Full issue - Ministère de l'énergie et des mines

By
Chakib Khelil
Minister of Energy
and Mines
The consistency
of an approach
«T
alking and working together have paid off. However,
four years of effort, explanations and clarifications
were needed to remove the reticence, overcome
suspicions, and sometimes bring the false processes to light and,
finally, to win support. The strength of conviction, the capacity of
persuasion supported by the rigour of the argument ended up
being right having a few concerns and apprehensions which is
easy to understand when they are the repercussions of a lack of
communication.
From this point of view, the behaviour of the workers and the
executives of the sector will have been exemplary in this sense
that, for about two years now, they have put a lot of time and
effort into communication, making permanent dialogue and
transparency invaluable assets, which are irreplaceable in this
progress made and the modernisation work undertaken with
resolution by the sector. They must persevere on this track.
And the hydrocarbons’ law certainly is an important step in
this undertaking which, after the mining law and the electricity
law, gives its full consistency to a long-winded approach which
is eager to modernise our Nation, placing it to its advantage in
the implacable modernisation process which is currently underway.
In short, in this resides the ambitious project which the
President of the Republic has established for Algeria and to
which he is committed on a daily basis. In this global strategy
which must involve the entire country, the Energy and Mines sector,
due to the place it occupies in the national economy and the ☞

☞ new dynamism which characterises it, intends to place itself in
the vanguard.
Going from a planned economy to a market economy, without
losing sight of the values of solidarity and mutual aid which have
deep roots in our society, is not something that is easy to implement.
This is a requirement to be assumed as it stands solidly
behind our culture.
This means that, whilst a lot has been done, there is still a lot
to do. It is not just a case of voting on a law: it is important to
give it full effect and to make it deliver all the potentialities
which it contains. This will require perhaps two or three years.
But we are pressed for time.
It is to this task, amongst others, which I call upon the numerous
competences and the great talents as well as the exemplary
devotion found in this sector.»
C. K.

Table of Contents
Energie
&
Mines
No.4 - November 2005
Performances 6
■ Record success for the 6 th Exploration appeal for tenders
■ Algeria initiates the GTL conversion
Reforms 14
■ 55 billion dollars for the economic growth support
programme
■ Adoption of the hydrocarbons law
■ Establishment of Mining Agencies
Performances
■ New LPG bottling centre in Arzew
Oil products
■ Opening up to the private sector has enabled the
storage and distribution infrastructure to be developed
Performances
■ The reinforced Hyproc-Shipping Company fleet
Financing
■ Thirteen banks have subscribed to the Sonelgaz
compulsory loan
Performances
■ The mass electrification in Algeria is now complete
■ Sonelgaz hopes to be one of the first 5 companies
of the Mediterranean basin
Electricity transportation
■ GRTE, market operator !
Transparency
■ The appeal for tenders rule opens
■ Internal audit: to correctly audit management
actions
26
27
30
33
34
37
43
Performances 63
■ 5 th year of growth for the Algerian economy
■ 13.5 billion dollar surplus for foreign trade
■ Increase in foreign exchange reserves and reduction
of foreign debt
■ 2 billion euros for investments (excluding hydrocarbons)
Case Study
The challenge of blue gold
Partnership 84
■ 2 nd African oil conference: to promote inter-African cooperation
■ Working towards the creation of a free trade area between
Algeria and the USA
■ The USA – Algeria’s number one client
■ Cooperation programme between Algeria and OLADE
(Latin American Energy Organisation)
■ France – Algeria’s number one supplier
■ 120 French bosses meet the Algerian directors
■ “The Galsi project is a source of pride for Italy”
■ Algeria-Spain: strategic relations
■ Repsol wins the Gassi Touil gas producer project
■ Creation of an Algerian-British business council
■ Tokyo bets on Algiers
■ The Seoudians present an ambitious investment programme
■ Tehran interested by the Algerian market
Human investment 142
■ The Corporate University, a strategic tool
■ Directive on female employment
Sustainable development 153
■ From awareness to regulation
Social investment 159
■ Sonatrach in the vanguard
Town planning 162
■ New elements of the town planning policy in Algeria
73
Mines
■ 4.9% growth in 2004
■ Impacts and protection of the environment
55
Our supplement
The hydrocarbons’ law
Full text and presentation made by A. Mebtoul
Energie
&
Mines
Review of the Energy and Mining sector ISSN 1112-4873 Legal deposit : 1094-2004
No. 4 – November 2005
Head of publication Sid Ali Hattabi
Assistants Ouahiba Abdellaoui, Souhila Bourouma, Halima Chehri, Samia Kahlet, Lila Rahma
The following people were involved in putting together this edition Mohand Rachid Aït Ibrahim, Hocine Amer Yahia, Raihana Haddad, Mustapha Benkhemou,
Abdelkader Benyoub, Ewa Berezowska-Azzag, Samia Bettahar, Shahrazed Boutira, Mohamed Salah Bouzeriba, Samia Kahina Bouzid, Hocine Chekired, Sliman Dakar,
Hussein El Hag, Réda Fettah, Mustapha Hanifi, Karima Hayati, Anissa Ikououbel, Mohamed Sofiane Kasbadji, Salim Korsane, Omar Kouidri, Nadjia Laleg, Nedjoua Latif,
Mohamed Tayeb Madi, Amine Maher, Mohamed MedjelledAbdelaziz Nacer, Mohamed Ouddane, Khaled Remouche
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The manuscripts, photographs as well as any other document sent to or issued for editing are not returned and cannot be the subject of any claim.
The articles published in Energy and Mines only commit their authors. Reproduction authorised provided the source is indicated.

PERFORMANCES
Energy
Four international companies
win 9 oil exploration blocks
In Algiers, four international oil companies won 9 oil exploration blocks
in Algeria, for a total amount of 133 billion dollars. These companies
were selected at the end of a public session in which the tenders were
opened which took place in Algeria, further to a 6th international
appeal for tenders launched by Algeria.
Energie & Mines
6
These companies are: BP, which
won 3 exploration blocks, and
BHP, Gulf Custom and Shell
which won 2 blocks each.
The blocks in question are located in
Bottena, in the Constantine South-East,
Bir Romane and Hassi Bir Rekaïz, in the
Berkine basin, Hassi Matmat in the
Oued-Mya basin, Oudoum and
Bourarhat-Sud (Illizi). Other blocks are
located in Hassi Ba Hamou (Béchar-
Oued Namous), Zerafa (Gourara) and
Reggane-Djebel Hirane (Reggane).
Since the first international appeal for
tenders, launched in November 2000,
exactly 27 contracts have been signed
for a total investment of 393.85 million
dollars. The allocation of 9 oil exploration
blocks in Algeria out of the 10 put
up for competition within the framework
of the 6th appeal for tenders is an
“excellent result” stated the Minister of
Energy and Mines, Mr Chakib Khelil, in
Algiers yesterday. “It is an excellent
result, the Minister told the press after
the 9 blocks were awarded, after tough
competition, to the British company BP
(3), the Anglo-Dutch company Shell
(2), the Australian company BHP (2)
and the Emirate Company Gulf Kesyton
(2) for a total investment amount of 133
million dollars. The Minister called upon
the companies which did not succeed in
obtaining blocks to "persevere" and to
participate in the next appeals for tenders
which must be launched in accordance
with the new hydrocarbons’ law.
This law has to be published in the
Official Journal next May, specified the
Minister. “The hydrocarbons’ law will
be published next month”, he said,
without specifying the date of the next
appeal for tenders. For his part, the
november 2005
Chairman and CEO of Sonatrach, Mr
Mohamed Meziane, hailed this "very
good result" before reiterating to the
foreign companies his "complete desire
for cooperation" as well as "the availability
of Sonatrach to give them any assistance
and help required for them to correctly
carry out their oil operations" in
Algeria. He assured these companies "of
the respect of all the contractual commitments
and of the benefit of the long
and rich experience of a diversified partnership
which the Sonatrach Group has
been practising for almost twenty years
and, now, with international companies
of all sizes, all profiles and of all geographic
origins". The experience acquired
from the partnership such as
Sonatrach's strategic development
option, added to the knowledge of the
Algerian mining domain and to the
"strong positions" which Sonatrach
occupies as well as its proven mastery of
the gas and oil industries, enable the
company "to face the future with optimism",
he added.
These assets, said Mr Meziane “authorise
us to express our full satisfaction further
to the adoption of the new hydrocarbons’
law and which supports our
capacity to seize all the new opportunities
which it offers us as well as all the oil
companies, regardless of whether they
are Algerian or foreign".
“In this case, it is highly likely that at the
time of the next appeals for tenders on
Algerian exploration projects, Sonatrach
will be with you in the room and no longer,
as is the case today, opposite you in
the forum", Sonatrach's Chairman and
CEO also said.
Mr Meziane indicated to the press that
Sonatrach is “ready” to conform to the
new hydrocarbons’ law and will now
behave as a “manager” and no longer as
a representative of the State, which will
now assume its natural role of control
and regulation.
“We will participate in the new appeal
for tenders as an economic operator,
either alone or in partnership, whether
in Algerian or abroad”, he added, saying
that he was confident about doing so.
Record success for
appeal for tenders
■ Nine out of the 10 licences
offered have been awarded
■ Shell’s great come back
■ BP and BHP Billiton reinforce
their positions in the country
Launched at the start of October 2004, the
sixth international appeal for tenders for
exploration is the one which produced the
best results since the start of this process for
awarding new contracts in Algeria in 2000.
Out of the 10 licences offered, nine have
been awarded, i.e. a 90% success rate whereas
the previous record was 80% with the
fifth appeal for tenders.
The only perimeter which did not find a taker
is the Bir Romane block in the Berkine basin.
Bir Romane had, furthermore, already been
included in a previous appeal for tenders and
this new failure confirms that it does not
really arouse the interest of potential investors.
Overall, the competition was tough,
since about 60 companies participated in the
appeal for tenders.

PERFORMANCES
M. Khelil to the Financial Times
Sonatrach will make 30%
of its production abroad by 2015
The Minister of Energy and
Mines, Mr Chakib Khelil, indicated
that Sonatrach will make
30% of its oil production thanks
to its activities abroad with a view to reaching
2 billion b/d by 2015.
In a statement to the Financial Times,
Mr Chakib Khelil confirmed that
Sonatrach intends to extend its exploration
activities in the oil and gas domain
to Niger and Mauritania and to develop
its activities in the domain of gas communication
and liquefaction in Asia.
the 6 th international
for exploration
Other than this success criterion – a true
barometer of the way in which the international
oil industry has appropriated the appeal
for tenders process – the quality of the future
investors is another significant element of
this sixth appeal for tenders which were opened
on 9 April. By obtaining two licences,
Royal Dutch/Shell has made its entrance in
Algeria. The Anglo-Dutch group showed its
interest in the country a few years ago, by
signing a cooperation agreement with
Sonatrach – it does not seem that this agreement
has given concrete results yet – and by
participating in a few appeals for tenders,
including the one for the Gassi Touil gas project
(with Total), finally won by the Spanish
consortium Repsol YPF/Natural gas. As BP
and Total were already very active, Algeria
therefore succeeded in attracting three of the
five “super majors”, all three of which are
European. Exxon Mobil and Chevron Texaco
do not, for the moment, have any activity in
the country.
Sonatrach, boosted by its experience,
particularly in the domain of gas trade
and liquefaction, has already made enormous
progress towards achieving these
objectives, confirmed Mr Khelil. In the
same sense, he highlighted the different
agreements concluded with foreign
companies, particularly Sonatrach's
ownership of a share in the "Camisea
2003" gas project in Peru and the signature
of a gas agreement with British
Petroleum (BP) to export gas to the
United Kingdom.
In its columns, the Financial Times
points out that the hydrocarbons’ law
which has to be presented before
Parliament aims to open up the hydrocarbons
market in Algeria to competition
and to extend Sonatrach’s activities
abroad.
The same newspaper also estimates the
investments annually drained by
Sonatrach in Algeria at 3 billion dollars.
Over the next decade, Algeria will,
according to the Financial Times, require
70 billion dollars to increase the oil
reserves to 11.3 billion barrels and gas
reserves to 160 trillion cubic metres.
Béthioua GP1Z obtains
the standards
ISO 90001-2000 and
140001-2004
The GP1Z complex, based in Béthioua
(Oran), has just successfully passed the
certification audit built into the standards
ISO 90001-2000 relating to quality
management and ISO 140001-2004
concerning environmental management,
the APS learnt from the director of this
complex relating to the Downstream
Activity of the Sonatrach Group.
The audit was carried out by the certification
body AI-Vincotte, adds the same source,
which also specifies that the complex’s
support to the quality, hygiene, safety and
environment certification (QHSE) was
ensured by the Algerian-Canadian subsidiary
Pentacle, over twelve months.
The complex’s director considered that this
double certification, which comes a few
days after the celebration of the double
anniversary of the creation of the UGTA
and of the nationalisation of the hydrocarbons,
rewards the efforts made by the personnel
to adapt their management and
working methods to the requirements in
terms of HSE, to preserve the environment
and to continually improve performances.
Built by the Japanese consortium
IHI-Itochu, the GP1Z complex entered production
phase on 12 December 1983, to
ensure the separation and the transformation
of LPG into butane, propane and
gasoline. The complex ensures a production
capacity of 7.2 million tonnes a year.
As part of this certification approach in the
wake of the QHSE policy adopted by the
Sonatrach Group, in the month of
February, the same complex organised a
"month of safety", marked by various
events (conferences, projection of films,
simulation exercises, first aid courses,
etc.). On 22 February an award ceremony
took place in Arzew for the standards ISO
14001/1996, relating to environmental
management and OHSAS 18008/1999,
relating to organisational health, safety and
security. These certifications are added to
the ISO 9001/2000 obtained in November
2002 for the same complex.
Energie & Mines
7
november 2005

