relations with foreign partners.

Ould Kadour, an engineer who graduated from the Massachusetts Institute of Technology and headed U.S.-Algerian firm Brown & Root Condor in the 1990s, was appointed at the end of March in a surprise decision to replace Amine Mazouzi.

In recent years Algeria's production stagnated as investors stayed away, put off by tough contract terms and state bureaucracy that made the North African country a tough sell for oil companies despite its potential. Lower oil prices have made Algeria's offers less competitive for investors.

But oil and gas production has been increasing since last year. Sonatrach said in 2016 that it would start working with companies on a bilateral basis for new fields instead of through bidding rounds as a way to cut through bureaucracy and make dealings more flexible to help increase production.

Algeria remains dependent on oil and gas earnings, which provide 60 percent of the state budget, and Sonatrach's performance is key to the economy. But there is debate within government circles on how best to work with and attract more foreign oil investors.
 
(By Lamine Chikhi, Writing by Patrick Markey)

Related News