PERFORMANCES
Algeria initiates
the GTL conversion
■ The international appeal for tenders for the integrated Tinrhert project has
been launched
■ The contract will be awarded on 20 December
■ The project includes the development of wet gas and oil fields
■ The GTL factory will have a capacity of 36,000 b/d
Energie & Mines
8
LThe Ministry of
Energy and Mines and
Sonatrach have launched
an international
appeal for tenders, for an
“integrated gas and oil project”
on the Tinrhert block, located
in the Illizi basin, along the
border with Libya.
This development project is,
however, very particular, as it
solidifies Algeria’s desire to
enter into the race for converting
gas to liquid (GTL), which
includes Qatar which hopes to
become the world centre for
GTL conversion.
In an interview accorded to the
PGA at the start of this year,
the Algerian Minister of
Energy and Mines, Mr Chakib
Khelil, clearly set out the stakes:
“GTL is very important for
several reasons: this technology will
enable gas to compete against oil in the
transport sector; it will help to increase
the value of gas, taking account of environmental
constraints; and the world's
remaining gas reserves are greater than
the oil reserves" (PGA of 16 January
2005, p. 7).
Evoking the argument of the non-profitability
of this segment, Mr Khelil particularly
emphasised that it was necessary
to look to the long term and that
the oil prices would increase in order to
maintain the costly investments profitable
which will be necessary to satisfy
the global demand.
As for all appeals for tenders launched
by Algeria in the last years, two phases
(technical and commercial) are planned.
The contract award date is set for
20 December 2005 for signature in the
two weeks which follow. The project
includes three main parts :
november 2005
■ the development of oil and gas fields,
the construction of surface facilities
(pipelines and processing factories
with, for gas, the separation of the LPG
and condensates) and the exploration
of the Cambro-Ordovician reservoir;
■ the exploitation of fields reached a
stage of maturity with the recovery of
natural gas which is currently burned
and the development of gas caps after
the end of oil production;
■ downstream of these developments,
the construction of a GTL factory
which will be powered using dry gas
and which will be located in North
Algeria. Its capacity will be 36,000 b/d
of liquids, which corresponds to the
planned rate of dry gas production in
Tinrhert in plateau phase. The duration
of this plateau would be 15 years, but it
will be increased to 25 years, thanks to
the successes encountered in the exploration
of the Cambro-
Ordovician - a reservoir present
in the 17 fields of the
zone, according to the Algerian
part - thanks to the addition to
the perimeter of the project for
new undeveloped fields. The
volumes of hydrocarbons in
place would be, according to
the promoters of the appeal for
tenders, 151 billion cubic
meters of low sulphur wet gas,
of 37 million cubic metres of
oil and of 3Mm3 of oil still to
be produced in the mature
fields. The potential of the
Cambro-Ordovician is, furthermore,
presented as “high”,
but cannot, obviously, be estimated
at this stage. The expected
production of wet gas is 12
Mm3/d for 15 years. The
duration of the future contract
will be 30 years, 5 years of which for
the upstream and downstream development
works and 25 years of production.
The interested companies have 3
months to evaluate the project, propose
"clarification" meetings and visit the
sites before submitting the technical
tenders to the director of the oil development
and engineering division at
Sonatrach (Upstream Activity, PED 8,
chemin du Réservoir, Hydra, Algiers).
The ministry and Sonatrach will then
assess the proposals received, will organise
“clarification” meetings and will
define an optimal development
concept. The commercial tenders will
be based on a single parameter which is
not yet known.
The Tinrhert block had been explored
and partially developed by Petro-
Canada, which is exploiting the
Tamadanet oil field and which had

PERFORMANCES
Tender opening for the “Condensate topping” project in Skikda
The Chinese company CNPC
wins the contract
In the presence of Mr Mohamed Meziane, Chairman &
CEO of Sonatrach, this oil company publicly opened up
the commercial tenders for the realisation of the Skikda
“Condensate topping” project. Three companies, including
Saipem (France and CNPC (China) submitted tenders
and fulfilled the technical criteria of the brief.
At the end of the opening ceremony and examination of
the commercial tenders of the tenderer companies, the
Chinese company CNPC was awarded the contract with a
tender of a total amount of DZD 28,059,765,883 against
the tender from the French company estimated at DZD
33,221,295,985.
In addition to the development of fields to produce gas,
this company plans to carry out numerous projects to
recover LPG and the condensate contained in the wet
gases. The production level of this project currently achieves
almost 16 million tonnes a year and the difficulties
encountered by the company to permanently have a sufficient
number of buyers has, according to the Downstream
vice-president, encouraged the experts in this domain to
define a condensate valorisation strategy which consists of
making available to the national company a flexibility tool
to improve the quality of the distillates (diesel and kerosene)
and the Skikda refinery by blending the products from
the topping. This project consists of constructing in
Skikda a “Condensate topping” factory with a processing
capacity of 5 million tonnes a year of this product which
will produce butane, naphtha, Jet A1, light diesel and
heavy diesel.
This factory will be capable of producing 110,000 tonnes
of butane a year on average and 3.7 to 4 million tonnes of
naphtha. For the Jet A1, the realisation of this project will
enable the production of 450,000 to 680,000 tonnes/year
and of 320,000 to 850,000 tonnes of light diesel and
heavy diesel. The production of butane will be made in the
East region of the domestic market, hence enabling the
satisfaction of part of this region’s butane requirements.
The diesels produced by the Condensate topping will be
sent to the storage facilities of the Skikda refinery to
improve the quality of the diesel currently produced by the
facilities of this refinery or exported as is, depending on
the best valuation. The naphtha and the kerosene will be
exported. With a completion period of 32 months, the
contract is expected to come into force in July 2005 whereas
the receipt will only take place as of 1 March 2008.
planned to improve and
develop several gas structures
on this permit. In spite of
three years of negotiations,
the Canadian company did
not however succeed in
concluding an agreement
with Sonatrach.
Sonatrach had made it
known that the Tinrhert wet
gas fields’ development project
would after that be the
subject of an international
appeal for tenders. In April
2001, an appeal for tenders
was launched to develop oil
and gas structures in the Illizi
basin, including Tinrhert, but
the results made public on 1
October 2002 were disappointing
since only 3 tenders were submitted
for 5 projects. Out of the three,
one, which came from BHP Billiton
and which related to Tinrhert, was
declared inadmissible and the project
was not awarded. The only contract
signed further to the appeal
for tenders in 2001-2001
was done with the Chinese
company Sinopec for the
redevelopment of Zarzaïtine.
The fields discovered (developed
or undeveloped) in
Tinrhert include: Dimeta,
Guelta Nord, In Akamil,
North In Akamil, Ouan
Taradjeli, East Sedoukhane,
Tilmas, North Tamadanet,
North Timedratine and Trig.
This zone neighbours the
giant fields of Alrar, and
Zarza Ohanet, recalls
Sonatrach.
Energie & Mines
9
november 2005

PERFORMANCES
Arzew
Two new petrochemical
complexes planned
Sonatrach’s Downstream Activity intends to build in
partnership, by virtue of its development, two petrochemical
complexes in the industrial zone of Arzew (Oran).
An appeal for a show of interest has just been launched
in this sense in the Appeal for Tenders Bulletin for the
energy and mines sector (Baosem) and in the national
press. The first project concerns the construction of an
integrated polypropylene production complex via the
dehydrogenation of the propane from the LPG separation
complexes located in the Arzew industrial zone.
These two complexes (GP1 and GP2) have a total production
capacity of 9 million tonnes/year.
The second project concerns the construction of an ethane
steam cracking complex, particularly to produce
polyolefin. The specification sheet, drawn up by
Sonatrach/Downstream, indicates that the ethane steam
cracking will have a processing capacity of one million
tonnes/year with, downstream, the main polyethylene
units (450,000 tonnes/year) and the glycol ethylene units
(410,000 tonnes/year). Other than these two complexes,
whose production will be designed both for the needs of
the domestic market and for exporting, the same business
area of the Sonatrach Group has also launched
appeals for the construction of a refinery with a capacity
of 15 million tonnes/year in Algiers and 4 other
petrochemical complexes in the industrial zone of
Skikda.
Sonatrach’s Downstream Activity had launched these
appeals with the aim of collecting shows of interest from
companies potentially interested by these projects.
Information meetings and data-rooms will be organised
for these same companies to provide them with all the
technical and economic data and to give the necessary
clarifications for the realisation and the establishment of
the planned projects.
Hydrocarbons
The American department of Energy reveals
Algeria’s “ambitious” programme
The American department of
Energy has revealed, in its latest
report, Algeria’s “ambitious" programme
to increase oil production,
stating that the extraction capacities
have recorded “a significant increase
in just a few years”.
In its latest update report on the
energy sector of each of the member
countries of OPEC, a copy of which
was obtained by the APS, the
American department of Energy
points out that oil development
“recorded a significant increase in
just a few years, enabling Algeria to
achieve its ambitious programme to
increase its oil production”.
Other than oil, the department of
Energy notes that "Algeria is an
important exporter and is fully
expanding in terms of natural gas
both through the pipeline going to
Europe and the tankers transporting
the LNG”.
In the long term, according to the
report, “the revenues from natural
gas exports will probably increase
even more with the commissioning
of new fields such as In Salah and In
Aménas”.
Furthermore, the American report
notes as a priority the reduction of
the unemployment rate and that the
structural reports and the budgetary
discipline remain the most important
part of the economic programme
of the Algerian government. The
department of Energy also points
out that Algeria's macro-economic
indicators are significantly improving.
Other than the reduction in foreign
debt, the report specifies, “growth
has increased by around 6% in 2004,
whereas the actual growth rate
should considerably increase in a
range of between 6 to 7% in 2005
and 2006, whilst revenue from oil
and gas exports will also experience
the same upwards trend”.
Energie & Mines
10
november 2005

performances
The appeal for tenders has been launched
Creation of a databank at the Ministry
of Energy and Mines
The award of the contract relating to the creation and putting in place
of a databank (BDN) in the Ministry of Energy and Mines will soon be known.
The international appeal for
tenders relating to the creation
of this databank which will
store all the Algerian data on
the hydrocarbons sector was launched
by the Ministry last March.
This databank falls in the framework of
the reforms undertaken by the sector
and whose objective is to provide it with
an objective, reliable and credible information
tool enabling the objectives to
be achieved in the short, medium and
long term to be planned and monitored,
as well as making reliable and targeted
information available to national and
foreign investors.
Part of the financing for creating this
databank comes from part of a loan
from the International Bank for
Reconstruction and Development
(IBRD) granted in the framework of a
technical support project to the
Ministry of Energy and Mines and the
remainder will be ensured by
Sonatrach.
To tender for this contract, the applicants,
according to the ministry, must
have the necessary capacities to
“conclusively” execute three contracts
of drawing up, installation and technical
support for analogue information
systems on a technical and function
level, on a comparable scale. The other
criterion, which is equally as important,
is that the applicant must have previous
positive experience in terms of executing
contracts. Other than these rigorous
criteria which leave no room for
amateurism or DIY in order to ensure
the success of the operation, the applicant
must certify that all software applications
are covered by a valid licence or
have been produced by themselves.
“Breaches will be considered as cases of
fraud which could give rise, amongst
other penalties, to the prohibition of the
tenderer concerned from any future
participation in contracts financed by
the World Bank”, warns the Ministry.
The national and international appeals
for tender procedure for granting
contracts in the energy and mines sector,
put in place since 2001, has, since
this period, given unexpected results,
either in terms of gains in dinars or in
foreign currencies, reductions of costs,
or in terms of professionalism through
the selection of world renowned companies
which have established technological
and managerial know-how. In
the first conference evaluating this procedure,
held at the Sheraton hotel, the
Minister of Energy and Mines, Mr
Chakib Khelil, revealed "the very
conclusive results" of this procedure
and which particularly consist of a
“very significant expansion of the list of
competitors and competition both at
the sectoral and geographic level, a
considerable reduction of the costs of
the operations and substantial gains for
the company Sonatrach and its subsidiaries,
a considerable reduction in the
time it takes to conclude contracts and
abundant production of useful data on
the quality and the availability of goods
and supplies as well as the players operating
in the different markets (local
and foreign)”.
This data alone reveals that out of the
5,550 tenderers, 1,800 were able to win
at least one contract. Out of the 1,800
tenderers, there are 180 foreign companies
(10%) whose origin goes from
China to Norway.
Nedjoua Latif
Energie & Mines
11
november 2005

ANALYSIS
The national company's 2005-2009 development plan
A turning point for the future
of Sonatrach
Energie & Mines
12
Sonatrach’s 2005-2009
development plan projects
investments of around
24 billion dollars, 50%
of which in currencies
and the rest in dinars.
On average, almost
5 billion dollars will thus
be injected annually,
mainly in the upstream
activity.
november 2005
By
Khaled Remouche
T
his programme will, for the dinar
part, mainly be financed by equity,
or even local bond loans.
Sonatrach will count on the support
of its foreign partners mainly with
regard to the currencies part. The foreign
credits will continue to be mobilised, but a
lot less systematically and at less onerous
costs. This very prudent policy in terms of
indebtedness conforms to the directives of
the concerned owner State to quickly reduce
the country’s outstanding foreign debt,
although the national company, at the end
of June 2004, only recorded 2 billion dollars
of debt and made early repayments of quite
large sums.
Upstream: development
of Hassi Messaoud and
intensification of exploration
Sonatrach has set itself objectives to get
close to a crude production capacity of 2
million barrels/day of oil and exports of 85
billion cubic metres of gas/year at the end of
the programme.
To achieve this first challenge, Sonatrach is
banking on the Hassi Messaoud development
project, aiming to improve the field
recovery rate as well as on the Rod fields in
partnership with BHP, the development of
the fields in block 28 in partnership with
Anadarko, the Zarzaitine project (improvement
of the recovery rate), the second development
phase of Menzel Ledjmat with the
company Burlington Resources, of the
Gassi, El Agreb and Zotti fields with
Amerada Hess (second phase of the works
to improve the recovery rate), the commissioning
of the Bir Berkine and Bir Berkine
Nord fields. According to the statements
made by the Minister of Energy and the
Chairman and CEO of Sonatrach, at the
end of the development works, the production
capacity of Hassi Messaoud could
reach 550,000 to 600,000 barrels/day over
a period of 20 years, compared to less than
400,000 barrels/day currently. To perpetuate
the production level of several decades,
Sonatrach intends to intensify the exploration
of new fields. For oil, it is particularly
targeting the region around Hassi
Messaoud. It intends to invest 700 million
dollars annually in exploration works.
With regard to gas, Sonatrach is mainly
banking on the development projects of the
gas fields of Gassi Touil-Rhourde Nouss
and Tinhert. Over the period, the development
project for the wet gas fields of In
Amenas will be commissioned in 2006. The
gas fields of In Salah will reach their production
peak. All these fields will supply at
least an additional 27 billion cubic metres of
gas annually.
For the LNG, Sonatrach is banking on two
main projects: the two large trains of Arzew
and Skikda could produce 12 billion cubic
metres of gas annually. The extension of the
Duran Farrell and Enrico Mattei gas pipelines
(capacity increased to 32 billion cubic
metres annually) as well as the commissioning
of Medgaz will enable achievement of
an additional capacity of 16 billion cubic
metres/year. In total, the development of
these fields, the construction of two new
LNG factories as well as the commissioning
of the new gas pipeline and the extension of
two others will enable achievement of an
export capacity of 85 billion cubic metres of
gas annually before, in principle, 2010,
without counting the Galsi gas pipeline project
between Algeria and Italy which is soon
to be launched.
Transportation: the GZ4
and the OH4 – major projects
But will the evacuation capacities be met
For oil, Sonatrach is banking on the OH4
oil pipeline project which will, along with
OH3, enable it to have an evacuation capacity
of 1 million barrels/day of crude from
the Berkine basin, where the majority of the
oil production in partnership is located -
including the fields of block 208, Menzel
Ledjmat. The GZ4 gas pipeline, linking
Hassi R’mel-Arzew which constitutes the
on-shore part of Medgaz with a capacity of
16 billion cubic metres/year, is part of the
major projects. It is designed to cover the
internal requirements, to power the Arzew
liquefaction factory – an integral part of the
Gassi Touil project – and the under water
Medgaz section.

ANALYSIS
Downstream : a series of
mega projects
Downstream, the major projects, other
than the new liquefaction factories, are
the construction of the Skikda condensate
factory (the EPC will be awarded in
2005), and the series of petrochemical
factories to be built in partnership – for
which the appeal for tenders has just
been launched. The objective is to
increase the value of the hydrocarbons
resources, to reinforce the integration of
the national industry (raw materials for
paints, detergents and packaging products,
etc.). The most important one
seems to be the refinery with a capacity
of 15 million tonnes/year to be realised
in the centre. The objective is to refine
50% of the crude production.
Overseas, Sonatrach plans a minimum
of investments of around 1.2 billion
American dollars by 2010, indicated a
manager from the company. Priority is
given to equity to finance the overseas
projects. The Minister of Energy, Mr
Chakib Khelil, pointed out that Algeria
has set itself as an export objective: 30%
of sales should come from Sonatrach’s
activities overseas. For the LNG, it targets
2 billion cubic metres/year from
abroad. The objective for crude is to
increase its reserves by 250 million barrels
and to ensure production of
120,000 barrels/day of oil drawn from
the exploitation of the fields overseas.
Sonatrach faces
three difficulties
Sonatrach will continue, hence, to bank
on partnership as a major basis of its
strategy. But this growth dynamic suffers
from two difficulties which are yet to
be overcome. The first one is the removal
of the destination clause claimed by
the European Union and which entails
the re-negotiation of old LNG sales
contracts. Sonatrach has obtained from
the European Commission the principle
of sharing the capital gains in case of
change of cargo inside the European
Union. But Sonatrach must arrange this
with the client companies on this detail.
The issue is therefore on the right road
to be settled. What’s more difficult,
however, is the increase in Algeria’s
quota within OPEC. But different analysts
predict strong demand for crude
over the period. Algeria could fully use
its capacities with the go ahead from
OPEC, following a scenario which is
almost comparable to the one of these
last few years. Third pitfall: the financing
of its projects. Three ways need to be
explored over the period: project financing,
local bond loans, international
bond loans and advantageous foreign
credits.
The net creditor situation of Algeria
offers very favourable outlooks for
financing for Sonatrach in the projects.
But the complex mechanism of project
financing requires flexibility of the regulations
of the Bank of Algeria – particularly
on the issue of escrow accounts.
The international bond loans which
mark Algeria’s access to the international
capital markets are linked initially to
Sonatrach’s and Algeria’s rating.
Finally, there have never been so many
opportunities for Sonatrach to stamp its
mark on the international energy scene
– its revenues have never been so large.
Everything in fact relies on its human
resources and its capacities to seize the
opportunities which present themselves
both on the local market and abroad.
The uncertainty of Sonatrach’s future
performances created by the implementation
of the hydrocarbons law is attenuated
by the partnerships recorded
since 2000, the current successes which
give the company hope of growth. But
let’s not forget that, in order to increase
its presence and supports its positions in
an open market situation, it must make
efforts on a daily basis to transcend its
limits: human resources management
needs to motivate and develop its grey
matter, a research and development promotion
policy in order to reduce its technological
dependency. These are all
essential for its future evolution, faced
with much fiercer competition and a
fragmentation of players in certain segments
of its activities.
K. R.
Journalist at the
daily newspaper
Liberté
Chakib Khelil
appointed “man
of the year”
During a ceremony which took place in
Constantine, the director of the newspaper
l’Est, An Nasr, Mr Oeunoughi Larbi, on behalf
of his company, presented an award to
Mr Chakib Khelil, Minister of Energy and Mines
and, at the same time, to a certain
number of senior executives in the energy
sector, including the Chairman and CEO
of Sonatrach and Sonelgaz.
Mr Chakib Khelil was appointed "man of the
year" for his merits and the action which is in
the middle being taken within the government.
The partnership, thanks to the action of the
Minister, is booming today, proof of which can
be found in the numerous partnership programmes
signed and the launch of large projects
with Spain and Portugal.
The work which was carried out and led by
Mr Chakib Khelil ensured real contribution
was made to the development of the
investment with its strength of training on all
sectors.
Energie & Mines
13
november 2005

REFORMS
President Bouteflika in front of the executives to the nation upon
the occasion of the first anniversary of his re-election
He gaves 55 billion dollars for the economic
growth support programme
«S
ince last year, I have
instructed the government
to start preparing
a national programme
to support economic growth; a
five-year programme whose challenge
Algeria must accept, insofar as the
resources on which our country can
objectively rely enables us to do so.
This programme was carefully put
together and I personally oversaw its
outlines. I therefore have the pleasure
of announcing today that it will cover a
total amount of over 4,200 billion
dinars of public development expenditure
for the period running to 2009.
The detailed substance of this programme
will be made public today. I
will therefore just set out the guidelines
here. Initially, half of this financial package,
i.e. over 1,900 billion dinars, is
intended to improve the population’s
living conditions and will be specifically
allocated to :
■ the construction of one million housing
units for a value of 555 billion
dinars,
■ the development of the national education
establishments, vocational training
and higher education, for a value
of almost 400 billion dinars,
■ the reinforcement of health facilities,
for a value of 85 billion dinars,
■ powering over a million homes with
gas and electricity, for a value of 65
billion dinars,
■ giving populations drinking water,
outside the large facilities, for 127
billion dinars,
■ promoting unemployment and the
national solidarity for 95 billion dinars,
including the construction of 150,000
places through all communes, in favour
of unemployed people,
■ the communal development programmes
for 200 billion dinars,
■ and, finally, the development of the
regions of the South and the High
Plateaus, for 250 billion dinars.
Secondly, almost 1,700 billion dinars
will be allocated to the development of
the country’s basic infrastructures,
namely :
■ 700 billion dinars for the transportation
sector which will enable us to complete
the large building works in progress
and to make new ones, including
the modernisation of the railway network,
■ 600 billion dinars, aimed at the
public works sectors, thanks to which
the projects underway will be completed,
including the East-West motorway,
and also other projects will be realised,
including the construction and rehabilitation
of over 1,500 km of roads,
■ and, finally, over 400 billion dinars
for large hydraulic projects, whether
relating to dams or to water transfers.
Thirdly, we will devote almost 350
billion dinars to supporting the country’s
economic development. Out of the
sectors which will be covered by this
effort, agriculture and rural development
will receive 300 billion dinars,
given the specific interest which we
have in the fate of the rural populations,
and to support farming to create
the national wealth. Fourthly, over 200
billion dinars will be devoted to the
modernisation of the public service,
particularly with 34 billion dinars for
justice, 64 billion dinars for the financial
services as well as 65 billion for the
modernisation of the local authorities
and the National Safety. Fifthly, finally,
during these five years, Algeria will
launch an important programme to
develop its capacities in terms of the
new information and communication
technologies to which the State will
devote an amount of 50 billion dinars.”
Energie & Mines
14
november 2005

REFORMS
The hydrocarbons law
Safe and Sound

REFORMS
Hydrocarbons law
Finally safe and sound !
Energie & Mines
16
On 20 March 2005, the
National People’s Assembly
(APN) adopted the hydrocarbons
bill which was
presented a few years ago
and which, after arousing
lively protests from different
sectors of opinion, was “frozen”
in Spring 2003, i.e. one
year before the presidential
election in April 2004.
For the Minister of Energy
and Mines, Mr Chakib Khelil,
this vote is at the end of a
long road, fraught with pitfalls.
After the freezing of the
bill was announced two years
ago, few observers would
have bet on the chances
of this text which almost
everyone was unanimous
against. The resounding
victory of President
Bouteflika in the April 2004
election, the tenacity of the
Minister of Energy, the changes
in the international
environment, particularly
in neighbouring Libya, but
also the increase in power of
several gas exporting States
such as Qatar, Egypt and
Trinidad-and-Tobago, efforts
of renewed explanation particularly
towards the General
Workers’ Union (UGTA) would
justify all the obstacles. The
parliamentary debates took
place without a hitch, as the
Minister predicted at the
start of 2005 and, in total,
the text arrived safe and
sound.
november 2005
Sonatrach, then reinvigorated
given that no one spoke
about dismantling the national
company, found itself,
in the terms of the new law, reinvigorated
and comforted by substantial
advantages.
■ An option to take an interest
“which could reach 30% without
being lower than 20%” in any commercial
discovery by a third party,
only reimbursing the costs of the discovery
wells and assessment drilling
works. The option must be exercised
no later than 30 days after the discovery
development plan has been
approved.
■ The joint marketing of gas for
exporting.
■ The ability to keep all the fields,
the modes of transport and the processing
and distribution facilities
which it owns today. Mr Khelil
hence predicted that it would continue
to control the majority of the
hydrocarbons produced in Algeria
(75% in 2002, not taking account of
the percentage going back to it in the
association contracts). The national
company controls about 40% of the
perimeters of the national mining
estate relating to hydrocarbons,
whose surface area is 1,500,000km2.
■ Sonatrach will benefit from a
research and exploitation contract
for each perimeter it owns. In case of
a commercial discovery, it may base
itself on this contract to obtain the
funds necessary to develop this discovery
on the basis of project financing.
■ Sonatrach obtains the assignments
on the existing transportation by
pipeline works, i.e. a network of
14,000km, and it will no longer be
mandatory for it to finance the future
pipelines. It may hence freely
makes its investments in the most

profitable activities, hence improving
its long term financial situation.
Transportation is, in fact, an activity
which is often less economically interesting
than exploration-production.
For Mr Khelil, the stake was very
important. The key objectives of the
law are to consolidate Algeria’s competitiveness
and to really clarify and
distinguish the respective roles and
the responsibilities of the State and
Sonatrach. On the first point, the
opponents remarked that Algeria
had recorded numerous successes in
the awarding of oil and gas contracts
over the last years and that it was
not therefore necessary to profoundly
modify the legislation. However,
the Ministry of Energy felt that it
was essential to write into the law,
in order to perpetuate them, a certain
number of practices and that the
reinforced appeal of Algeria since
2000 partly came from the fact that
these practices anticipated the new
law on certain points. The positive
signal sent to foreign investments
would obviously be stronger with a
law committing all the Algerian
authorities than with the sole good
will of the Ministry.
On the second point, the idea is that
Sonatrach will be increasingly placed
in a competitive environment
and that it must be able to fight with
equal weapons inside – which is new
– and outside Algeria in the context
of its international development. It
was therefore necessary to enable it
to focus on its commercial missions
and to entrust what comes under
other rationales either to the State
itself, or to independent regulation
agencies created by it.
But the opponents claimed that such
measures would seriously weaken
the national company, implicitly
supposed not to fully be able to cope
with the flurries of the competition,
and/or prepare for its privatisation,
which the authorities have always
denied. The government therefore,
over the months which preceded the
presentation of the hydrocarbons
bill to Parliament, greatly focussed
on the guarantees for Sonatrach
contained in the text, particularly
the fact that it keeps all its current
assets and that it still has the right to
take an interest in all the hydrocarbons
discoveries made in Algeria. Its
re-focussing on the most profitable
activities could only lead to its reinforcement
and not to its weakening,
indicated Mr Khelil on many occasions.
REFORMS
For the exploration-production, the
provisions of the new law include
the following elements :
■ The importing and selling of
hydrocarbons and oil products on
the national territory are free.
• Independent national agencies are
created: a Hydrocarbons regulation
authority and ALNAFT (which
means oil in Arabic). The second
agency is responsible for the valorisation
of the hydrocarbons resources
and will particularly organise the
appeals for tender with a view to
awarding new research and/or
exploitation contracts.
■ The national mining estate is divided
up into four zones, A, B, C and
D. The taxation will be variable
depending on the zone in question.
■ ALNAFT may award prospecting
permits for a maximum period of
two years.
■ The research and/or exploitation
contracts will be awarded by
ALNAFT after the appeal for tenders
in two phases (technical and
economic phase) and approved by
decree by the Minister in charge of
Hydrocarbons. The duration of the
research and exploitation contract
will be 32 years. The research period
will last 7 years (3 years plus 2 times
2 years). For the dry gas fields, an
additional period of 5 years will be
added to the exploitation period.
For an exploitation contract concerning
an already discovered field, the
duration is 25 years (30 years in the
case of a dry gas field).
■ In case of a discovery (discoveries)
by a contracting party which could
not present a commercially viable
declaration in the research period
due to the lack or deemed absence of
transportation infrastructures or the
lack of market for a future production
of gas, a retention period is provided..
It will not exceed 3 years (5
years for the dry gas fields).
■ In case of a discovery plan, the
contracting party may benefit from
an early production permit, for one ☞
Energie & Mines
17
november 2005

REFORMS
☞
Zone A B C D
0 to 20 000 bop/d 5,5 % 8 % 11 % 12,5 %
20 001 to 50 000 bop/d 10,5 % 13 % 16 % 20 %
50 001 to 100 000 bop/d 15,5 % 18 % 20 % 23 %
For productions above 100,000 boe/d, the royalties rate must be equal
to or greater than the level below: zone A, 12 %; zone B, 14.5 %; zone C, 17 %;
zone D, 20 %.
or several wells for a duration not
exceeding 12 months. This period
shall enable the contracting party to
further identify the characteristics
necessary to the drawing up of the
development plan.
■ The draft development plans must
be submitted to ALNAFT with the
notification of the commercially
exploitable declaration. The draft
and the annual budgets must be
approved by this agency as well as
any change to the development plan.
■ The Minister in charge of
Hydrocarbons may decide upon the
field production restrictions for reasons
linked to the objectives of the
national energy policy. These restrictions
will be fairly distributed by
ALNAFT: it will be applied to all
the contracting parties, pro rata of
their production.
■ ALNAFT may ask each gas producer
to contribute to satisfying the
needs of the domestic market.
■ Gas flaring is prohibited. As an
exception and for limited periods,
ALNAFT may give a flaring authorisation
upon the request of an operator.
This operator must pay a tax of
DZD8,000 per thousand normal
cubic metres.
■ In the event a commercial discovery
encompasses at least two perimeters,
covered in different contracts,
the unitisation plan is submitted for
ALNAFT's approval. In the event
the contracting parties agree on this
plan or if the plan proposed is not
approved, ALNAFT will take on an
independent expert to draw up this
plan. This will be payable by the
contracting parties.
■ In case of a dispute between a
contracting party and ALNAFT,
prior conciliation is provided for.
Should this procedure fail, the dispute
will be submitted to international
arbitration.
■ At the start of each year,
ALNAFT will draw up an “updated
ten-year sliding plan”, taking
account of the developed and as yet
untapped gas reserves, the needs of
the domestic market and the quantities
of gas available for export.
■ To satisfy the needs of the domestic
market as best as possible, a Swap
procedure may be freely negotiated
and applied between the different
suppliers.
■ At the end of the duration of a
research and/or exploitation
contract, the ownership of all the
works enabling the pursuit of the
activities, will be transferred in
favour of the State, free of charge.
■ The tax system applicable to the
research and exploitation activities
includes :
• a non-deductible area (land) tax to
be paid on a yearly basis to the
Public Treasury,
• a monthly royalty paid to
ALNAFT,
• an oil income tax payable monthly
to the Public Treasury,
• an additional tax on the profits
payable annually to the Public
Treasury,
• a land tax on the properties other
than the exploitation ones, such as
fixed by the general tax legislation
and regulations in force,
■ For productions less than or equal
to 100,000 boe/d on a monthly average,
the royalty rates stipulated in
each contract cannot be less than the
rates above.
In PGA
* See full text of the law in the supplement.
Energie & Mines
18
november 2005

eforms
The Minister of Energy and Mines in “Pétrole et Gaz arabes”
“The new hydrocarbons law reinforces
Algeria’s “competitiveness””
Mr Chakib Khelil, Minister of Energy and Mines, has
emphasised that the expectations of the oil industry in relation
to the new legislative provisions are very high. In an
interview to be published in a specialised Pétrole et Gaz
arabes(PGA) review, a copy of which the APS has obtained,
Mr Khelil feels that the hydrocarbons law which has
just been adopted by the two Chambers “reinforces
Algeria’s competitiveness” compared to other producing
countries. He explained that the tax system included in the
new law will enable “the development of small fields to be
encouraged”, of which there are many in Algeria, according
to the Minister.
“Whilst contributing to developing our competitive capacity,
this system presents significant advantages for the State
which will receive a larger part of the windfall profits than
before, indicated Mr Khelil, who noted that “these profits
may come from the surge in oil prices or the discovery of
much larger reserves than expected”. “The new law will
lead to better efficiency of the hydrocarbons sector and will
put an end to the conflicts, thanks to the creation of agencies
which are totally dedicated to promoting explorationproduction
and controlling the activities of the operators,
particularly” further stated the Minister of Energy and
Mines. This will enable the sector to respond “efficiently
and quickly” to the needs of the investments, which constitutes,
according to Mr Khelil, a “competitive advantage”
over other producing countries. He also emphasised that
the new law includes several encouragements to explore
hardly known regions, since it stipulates that "the national
mining estate will be divided up into four zones, A, B, C
and D, with differentiated royalty rates (...)". Mr Chakib
Khelil also felt that the tax consolidation which is stipulated
is "likely to encourage the companies who earn a lot of
money in the upstream activity, to invest in the downstream
activities, rather than repatriate their profits". “The clarifications
made in terms of gas assignment prices and for the
oil products should also encourage the investors to invest in
the downstream activity", he said.
The Minister of Energy, who insisted on the “global and
consistent” nature of the new law, revealed two important
aspects: the first is that it makes the “clear and distinct
separation of the roles going to the public authorities with
the creation of two specialised agencies from those which
arise from the missions of a commercial operator" and the
second is the new tax system. This will enable “conflicts of
interest to be avoided since Sonatrach's missions participated
in these two dimensions before", he said. “The law will
in fact contribute to reinforcing Sonatrach since, up until
now, our national company was forced to conduct less profitable
activities than others”, he explained.
According to Mr Khelil, the new law will come into force in
May 2005 and will be applicable to the international appeal
for tenders which has just been launched for the integrated
Tinhert oil and gas project, including the construction of an
GTL factory, which will be awarded in December 2005.
This will also be applicable to the seventh appeal for tenders
for exploration which will be launched in the immediate
future.
Chakib Khelil welcomes the private
sponsor coordination
In the context of the continuing efforts
made by the public authorities,
Mr Chakib Khelil, Minister of Energy
and Mines, inaugurated the first of the
meetings between the different
Ministries and the national sponsor.
Hence, the sponsorship coordination,
represented by the chairmen of the
CAP-CNPA-CIPA-CGEA was received
at the headquarters of the Ministry for
a working session in the presence of
representatives from the different
departments of the Ministry (gas-electricity
and mines).
During this meeting, all the constraints
were debated which, in the past, have
paralysed the investment initiatives.
The sponsorship coordination took
note of the concerns of the directors in
terms of relationships with the different
sectors directly concerned by the support
in terms of investment and economic
recovery. The difficulties in terms
of energy (gas-electricity-fuel) and
equipment supply were also debated,
whose impacts have been on-going
since the black decade. At the end of
the working session, and further to the
clarifications made and to the commitments
made by the Minister of Energy
and Mines, for taking responsibility for
the concerns of the economic operators,
the representatives of the sponsorship
coordination noted their full
satisfaction as to this meeting, initiated
by the public authorities, to reaffirm the
contents of the programme of the
President of the Republic at the time of
his re-election in April 2004.
Energie & Mines
19
november 2005

REFORMS
The central trade union gives its support to the hydrocarbons law
The seven reasons of the UGTA
The Algerian General Workers’ Union
(UGTA) has given its support to the
contents of the hydrocarbons bill and
explains, in seven points, the reasons
for this in a letter sent to the Head of
the government, Mr Ahmed Ouyahia.
The UGTA declares that it has “taken
note of the clarifications and commitments
presented by the government”
and considers that the institutional
completion of the hydrocarbons law
"will contribute to improving the performances
of the national economy and
of the social welfare of our citizens", we
read in this letter signed by the
Secretary General of the organisation,
Mr Sidi-Saïd. The “clarifications" and
"commitments" made by the government
are summarised by the UGTA in
seven points, in this letter, beginning
with the fact that “this text “does not,
either now or in the future, aim to open
up the capital of Sonatrach, whether
totally or partially, with the capital
being integrally owned by the State.”
According to the UGTA, the government
is also committed to the fact that
the text "nowhere, either now or in the
future, harms the jobs of the workers of
Sonatrach and of its subsidiaries or to
the social rights and benefits of its workers,
in accordance with the legislation
in force". The bill “nowhere aims to call
into question the State's ownership of
the fields and subsoils in accordance
with the Constitution" and "nowhere
aims to harm, either now or in the future,
the current assets owned by
Sonatrach, whether these are wells,
perimeters, pipelines or others" are the
two other clarifications made by the
government, according to the trade
union organisation.
The authorities also explained, according
to the UGTA, that the text “aims
to increase the resources drawn, by the
nation, of hydrocarbons, whether these
are external financial resources or tax
resources" and to "encourage the development
of the industry in Algeria
around hydrocarbons, including in the
downstream domain and particularly
petrochemistry”. The last point emphasised
by the UGTA in its letter to the
Head of the government, indicates that
the Executive has confirmed to the
union that the changes which will be
made in the future on the prices of
energy products, on the domestic market
“will be made gradually and will
take account of the purchasing power
of the citizens with, where appropriate,
direct public subsidies from the State
aimed at the economic operators in the
energy sector”.
In its letter to Mr Ouyahia, the trade
union began by “congratulating the
effort to which it has been invited by
the government on the hydrocarbons
bill” and finds that this governmental
initiative “is likely to consolidate the
partnership relationship to which the
UGTA, the government and the economic
operators are working together”.
The bill, which was discussed one last
time by Mr Ouyahia and a delegation of
the UGTA, must now pass to the
government cabinet and then to the
Council of Ministers before being submitted
to the two Chambers of
Parliament, very likely in the next
Spring session.
Economy-insurances
The insurance law will be modified
The Minister of Finance intends to make a revision to the
ordinance and the professionals expect a discussion to be able
to take place on the bill within the sector, AAI learnt from
reliable sources. The control function will be concerned by
this reform in a sense of greater reinforcement, according to
the same sources. Whilst awaiting these reforms, the National
Insurance Council (CNA) intends to initiate several actions to
boost the dynamics of the activity of the sector and to contribute
to achieving this objective. The council’s programme is
not limited to promoting the law on the obligation of insurance
against natural catastrophes, but it is also interested by the
users. Risk-management is also one of the actions which the
sector wants to develop, even if there are not many specialists
in charge of this function. Some companies, such as
Sonatrach, have put a structure in place for health, safety and
the environment (HSE) to take responsibility for the riskmanagement
issue. The insurance sector is also aiming to put
in place joint risks and insurance training structures.
The CNA, likewise, wanted to see the emergence of risk
management associations among the natural partners of the
insurance companies and training courses have been carried
out in favour of the managers of private and public companies
by experts who came to Algiers with this goal in mind. Other
projects are also scheduled, such as the modernisation by
using the new information and communication technologies.
For the time being, only a few companies have announced
that they intend to enable their clients to make some currency
transactions through the Internet, with the aim of offering
other services.
These projects must avoid ending up in the same way as the
project on the direct compensation agreement of the insurance
companies which hardly saw the light of day, according to
the CAN, which did however recommend in a study carried
out in 1999 the implementation of a direct car compensation
agreement to improve the compensation timeframes of the
policyholders which are deemed excessive. The delays in processing
inter-company claims and those within a same company
between the agencies were evoked to explain these timeframes.
This agreement was adopted in 2000 and should
come into force in January 2001.
Energie & Mines
20
november 2005

eforms
Mr Rodrigo de Rato, Director General of the IMF
“Algeria has successfully come out of recession”
The President of the Republic, Mr
Abdelaziz Bouteflika welcomed at the
headquarters of the Presidency of the
Republic, the director general of the
International Monetary Fund (IMF),
Mr Rodrigo de Rato. The audience
took place in the presence of the
Minister of Finance, Mr Abdellatif
Benachenhou, and advisors to the
Presidency of the Republic, Messrs
Mourad Medelci and Hamid Temmar,
and the governor of the Bank of
Algeria, Mr Mohamed Laksaci.
The director general of the
International Monetary Fund (IMF),
Mr Rodrigo de Rato, stated in Algiers
the “very important” efforts of Algeria
in these last few years.
“Some fifteen years ago we were going
through difficult times in Algeria, and I
think that the work and the effort made
by the government and the Algerian
people are very important”, emphasised
Mr De Rato coming out of the audience
which was given to him by the
President of the Republic, Mr
Abdelaziz Bouteflika.
Mr De Rato indicated, furthermore,
that the macro-economic stability and
the commercial and economic opening
up which Algeria is experiencing will
enable both parties to work together in
several domains, such as the financial
market, the budgetary policy and the
investment policy. In the same context,
he expressed his conviction that “the
large opportunities” which Algeria currently
has “will be used to the benefit of
the Algerian people”.
The director general of the IMF, who
indicated having talked about all these
topics with President Bouteflika, added
that an important work of technical
collaboration and support is planned
for the coming months between Algeria
and the IMF. “This visit, the first I have
made as director general of the IMF,
has enabled me to meet the Algerian
people in charge with whom I have talked
about the role which the IMF can
play in this country”, Mr De Rato then
declared.
The FCE invites the private companies
to mobilise themselves around
the growth support programme
The FCE Forum des chefs d’entreprise (Forum of directors)
expresses its full satisfaction upon the announcement
of the additional growth support programme by the
President of the Republic during the national conference
for the nation's executives", on 7 April.
This five year plan continues from the previous one,
implemented in April 2001, whose contribution to leading
our economy towards regaining growth was essential. The
Forum des chefs d’entreprise completely adheres to the
strategic option which this plan sets down: the mobilisation
of the national resources to finance the growth and to
encourage a new vigour to the economic and social development
process of our country. This orientation of the
national economic action has supported our association as
to the fairness of its analyses and its proposals: since
2001, the forum has not ceased suggesting in fact the
implementation of a voluntarist policy relying on a public
expenditure programme.
To realise the large works and infrastructure projects such
as the East-West motorway project, the metro and the
Algiers airport, the modernisation of the railway network,
the construction of dams, the desalination factories, housing,
etc. the forum has constantly appealed for recourse
to public financing.
It has also recommended and advised not losing time in
waiting for hypothetical foreign investments and, to the
contrary, taking advantage of the financial upturn to equip
the country with the vital infrastructures needed to continue
its economic and social development.
We feel that realisation of these infrastructures, the initiation
of a climate favourable to investment, particularly
including access to less expensive credits, the implementation
of a vast programme to upgrade companies and
their environment are essential and indispensable economic
actions to the creation of conditions which will enable
the Algerian company to really ensure the creation of jobs
and development. Furthermore, the forum supports the
appeal made by the President of the Republic which
exhorts the entire national collective for more effort and
work. For its part, it invites the company directors to
mobilise themselves in order to ensure the success of this
ambitious programme.
“Our commitment to everyone and our desire to work on
this success constitute the guarantee necessary for promoting
strong growth, the stabilisation of this growth and
its definitive anchorage over time; they consequently
constitute a pledge, in the context of an economy regulated
by market forces, the realisation of the social progress
by the substantial reduction in unemployment and the
resorption of poverty.
We are convinced that this programme, thus supported by
our companies, will put our country on the road of emergence
and development".
Energie & Mines
21
november 2005

REFORMS
Establishment ceremony of the board of directors of the Mining
Ahmed Ouyahia :
“The reforms are essential”
“It is indeed our increasingly intense
effort for national development, which
is more beneficial for the country and
more profitable for the citizens which is
at the centre of the ceremony which
brings us together today, namely the
establishment of the board of directors
and of the National Mining Estate
Agency, the National Geology and
Mining Control Agency as well as the
Electricity and Gas Regulation
Commission
(…)
But our country has unfortunately
experienced serious delays in achieving
the necessary transition – delays which
have cost us an awful lot (…) We must
also remember and remember once
more the progress which Algeria would
not have been able to make without the
invaluable contribution of the reforms
(…)
Hence, for a few years now, in the
reinstated safety and stability, Algeria
has re-established development and
growth and is finally seeing unemployment
begin to reduce. This development
is tangible everywhere in the
country, even though it is naturally still
insufficient. But we must not forget
that this progress is also the fruit of the
structural reforms which were made a
few years ago.
Likewise, our country very fortunately
turned over the page on the era of multiple
shortages. We must accept that
this is the effect of the liberalisation of
the market, now majority owned by the
private sector.
We must also note that the experiments
already carried out in terms of privatising
public companies have very often
entailed beneficial effects on the production,
on the fate of the workers and
on the creation of new jobs. The example
of El Hadjar, which is a symbol of
the national industry, proves this. We
should also remember that where the
missions of the State and the company
have already been distinguished, the
workers of the sector have lost nothing;
in fact completely to the contrary, but
above all, the consumers have greatly
benefited from this.
For this purpose, we remember the
stormy debates, only five years ago, on
the reform of the post and telecommunications
and today note the collective
satisfaction on free access for everyone
and in the competition of the mobile
phone, for example.
It is also by remembering our opinion
that the price margin of energy products
has not seen any change for
seven long years that we will block the
way to the current manipulations of
annuitants and politicians further to the
recent increase in these margins.
Of course, order will be maintained
and the law rigorously applied, but the
citizen must also understand the real
stakes and know that populism is still a
victim of its own restrictions and if we
need proof of this, remember the bitter
experience of the late, but enormous,
increases of the prices of bread and
milk in the 1990s.
The new hydrocarbons law will be
naturally faithful to the Constitution. It
will not reduce the share of the nation
in the hydrocarbons resources – in fact,
completely the opposite. Neither does it
have the aim of privatising Sonatrach.
This law which will commit the responsibility
of the State in its public authority
mission through appropriate organisms
will release Sonatrach and any
other national hydrocarbons industry
from the restrictions and costs. It will
enable the hydrocarbons industry to
commit even more its own resources
and mobilise other contributions to
develop its contribution to the national
development. This same law will enable
Algeria to reinforce the exploration and
exploitation of its capacities and hence
reinforce its potentials on the global
energy market and, hence, consolidate
the national wealth (…)”
The principles assigned
by the new legislative
framework
For the mines
• accessibility to the activity by any operator
• separation of the ownership of the soil from
the ownership of the subsoil
• distinction of the role of the State and that
of the operator
• removal of the discretionary power
• equal treatment of all economic operators
• specific taxation
• granting tax advantages
• guarantee to transfer the invested capital
• mining titles have a legal value
• saleability and transferability of mining titles
• awarding of mining titles by adjudication for
the fields study on public funds
• protection of the environment.
For electricity and the distribution of gas
• opening up to the competition and to private
investment for the electricity production by
assignments
• opening up to the competition and to private
investment for the electricity and gas production
by pipelines by assignments
• free access to the transportation and distribution
systems for all operators
• putting in place a market operator for the
wholesale market
• creation of an independent regulation body
• restructuring of Sonelgaz
• pricing freely negotiated for the eligible
clients
• pricing regulated on the basis of equalisation
for the captive clients and for the prices
relating to network access
• the State’s guarantee for the public service.
Energie & Mines
22
november 2005

eforms
Agencies and the Electricity and Gas Regulation Commission
M. Chakib Khelil :
“Being in tune”
“The putting in place of new devoted
institutions by the mining law and the
electricity and gas by pipelines distribution
law obeys a concern for more efficiently
taking responsibility for the
tasks which the Ministry of Energy and
Mines must assume and better governance
of the prerogatives which have
devolved to it. In an ever changing
world only countries which adapt
themselves and which change their
organisation and their working procedures
in tune with the development of
the global economic situation can succeed.
We live in a world which will
increasingly shrink, for those which
marginalise themselves and which are
demarcated from the market economy
and globalisation but which could
become more extensive and more
advantageous for those which adhere to
it and which draw benefit from the possibilities
offered by this globalisation.
Prerogatives devolved to the new authorities
The National Mining Estate Agency is responsible for :
• putting in place and managing the mining land register
• issuing the mining titles and preparing the agreements and briefs
accompanying said mining titles
• managing and monitoring the execution of the titles and the successful
tenders as well as suspending and withdrawing the mining titles
• supervising and coordinating the mining activities
• intervening for arbitrage, conciliation between operators and
representing the State in the dispute settlement procedures
• helping the investors
• establishing titles and keeping them updated
• demarcating the potential zones to be promoted and the fields
highlighted on public funds
• supervising and encouraging the jobs linked to the mining activity
and promoting small and medium sized exploitation and artisan
exploitation.
The National Agency for Geology and Mining Control is
responsible for :
• putting in place the national geological department
• managing the legal filing of geological information
• collecting, selecting, processing, assessing and circulating geological
information
• drawing up and implementing the national geological infrastructures’
programme in terms of maps
• drawing up and updating the mineral inventory
• ensuring and realising the official publication of geological and
thematic maps
• putting in place and managing the national geological database
• issuing the geological infrastructure working permits
• ensuring the administrative and technical supervision of the
mining activities
A revision of the legal and regulatory
framework as well as the putting in
place of a new organisation of the
administration with a re-distribution of
the roles is imperative. Solutions have
to be proposed which fall within the
framework of the process of economic
and structural reforms which the
government must undertake in application
of the programme of the President
of the Republic. This would mean working
in the sense of a policy to open up
our economy by encouraging the competition
and the transparency which the
success of putting in place a market
economy would require. The State
must therefore relinquish its roles of
operator, monopoly holder and of sole
investor and only devote itself to its role
of regulator and encourager of investment.
The regulating State will remain
the guarantor of the public interest, in
general and of the public service in particular.
The State will therefore remain
committed to its role of purveyor or
electrical and gas energy for all citizens,
wherever they may be.
It will rationally ensure all its citizens
have the required power, by developing
the existing distribution networks in
order to reach all the regions of the
country and more particularly the disadvantaged
areas. The targeted market
economy was not therefore a wild and
uncontrolled liberalisation, but a reasonable
de-regulation and an economic
opening up which take account of our
specificities. It is with this vision of the
situation that two bills have been proposed
to our legislators who adopted
them. These bills are the mining law –
promulgated in July 2001, and the electricity
and gas transportation by pipeline
law, promulgated in February
2002..."
• controlling the mining activities to ensure the respect of the
mining profession, the rules of hygiene and safety and preservation
of the environment
• organising and controlling the renovation of mining sites
and repair of the sites
• controlling the management and the use of explosive substances
• gaining the approval of mining and geological experts
• issuing payment documents relating to the royalties
concerning extraction and controlling the payment of the provision
for repairs
• exercising the policing prerogatives of the mines and reporting breaches.
The Electricity and Gas Regulation Commission is responsible for :
• ensuring the competitive and transparent operating of the electricity
and gas market
• contributing to the process of drawing up laws and regulations
and ensure the technical, economic and environmental regulations
are respected, guaranteeing the protection of consumers and
ensuring the transparency and non-discrimination between the
operators
• fixing the transportation cost and the tariffs for the non eligible
clients
• establishing the long term needs in terms of production, and authorising
the construction of new units to launch appeals for tenders
• approving the network development plan
• ensuring the implementation and controlling the execution of
public service missions, guaranteed by the State
• organising a conciliation and arbitration service dealing with the
recourse of the consumers and disputes between operators, particularly
for the questions relating to access to the network, to the
tariffs and remuneration of the operators
• arbitrating in the disputes chamber.
Energie & Mines
23
november 2005

ANALYSIS
Algeria, on the eve of its
accession to the WTO
Everyone knows that the
reforms process would
never be complete if Algeria
does not integrate within this multilateral
framework, as it was led, at
the regional level, to sign in April
2002 the association agreement with
the European Union with a view to
the progressive establishment of a
free trade area. From the outset, it is
appropriate to say that these agreements
will constitute for Algeria a
strong signal to both national and
foreign investors, as it would guarantee
them better predictability of
the great opportunities to be seized
for its insertion in the world economic
area. We should be careful not
to regard the WTO as a monster
which is going to eat us! The current
trade practices in Algeria, based on
legal instability, informal practices,
Energie & Mines
24
These last few years,
the World Trade
Organisation has been
one of the top subjects
of news in Algeria.
A large political desire
is finally displayed by
the public authorities
for Algeria’s accession
to the largest international
organisation
which governs the
rules organising trade
in the world.
november 2005
By
Hocine Amer-Yahia
false declarations, counterfeiting,
bureaucratic repression, all types of
obstacles and the culture of interventionism,
are infinitely more
harmful than the opening up of an
economy made on transparent and
equal bases of everyone.
The customs tariffs are no longer
today the sole means used to protect
the local products. These tariffs are
being called upon throughout the
world to progressively disappear,
including within the framework of
the WTO. It is time for Algeria to
start using other instruments which
are more adapted to the globalisation
context, through the standards,
the administration of the customs
value and the elimination of all
forms of unfair practices. It is at this
level that the competitiveness of the
companies, both inside and outside
the country, is at stake today.
Having said this, it is useful to recall
in a few words what the WTO
actually is. Unlike GATT (created
in 1948), whose role is limited to the
trade of goods only (some goods
such as agriculture and textiles are
excluded) and which is not recognised
in international law as an organisation,
to which it has succeeded, the
WTO governs the trade of goods,
the trade of services and the aspects
of intellectual property law linked
to trade.
Essentially, the WTO is the most
democratic international organisation
(its headquarters is in Geneva) :
the decisions within the WTO are
generally made by consensus : each
Member State has the right to one
vote, even if, in reality and in the
sidelines there are members who are
more influential than others (USA,
European Union, Japan, etc.). In
any event, this international institution,
currently made up of 148 members
through which over 90% of
world trade transits, is mostly composed
of developing countries and
less advanced countries. The WTO
forum is therefore the world organisation
where the less developed
countries can make their voices
heard and represent a force of proposal
in order to better defend their
interests and consequently promote
their economies. The WTO is the
result of negotiations which were
held from 1986 to 1994 (Uruguay's
cycle) as well as the prior GATT
negotiations. Currently, since 2001,
a new cycle has begun, within the
framework of the “Doha programme
for development”. Through its
different negotiation cycles, it aims
to diversify its scope and have greater
liberalisation of world trade, by
eliminating its obstacles and discriminations.
Its main functions are summarised as
follows :
• administration of trade agreements;
• framework for trade negotiations;
• settlements of trade disputes between
countries in relation to the
commitments made within the framework
of the WTO;
• monitoring the trade policies of
the member countries;
• technical support for the less developed
countries;
• cooperation with other international
organisations.

ANALYSIS
The WTO is comprised of bodies
within which the member countries
act, particularly including :
• the Ministerial Conference which
is the supreme body, which meets
up at least once every two years;
• the General Council which ensures
the functions of the Ministerial
Conference between sessions;
• the dispute settlement body administered
by the General Council.
The WTO is also comprised of three
councils (goods, services, intellectual
property rights) as well as several
committees in relation to the technical
issues.
The member countries act within
these different structures.
We have said that the decisions are
made by consensus. If this is not possible,
they are made by a majority of
2/3 or 3/4 depending on the nature
of the question. Hence, the accession
of a new State to the WTO may be
decided with a majority of 2/3.
The capacity of member of the
WTO implies the acceptance of all
the disciplines contained in the multilateral
legal framework. To adhere
to it, each country must offer an
entry ticker in terms of pricing
consolidations and services and
adopt the rules of protection in
terms of intellectual property.
To this must be added the bringing
into line of the trade legislation with
the rules of the WTO in order to
ensure the transparency, the removal
of the technical obstacles, and
the establishment of fair competition
in trade transactions. Hence,
the existence of a double price for
energy and the prohibition of
importing wines may be considered
as non conformant to the spirit of
the WTO.
It is, however, accepted in the WTO
that the less developed countries
may benefit from greater flexibility
in their assignment commitments in
terms of pricing and services as well
as with regard to bringing their trade
legislation in line with the WTO
rules.
This all depends on technical negotiations
but also, and specifically, on
negotiations behind the diplomatic
scenes. With regard to settling
disputes, the objective is to bring the
measure deemed incompatible in
line with a given agreement.
However, dialogue rather than
confrontation is the principle on
which the system is based.
What are the cardinal principles
which characterise the WTO We
can summarise them in five points,
namely :
• the most favoured nation clause
which means that every member
must treat all the other members in
a non-discriminatory way;
• national treatment which means
that the imported products must
benefit from the same conditions as
the national manufacturing products;
• market access which assumes the
prohibition of quantitative restrictions,
the consolidation of tariffs
(ceilings not to be exceeded) and the
progressive reduction of the protection;
• fair competition which imposes
the supervision and the organisation
of dumping practices, subsidies and
State trading;
• transparency which implies the
notification of the rules which
govern trade;
• encouraging the development of
the nations and special and differential
treatment for less developed
countries.
These principles contain exceptions
and safeguard measures in certain
conditions, in this case, for example
where the committed economic opening
up puts in danger a branch of
activity or threatens the equilibrium
of the balance of payments.
Where is Algeria is the accession
process
It is recognised that the WTO accession
process is a long and complex
examination, as are the rules which
govern the WTO.
The negotiation process takes place
in two stages :
• the multilateral negotiations
which require that the country
which is the candidate for accession
presents a memorandum on everything
which deals with their foreign
trade systems (as well as their reform
processes) and responds to the questions
of the member countries
which result from this; in this framework,
large areas of our legislation
have been reworked as a consequence;
• the bilateral negotiations on access
to the goods and services’ market,
meaning commitments in terms of
customs consolidations and opening
up of service sectors; in this context,
Algeria has filed tenders in terms of
pricing and services, taking account,
particularly, of the commitments of
the new accessing countries. We can
say that Algeria has overcome the
majority of these stages. But the bet
has not yet been won. The technical
negotiation must be necessarily followed
by ordered diplomatic actions
of a large scope. The act of membership
must not however be considered
as a victory. Victory will only
come with an upgrading of the economic
structures and institutions of
the country - a necessary condition
to draw benefit from our adhesion
to the rules governing international
trade, whose objective sought after
by the WTO's commissions and
councils is obviously to make them
progressively more liberal and
increasingly transparent.
H. A. Y.
Energie & Mines
25
november 2005

PERFORMANCES
Chakib Khelil inaugurates the new LPG bottling centre in Arzew
State of the art technology
The Minister of Energy and
Mines, Mr Chakib Khelil, has
inaugurated the new LPG bottling
centre in Arzew (Oran),
the most modern and safest
infrastructure at the national
scale.
This centre, which is a direct
investment granted by the
company Naftal, aims to
respond to the requirements
of the entire West region in terms of
LPG and to replace the current bottling
centre located in Arzew, which poses
problems due to its dilapidation and to
its location inside the urban fabric of
this locality. Given the template for the
centre, the Minister received from the
Chairman and CEO of Naftal and the
project leader for this centre, information
on the operating of the infrastructure,
the safety system put in place in
all the production phases of three ranges
of butane bottles (3, 13 and 35kg),
as well as the IT management of the
site.
The first stone for the project was placed
by the Minister of Energy and
Mines on 12 December 2002. This
bottling centre is the fruit of a partnership
between the Belgian company
Basse Sabre-Eri, for the studies, the
supply of equipment and the supervision
of the works, and the ENCC for
the installation and assembly of the
infrastructures. The centre uses the
mass flow metre technologies which
enable the bottles to be filled up to the
nearest milligram of weight. It includes
numerous equipment, including storage
facilities comprised of one sphere of
2,000m3 of LPG, ensuring an autonomy
of 5 days of production, and of 4
tanks of 100m3 each, in addition to the
LPG distribution, filling and bottle
cleaning equipment. Its production
capacity is 2,400 bottles of butane
(13kg) an hour on 2 carrousels of 24
workstations, 240 others of 3kg an
hour on 4 filling workstations and,
finally, 60 bottles of propane of 35kg
an hour on 4 filling workstations. Its
total capacity will be 34 tonnes of
LPG/hour. The total cost of this investment
is around 1.5 billion dinars and
8.9 million euros. On the other hand,
the Minister of Energy and Mines made
an unexpected visit to the pipeline placement
building site which will connect
the Aïn El Bya (Béthioua) pumping station
to a reservoir of 10,000m3 in
Canastel (at the entrance of Oran) to
supply the capital of the west of the
country with water coming from the
future Arzew desalination station.
Mr Khelil was informed of the causes
for the delay recorded in the progress
of the works ensured by the company
Cosider and its potential impacts on the
handover of the project, next July. The
representative of the company carrying
out the works assured that this delay,
due to the bad weather and rains which
have struck the region, will be caught
up with very quickly since the work is
currently at the stage of soldering the
pipelines already placed along the
length of this future network.
Mr Khelil insisted on the imperative
respect of the deadlines and the handover
of the project on the stipulated date
given the vital importance of this
infrastructure both economically and
socially since this will mean responding
to the water requirements of the complexes
and units in the Arzew industrial
zone and improving the drinking water
supply of the populations in the city of
Oran. On the fringes of the inauguration
ceremony of the Arzew bottling
centre and the visit to the Aïn El Bya
building site, Mr Chakib Khelil ran a
press meeting during which he returned
to the importance of the two projects
“which have just been named to
respond to the expectations of the
populations and to satisfy their needs”,
he indicated whilst insisting, for the
case of the Arzew bottling centre, on
the better quality of the product, the
safety of the production process and
the reliability of the bottles which will
be put on the market. With regard to
the future sea water desalination station
in Arzew which should start production
next summer, the Minister
announced that the electric power station,
with a production capacity of
318Mw, to which is coupled the desalination
station, was pressurised two
weeks ago. “In principle, in a month’s
time, this power station's first turbine
will begin to produce the electricity
which will be injected into the national
system", he specified.
A two-stage contract
This bottling centre's contract is done in two
stages: the technical tender and the commercial
tender, for a Belgian company
(Basse Sambre-Eri) which has been retained
for the study as well as for the supply
of the equipment. As for the control, this
has been entrusted to Enep. The core of
this bottling centre is comprised of a power
supply system (2 pumps and 6,000m pipeline),
a storage area (one butane sphere and
2 horizontal propane tanks) and a power
supply network for the filling units.
Algerians consumed
over 1.8 million tonnes
of LPG in 2004
The national LPG consumption reached
1.86 million metric tonnes (mt) in 2004,
according to the statistics published yesterday
by the company Naftal. From the same
source, we learn that the butane gas
consumption is in first position with
1.42 million mt, i.e. an average of 48kg
per capita per year. The LPG fuels come
in second place with 304,000 mt, followed
by propane with 140,010 mt for the same
period. It is the East region of the country
which consumed the most LPG with a total
of 644,599 mt. The South of the country
occupies the last place with 168,026 mt.
With regard to the distribution of sales
through the national territory, it is the
Wilaya of Algiers which is the largest
consumer of LPG products with 111,936 mt,
followed by those of Tizi Ouzou (83,290
mt), Sétif (79,537 mt), Tlemcen (77,480 mt)
and Oran (71,060 mt), the same source
added. The Wilayas consuming the least
amount of these products are those of
Tamanrasset (7,712 mt), Tindouf (7,475 mt)
and Illizi (1,865 mt).
Energie & Mines
26
november 2005

OIL PRODUCTS
Synoptic report as of 31 December 2004 of the storage
and distribution realisation permits granted
to the private promoters
961 permits granted to the private promoters
As of 31 December 2004, 961 permit were granted to the
private promoters for the realisation of the following infrastructures
:
• Fuel distribution and storage centres : 8
• Bottling centres : 43
• Increases in storage capacities : 12
• Service stations : 431
• LPG/fuel service station extensions : 168
• Asphalt distribution and formulation centres : 11
• Lubricants distribution and storage centres : 80
• Oil product buyers : 10
• Lubricants distribution and formulation centres : 3
• Used oil regeneration and processing units : 2
• Inter-changeability of butane gas bottles : 9
• Transfers of ownership : 138
• Extension of deadlines : 22
• Updated decisions : 13
• Settlement : 8
• Cancellations : 3
Overall, the number of permits issued increased from 808
at the end of 2003 to 961 at the end of 2004, i.e. an increase
of 19 %.
Compared with the year 2003, where the number of permits
issued was 179, during the year 2004, a 14 % reduction of
this number was recorded, i.e. 153 permits granted. Only
the requests for permits for the realisation of the projects to
extend service stations to LPG fuels increased during the
year 2004 by 29 % compared to 2003, i.e. 31 new permits
issued in 2004 compared to 24 in 2003.
LPG
Contract between Sonatrach
and a private Algerian company
A liquefied petroleum gas (LPG) sale and purchase
contract was recently concluded in Algiers between
the national hydrocarbons company Sonatrach and
the Société privée algérienne des produits pétroliers
(STPP – Private Algerian oil products company),
indicated yesterday a Sonatrach press release.
The contract, whose amount was not specified in the
press release, relates to the delivery of an overall
amount of 15,000 metric tonnes of LPG per year.
The signature of this contract, indicates Sonatrach,
falls into the context of a vast programme opening up
to private Algerian operators the market for oil products’
distribution storage and packaging of this
source of energy.
This contract takes place after three others signed in
2004 by Sonatrach with the private Algerian operators
Eurl SARG, Eurl Norgaz and GBS, for a total
supply volume of 70,000 mt per year.
Present in the distribution of fuels, the STPP, based in
Sidi Bel Abbès, has extended its activities to butane
gas bottle bottling with a production capacity of 5,000
bottles/day, according to the indications in the press
release.
Energie & Mines
27
november 2005

OIL OIL PRODUCTS
Oil products’ distribution and storage
Chakib Khelil opens
the doors for reflection
The promotion and the
development of storage
and distribution
activities opened to
the private sector
since 1997 was on the
agenda of a study day
organised in Algiers
by the Ministry of
Energy and Mines.
This meeting, which brought
together the different persons
involved in these activities,
aimed to be, according to the
Minister of Energy and Mines,
Mr Chakib Khelil, “an opportunity
given to the professionals to focus on
and exchange their ideas for a real participation
in the development effort and
in these activities". Recalling that the
opening up of the sector to private
investment has enabled the oil products'
distribution and storage infrastructure
to be intensified and developed,
the Minister invited the operators
to “play an important role in the future
in satisfying the oil product needs in
the different user sectors on the
domestic energy market and to develop
their companies, based on a total quality
approach”. The current period,
continued the Minister, is characterised
“by a positive and constructive dialogue
with the economic operators and
the professional associations and shows
a real desire to improve the activities
linked to the distribution of oil products
and to stimulating investments”.
In this respect, he indicated that the
number of projects to realise oil products’
distribution and storage infrastructures
amounts to almost 500 additional
planned jobs.
These projects will be added to those
carried out since the opening up of the
service stations, 3 fuel distribution and
storage centres, 43 lubricants’ distribution
and storage centres and 9 LPG
bottling centres.
Recalling the actions already undertaken
to promote these activities, particularly
the opening up to the supply from
refineries in favour of distributors, the
increase in the distribution margins and
the exporting by Naftal of packaged
butane gas to Tunisia, the Minister
expects, with the promulgation of the
hydrocarbons law, larger participation
in the development of the investment in
these activities.
“This is explained, he pointed out, by the
fact that the costs and the margins must
reflect credibility and stability.” The
Minister of Energy and Mines added that
“the remarkable growth which currently
characterises the consumption of oil products
and, particularly, that of diesel, has
encouraged the sector to implement since
January 2005 a pricing of products which
is more appropriate to our refining model
and to our overall national energy policy”.
The Minister also confirmed "that
the clean fuels will now have more
advantages with regard to prices and
taxation for the period 2005-2009, in
close coordination between the administrations
of the Ministries of Energy
and Mines, Finance and the
Environment”.
The price of the oil products on the
domestic market must include the costs
of refining, transportation, distribution
as well as the reasonable remuneration
margins of each activities, in addition
to the depreciation of new investments
necessary for the activity. “We are
moving towards this policy, albeit progressively
over several years”, he said,
explaining that the increase in the prices
of fuels is particularly due to tax
and not to the prices of the product put
on the market by the operator. “To have
reasonable prices, the only alternative is
to reduce the taxes and not the costs
and the margins”, he specified, proposing
removing taxation from non-polluting
products such as the LPG/fuel
which is "subjected to an environmental
tax". For its part, the director of oil products,
Mr Khaled Benhassine, revealed
that the investment requests have particularly
related to the realisation of service
stations (438 permits), the extension
for the distribution of LPG/fuel
(172) and to a lesser extent to the realisation
of lubricants' distribution projects
(83) and mini LPG bottling centres
(45). Other communications on the
reforms of the downstream sector, the
adaptation to the sector’s reforms, the
increase in the value of the LPG/fuel,
the regulatory and institutional framework,
atmospheric pollution, the national
consumption of oil products will be
presented during this day.
Energie & Mines
28
november 2005

OIL PRODUCTS
Focus
Energie & Mines
29
november 2005

performances
PERFORMANCES
Hydrocarbons' transportation
The Hyproc-Shipping Company fleet
reinforced by two methane carriers
The company Hyproc-
Shipping Company, a subsidiary
of the Sonatrach
Group, has, over the
second half of the year
2004, received and also
ordered new carriers aimed
to reinforce its capacities
to transport hydrocarbon
and petrochemical products,
in order to respond
to the development in
Algerian exports.
Energie & Mines
30
november 2005
Unquestionably, the specialists
feel that the world’s energy
demand, particularly with
regard to the use of natural
gas, in general, and particularly in its
LNG form, will increase over the next
two decades.
Algeria is ranked second, after
Indonesia, in terms of LNG production.
Today it has 40 years’ experience
in the liquefaction of natural gas, given
that the first Algerian complex built in
Arzew, the GNL 4-Z, better known as
La Camel, was inaugurated in 1964. In
the new world configuration of LNG,
with the emergence of the Far East
countries, like China, Algeria has been
called upon to play an important role.
Several factors work in this sense,
including the geographic position of
the country which makes it a privileged
crossroads for the development of the
LNG industry.
Algeria finds itself on the optimal line
between the Atlantic basin and the
Pacific basin, which enables it to seize
the market opportunities which are
offered to it, both in the East and the
West of the planet. Algeria is in the
middle of a regional energy integration
phase, thanks to the new direct gas
routes to Europe and to the gas electricity
convergence on this continent,
which offers it new possibilities of reinforcement
in the Euro-Mediterranean
basin.
With the upcoming realisation and
exploitation in partnership of the integrated
Gassi Touil gas project, the
export capacities (gas pipeline and
liquefaction) which Algeria will have
before the end of this decade will be 85
billion cubic metres a year, i.e. an
increase of over 50% compared to current
capacities.
At the time of the 40th anniversary
celebration of La Camel, the Chairman
and CEO of Sonatrach recalled that the
Group had set itself the objective of
exporting 85 billion cubic metres of gas
by 2010 and intends to increase this
level to 100 billion in 2015.
It is in this perspective that the operation
to buy and order new vessels
(methane carriers and LPG carriers,
particularly) by Hyproc-SC falls.
Hence, the second half of the year
2004 was highlighted by the receipt of
two new methane carriers with a large
loading capacity. On 14 September last
year, the methane carrier Berge-Arzew,
with a capacity of 145,000 m 3 , comanaged
with the Norwegian owner
Bergessen, was received. It was built
by the South Korean company
Daewoo.
On 27 November, it was the turn of the
second methane carrier Lalla Fatma
N'Soumer, acquired by a "joint venture"
in equal parts between Hyproc-SC
and two Japanese companies Itoschu
Corporation and Mitsui-Oks line.
The building, with a transportation
capacity of 145,000 m 3
of LNG, is
managed by a totally Algerian team
which has already travelled, in the ship
building phase, to familiarise itself with
its equipment and instruments.
At the end of October, a contract to
acquire two LPG carriers, Medmax
(Mediterranean maximum) with a
capacity of 75,000 m 3 , was signed in
Algiers between Sonatrach and the two
Nippon companies Itoschu and MOL.
Sonatrach and Hyproc SC have equal
interests (25% each) in the financing of
these orders. The remainder is ensured
by the two foreign partners.
On 4 November last year, Hyproc SC
signed in Oran a contract with the
Japanese shipbuilding company
Namura Shipbuilding Corporation, for

MARITIME TRANSPORTATION
the acquisition of a LPG transportation
ship, with a capacity of 22,500 m 3 ,
which will be received in August 2007.
A second ship with the same capacity is
ordered as an option with the same
builder to be delivered in August 2008.
The two buildings, placed under the
national pavilion, will ensure the
transportation of LPG and ammoniac
to power the markets of the Northern
shore of the Mediterranean. Far from
stopping with these orders, the managers
at Hyproc seem to be doubling
their efforts, in the framework of the
national company’s fleet redeployment
programme, it is planned to acquire in
partnership a super-methane carrier
with a capacity of 165,000 m 3 .
Eight other vessels will be acquired in
partnership in the medium term. These
concern one LPG carrier (35,000 m 3 ),
two refined products’ carriers (25,000
tonnes and 8,000 tonnes), chemical
tanker of 4,000 t, one asphalt carrier
(4,000 t), one "Aframax" (110,000 t),
one "Suezmax" (140,000 t), whose
gauges enable it to go around Africa
and easily go into the Suez Canal, and
one VLCC (large oil tanker) with a
capacity of 300,000 tonnes.
We should also point out the efforts
of the Hyproc managers to bring in
line with the safety provisions imposed
by the International Maritime
Organisation (IMO) from 1 July 2004,
within the framework of the ISPS code.
These safety recommendations seem to
be well observed on board the vessels
and in the daily management of the
company’s services, which has, furthermore,
been certified for a few years
already.
The fleet of the Hyproc SC company is
composed of 6 methane carriers,
2 LPG carriers, 4 oil tankers, and
2 asphalt carriers, in addition to the
Djamila vessel chartered to Sonatrach.
In 2003, this subsidiary ensured the
transportation of 265 million cubic
metres of LNG. Its vessels made 3,043
trips in the same period, to cover a total
distance of over 4 million miles.
Gas transportation
Mr Chakib Khelil supervises the LNG
loading of the new methane carrier
Lalla Fatma N’Soumer
The Minister of Energy and Mines,
Mr Chakib Khelil, in the port of Arzew
Djedid (Béthioua), supervised the loading
ceremony of the first LNG order in
the tanks of the new methane carrier
Lalla Fatma N'Soumer which Hyproc
Shipping Company, the subsidiary of the
national hydrocarbons company
Sonatrach, has just received.
Accompanied by the Chairman and CEO
of the Sonatrach Group, the central
director of the maritime trader to the
Ministry of Transport, the Chairman and
CEO of Hyproc SC and its executives,
Mr Khelil visited the different parts of
this methane carrier with a capacity of
145,000 m 3 of gas, the first of its kind on
the African scale and the third in the
world, before meeting with the members
of the vessel's crew on the conditions of
their training and work on board this
type of gas carrier. With regard to the
control and steering room, the Minister
of Energy and Mines made a statement in
which he told of his pride and joy in being
present at such an event, “which shows,
he felt, the correctness of the vision of
growth and development which we have
defined for the Energy sector in its entirety”.
“With such gains, we are proud to have
see that we can, without any complications
or problems, work towards globalisation
and competition, as we have the
human capacities, the resources and the
necessary skills”, he pointed out. After
evoking the perspectives which are offered
in terms of production, exporting and
the sale of LNG, the Minister announced
that the LNG projects in Arzew will be
launched in the near future as well as the
acquisition of other transportation vessels.
“We hope to ensure sales of at least 50%
of our production capacities by our own
resources”, indicated Mr Khelil, who
congratulated the training policy initiated
by the subsidiary Hyproc and all the
approaches undertaken by this company
to be amongst the executives whose
“competences are recognised globally”.
Prior to this, the Chairman and CEO of
Hyproc and of the Sonatrach Group
spoke to emphasise the importance of
this event. For Mr Zenasin of Hyproc SC,
“this realisation is the fruit of 23 years of
effort – a long period during which no
investment of this size was made, particularly
for the LNG transportation”.
Whilst emphasising the importance of the
partnership and the management formula,
both technically, nautically and commercially
by Hyproc, which “enables us
to ensure for 20 years full employment
for at least 80 maritime jobs”.
With regard to the problem of safety, Mr
Zenasni emphasised the importance of
implementing the ISPS code, in force
since 1 July last year, relating to the safety
of vessels and port facilities.
“The phenomenon of stowaways signalled
in foreign vessels, if not strictly dealt
with, such as stipulated in the port safety
plan and approved by the Maritime
Goods Division with the International
Maritime Organisation (IMO), is likely
to seriously compromise our efforts and
would cause our economy enormous
harm”, he indicated.
Lalla Fatma N’Soumer, with a transportation
capacity of 145,000 m 3
of LNG,
was built in the shipyard of the Japanese
company Kawasaki Heavy Industries.
A joint venture in equal shares between
Sonatrach, Hyproc SC and two Japanese
partners, Itochu Corporation and Mitsui-
Osk Line, has been recommended by the
Algerian Nippon Gas Transport
Corporation consortium.
Lalla Fatma N’Soumer is a modern
methane carrier, built according to the
most recent technological standards
since it is fitted with “Moss System” type
spherical tanks. It is run by a totally
Algerian crew which has already travelled,
during the ship building phases, in
order to familiarise itself with its equipment
and instruments. This methane carrier
carries out the loading and unloading
operations, in the gas terminals, in a period
of just 12 hours. This enables it to be
profitable and save an enormous amount
of time.
Last September, the same company had
received an initial methane carrier, the
Borg Arzew, with a transportation capacity
of 22,500 m 3 , built by the South
Korean Daewoo on behalf of the Algerian
company and the Norwegian owner
Bergessen. As a reminder, the fleet of the
Hyproc SC company is composed of 6
methane carriers, 2 LPG carriers, 4 oil
tankers, and 2 asphalt carriers, in addition
to the Djamila vessel chartered to
Sonatrach.
Energie & Mines
31
november 2005

performances
PERFORMANCES
Sonatrach, financing of a 4 th
methane carrier
ING Bank retained
Energie & Mines
32
■ The carrier whose building
cost is estimated at
139 million dollars should
be received in June 2009.
Its construction will be
completed in 2007.
■ The building of this 4th
methane carrier, ordered
within the framework of a
joint venture, is entrusted
to the Japanese builder,
Universal Ship-Building
Corp.
■ 31.5 billion dollars – this
is the turnover made by
Sonatrach at the end of the
2004 financial year.
■ Its exports for the same
period reached 28.5 billion
dollars, 3 billion of which
were accounted on behalf
of the Group's partners.
PPNB Paribas, Calyon, Société
Générale (France), ING-Bank
(Netherlands), Fortis
(Belgium) and SMBC (Japan) are the
six banks which subscribed to the submitting
of bids by virtue of a transaction
to finance the building of a methane
carrier. The carrier, the fourth of its
type, whose building cost is estimated
at 139 million dollars – with the official
total amount of the transaction being
evaluated at 152 million dollars – will
be ordered within the framework of a
joint venture in equal shares, i.e. 25%
per shareholder, concluded between
the Sonatrach Group, the SNTM-
Hyproc, Itochu Corporation and
Mitsui Osk-Lines. According to the
financing options given, the shareholders
will pay a contribution of 25%.
The remainder of the amount will be
november 2005
acquired in the form of debts. The relative
late opening up of the tenders,
supervised at the El Aurassi hotel, led
to it being awarded to ING-Bank of the
Netherlands, on the basis of the least
expensive quarterly depreciation criterion
of the debt. However, the deadline
for validating the tender is fixed for 31
July 2005. Furthermore, the representative
of Société Générale (France) will
be notified of the inadmissibility of this
bank’s tender, as it did not submit its
tender within the regulatory timeframes.
Entrusted to the Japanese company
Universal Ship-building Corp, at the
end of the first tender dated 29 May
2004, the building of the methane carrier
will be started in 2007 in the Kobe
shipyard. The vessel, which must be
delivered in 2009, will become the property
of the subsidiary Algerian Nippon
Gas Transport Corporation.
This transaction which should enable
the fleet of the national maritime
hydrocarbons’ and chemical products’
transportation company (SNTM-
Hyproc) to be reinforced, most of
whose vessels are being renovated, stated
the executive financial director of
the Sonatrach Group, Mr Ali
Rezaïguia, at the end of the tender opening
session.
The interest for Sonatrach also consists
of achieving over 50% of its gas production
capacities, capable of honouring
its international commitments, he
added.
An investment programme
of almost 25 billion dollars
Sonatrach, which has just been awarded
an exploration permit on an oil
block in Libya, further to an international
appeal for tenders, the first of its
type, is committed in an investment
programme of almost 25 billion dollars,
1.4 billion of which comes from foreign
investments, indicated Mr Rezaïguia.
The Group, which intends to position
itself on the world oil market, at the
end of the financial year 2004 by excellent
performance, i.e. turnover of
around 31.5 billion dollars.
Its exports for the same period reached
28.5 billion dollars, 3 billion of which
were accounted on behalf of the
Group's partners.

financement
Thirteen banks, including two foreign ones, have subscribed to the
Sonelgaz bond loan
Chakib Khelil : “A good result”
Benachenhou : “A step in the right direction”
Thirteen financial and banking institutions, two of which are foreign (Société
Générale and ABC), have subscribed to the bond loan of an amount of 20 billion
dinars, launched by the Algerian Electricity and Gas Company (Sonelgaz),
announced the Chairman and CEO of this company, Mr Noureddine Bouterfa.
T
his loan is divided into three tranches. For the 5
year securities, the amount raised by these subscribers
is 8 billion dinars, with an interest rate of
2.4%; for the 6 year ones, the amount is 4 billion
dinars with an average interest rate of 2.45% whereas for the
7 year securities, the amount is 8 billion dinar with an interest
rate of 2.86%. This transaction, the first of its kind for
Sonelgaz, will be followed at the start of next year by another
mixed loan (public and private) of an amount of 20 billion
dinars and a third of an amount of 10 billion dinars at the end
of 2005, indicated Mr Bouterfa. This transaction "is the fruit
of our financing policy which we wanted to be based mostly
on the available national financial resources. It also constitutes
the end of an on-going search for foreign funds for financing”.
This amount must be used to finance development
products for the electricity and gas distribution, transportation
and production networks, as well as for the modernisation
of the company's branches. The total cost of these objectives
for 2005 is estimated at 92 billion dinars, 50 billion
dinars of which will be contributed by the bond loans and the
remainder will come from the company's own funds.
Addressing himself to the subscribers, Mr Bouterfa reassured
them of the “good management” of their money and of their
repayment.
For his part, Mr Chikhi, Chairman and CEO of the National
Bank of Algeria, emphasised the importance of this loan
which clinched all transactions launched this year on the
financial market and which will be followed by others next
year. The managing director of the consultancy company
Strategica, Mr Siagh, felt that Sonelgaz can successfully raise
on the financial market quite large funds to finance its
investment requirements. Mr Benachenhou, who congratulated
the “success” of the loan, which “constitutes a step in the
right direction”, emphasised that the Caisse nationale des
équipements publics (National fund for public equipment)
will intervene on the financial market next year to finance its
large projects. The Minister revealed the, albeit “moderate”,
participation of the foreign banks in this loan, describing it as
a “symbolic contribution which shows their confidence in
us”. Société Générale contributed with an amount of 1.250
billion dinars out of the 20 billion, i.e. a rate of 5%.
Mr Chakib Khelil congratulated this “great result for
Sonelgaz”, emphasising that the use of resources on the
national financial market is essential for the sustainable development
of Algeria. “Without this market, we will later on
have problems on the foreign financial markets, as was the
case for the re-negotiation with the IMGF which led to a
devaluation of the dinar with negative repercussions on the
public companies.”
A programme
of 5 billion dollars
Within the framework of its development strategy, Sonelgaz has initiated an
ambitious medium and long term investment programme. The realisation of
the projects in the East, centre and West of the country, concerning the
transportation network, mostly, requires financing evaluated at 5 billion dollars,
i.e. a little more than 611 billion dinars or even the equivalent of 80% of
the turnover of the company, which is deemed penalising; a consequent
amount which requires recourse to partnership and to external financing. It is
furthermore in this context in which the institutional bond loan of 20 billion
dinars falls.
This programme, 36.6 billion dinars of which will be released for the 2005
tranche alone, will be called for to respond to the requirements in terms of
production, transportation and distribution of energy, but also the renovation
and modernisation of its network. A number of electric power stations are
also scheduled in the medium term. In addition to the one at Arzew, coupled
with the water desalination, with a capacity of 300MW, whose commissioning
is planned for the end of the first half of 2005, and another, in combined cycle
with a total capacity of 825MW, operational in two phases, end 2005 and end
2006, Sonelgaz has already launched an appeal for tenders for the realisation
of an electric power station of 200 MW in Hadjirat Nous (Tipaza). Its commissioning
is planned for 2007-2008. The same procedure will concern a turbine
gas power station in the Berrouaghia region (Médéa), with a capacity of
400MW and which should enter into production in September 2006.
Mindful of responding to growing demand for electricity, Sonelgaz plans, by
2010, to build a power station, with a capacity of 1,200MW, in Kouidet
Edraous, near El Kala, in the East of the country (2008-2009) and a second
one, with the same capacity, in Tergua, in the Wilaya of Mostaganem. On
another plan, Sonelgaz plans to introduce into its system a higher pressure
level designated by the 400KV threshold, mindful of satisfying the quality,
service and safety criteria expected by the consumer. Two posts, in this case
Ramdane Djamel and Hassi Ameur, will enable exchanges or large capacities
of energy and international inter-connections. The Africa-Europe interconnections
are also the subject of a study, within the framework of a consortium
of seven countries in the areas surrounding the Mediterranean, called
EMATLEI. This will be examining the means for reinforcing the interconnections
and the bordering networks.
Energie & Mines
33
november 2005

performances
PERFORMANCES
National rural electrification programme
Sonelgaz in total transparency
Energie & Mines
34
■ The national rural electrification
programme plans
for 27,133 connections, i.e.
3,047km (MV/LV) for an
amount of 7 billion dinars.
■ The current national electrification
rate of 96% will
increase to 98% in this project
financed by State
funds.
■ 73 works companies and
30 other research companies
subscribed to this tender.
■ The results of the bond
loan for 20 billion dinars
launched with financial
institutions will be known
this Saturday.
For the first time, mindful of
transparency, Sonelgaz is breaking
away from tradition by
launching an appeal for tenders
open to the national competition,
by virtue of the electrification programme
for the financial year 2005. The
procedure, which sets out a series of
rules in terms of respecting the completion
deadlines and the technical
standards in force, must be fair and
strict in awarding project of such size.
The tender opening and examination
session by the National Commission
for opening and awarding contracts
(Cnopam) took place yesterday in the
El Aurassi hotel in the presence of executives
from Sonelgaz and the companies
concerned by the tender.
73 works companies including Kahrif,
Enel and Kahrakib, and 30 other
research companies subscribed to this
tender which concerns a rural electrification
programme which plans 27,133
november 2005
connections, i.e. 3,047 km (MV/LV)
for a total amount of 7 billion dinars.
Due to this large extent, the electrification
programme, currently at 96%, will
increase to 97% or even 98% which is a
performance compared to European
countries, indicated the Chairman and
CEO of Sonelgaz, Mr Nourredine
Bouterfa, which means that 21 villages
have consequently benefited, today,
from solar energy.
The contracts will be awarded to companies,
depending on their maximum
capacities. Hence, a section of less than
50km will be given to 2 companies for
a line between 50 and 100 km. The
contract must be shared between
3 companies.
Beyond this distance, the works will be
ensured by 4 companies, given that one
company cannot in any event be awarded
more than 70% of the programme
– a condition which has not been to
satisfy the entrepreneur Kahrif which
would have overestimated its realisation
capacities limited to 1,700 km,
according to Mr Bouterfa. Economic
and socio-cultural development, creation
of jobs, settlement of rural populations:
these are the benefits hoped for
from this programme which is supposed
to exclude companies which were
not successful in previous projects. As
to the financing sought after from
banks, Sonatrach’s head confirmed
that an action, currently being put
together, should be completed in one
or two months at the latest. And to add
that the guarantee pledges will be the
contracts with the companies retained.
150 locations will be
connected to natural gas
in 2005
Within the framework of its investment
programme evaluated at 50 billion dollars
in the short and medium term, Sonelgaz
intends to continue expanding its natural
gas network, currently at 40%, staggered
over about ten years. It should be emphasised,
for this purpose, that the company
is already considering a real realisation
strategy as of February or March 2005.
60 agglomerations, i.e. 70% from the
remainders of the previous programmes,
will be concerned in the initial phase.
The 2005 programme will also benefit
80 other locations.

ELECTRICITY
With an estimated rate of 96%
The mass electrification
in Algeria is now complete
With an electrification rate
estimated at 96% today,
we can consider that the
mass electrification, such
as was undertaken at the
start of the 1970s, is now
complete, reveals a study
published in the monthly
magazine Medénergie for
the month of April.
The study entitled “A remarkable
national work” was drawn
up by three experts, Slimane
Berraoui, who participated in
the “Rural electrification” study carried
out on behalf of the Ministry of Energy,
by Mr Abdennour Djidi, who led the
same study, and Mr Abdenour
Keramane, former Minister and one of
the founders of Sonelgaz.
“In the 40 years following its independence,
Algeria has designed and realised
using its own resources an extensive
piece of work, increasing the electrification
rate from less than 30% to 96%
today”, they pointed out. According to
them, “the electrification rate has changed
in the sense expected by the regional
equilibrium policy, constantly
continued by taking account of the
regional dispersion”. Only a few
“remote, small sized” centres need to
have electrical power, and according to
a different approach from the one
which was carried out until present to
complete this long electrification work.
On the basis of the hypotheses formulated
in this study, the cost of what
remains to be completed in the Algerian
companies and the suburban agglomerations,
particularly the new ones, in
terms of electrification, is estimated at
34 billion dinars.
This amount represents the connection
of 214,175 households, a Mv/Bv network
length of 25,700 km, which
would bring the total national electrification
rate to 97% by 2007.
Hence, the investment which still has to
be made represents barely 19% of what
has already been granted, according to
the study. The study recommends for
the non-remote centres (regions of the
North of the country) recourse to electrical
power by the extension of the LV
or MV (low and medium voltage) network.
In this case, this relates to geographic
areas where the density of the
networks is sufficient and the cost of
connection economical. In the Steppic
and Saharan regions, the experts
recommend making technical-economical
choices between different
options, depending on the density of
the population there. The alternatives,
according to the study, would be putting
in place a micro diesel power station,
the highly photovoltaic-type solar
facilities and the wind energy option,
which must also be prospected. “The
three power supply techniques have
been considered by Sonelgaz within the
framework of the electrification programme”,
confirm these experts.
Also, at least 20 solar sites have just
been completed in the South of the
country. The technical and commercial
management of the networks is defined
and controlled, according to the study,
specifying that “the completion of the
sites is the responsibility of Sonelgaz
and the financing carried out by the
electrification allowance”.
However, the responsibility of the
exploitation of the solar photovoltaic
sites and the micro power stations “is
not clearly defined for the moment”,
emphasises the same study. Hence, the
company Sonelgaz, which carries out
the works, does not seem to be committed
in the exploitation of the sites
nor in the management of the users
who benefit from the free connection,
indicates the study. This is the same,
notes the study, for the micro power
stations which should be exploited by
the Communal People’s Assemblies
(APC).
Energie & Mines
35
november 2005

performances
PERFORMANCES
The Chairman and CEO of Sonelgaz in an interview in Pétrole
et Gaz arabes
“We plan to be one of the first five companies
in the Mediterranean basin in 2010”
• Solar hybrid power station project in Hassi R’mel
• The development of the Maghreb electricity market – a priority
Energie & Mines
36
november 2005
Mr
Nourredine
Bouterfa, Chairman
and CEO of
Sonelgaz, said in an
interview to the specialised review
Pétrole et Gaz arabes (PGA) that
Sonelgaz aims to be one of the best five
companies comparable in the
Mediterranean basin by 2010. He indicated
that to do this the criteria used
related to "three main domains: quality
of service to the client, economic competitiveness,
which assumes good
management of our costs and technical
performances". The concrete realisation
of this ambition, already displayed
in 1990 for 2005 “is more difficult as,
at the same time, Sonelgaz has to be
transformed into a real industrial
group. We must therefore work on
several fronts at the same time, but we
are still aiming to be one of the top five.
It would, furthermore, be totally illusory
to hope to be among the best.
Electricity in Europe is being completely
shaken up with the emergence of new
players, such as the Italian company
Edison”, he added.
He reminded that, since 2004,
Sonelgaz has started to transform the
distribution and, this year, will have the
appropriate management systems and
tools to be able to measure its performances.
With regard to the forecasted
changes in the Algerian electricity
consumption, he indicated that for
2004, the electricity consumption was
31GWh, with an installed electric capacity
of about 6,500MW.
“In 2010, the installed power commissioned
will be 10,000 – 10,500MW.
Furthermore, by 2010, we are going to
install 6,000km of new high voltage
lines, 1,500km of which in 400kW, and
70,000km for the distribution network”,
he further indicated. “For gas,
we plan 19,000km of distribution network
to be completed by 2009-2010.
We estimate that we will have to be able
to recover 500,000 additional clients
for the gas and about 1.3 million for the
electricity”, he estimated. With regard
to investments, Mr Boutarfa indicated
that they are “progressing very well and
could reach 93 billion dinars in 2005”.
“Over the period 2005-2010, we estimate
that our total investments could
be around 611 billion dinars, about
78% of which for electricity and 22%
for gas”, he indicated, estimating that
over the 2005-2010 period Sonelgaz’
borrowing requirements would be
around 250 billion dinars. “Our desire
is to indebt ourselves as much as possible
on the domestic market. Hence, at
the end of 2004, we launched a bond
loan for up to 20 billion dinars. This
reduces the risk of foreign exchange
losses - losses which have varied between
4 and 7 billion dinars a year in the
last few years", he explained. With
regard to the new and renewable energies,
Mr Boutarfa revealed that the
contribution of Sonelgaz may be “multiplied
with axes such as research,
improvement of systems and the
connection to the electric network”.
“Our company could use the network
to route the solar-origin electricity
coming from Southern Algeria, which
would enable us to increase the value of
the contribution from this region”, he
said. “We are involved in a hybrid project
in the region of Hassi R’mel which
should, as a priority, serve the oil companies
and also free up capacities to
supply the North of the country. This
project will be a combination of thermal
solar energy and a gas power station. It
has been entrusted to the company
Neal, whose shareholders are
Sonatrach and Sonelgaz, up to 45%
each, and the private company SIM for
10%”, he recalled.
With regard to the cooperation between
Sonelgaz and Sonatrach, Mr Boutarfa
particularly stated: “We are
Sonatrach’s number one national
client. Sonatrach intends to develop the
value of its production and Sonelgaz
may be a good partner.
And, for our international development,
who better than Sonatrach could
be along side us” he said.
Questioned on the international development
outlooks for Sonelgaz,
Mr Boutarfa felt that "the priority is to
develop the Maghreb electricity market”.
“In Algeria, we have a legal framework
for the electricity market
which is similar to the one in Europe,
but our Moroccan and Tunisian neighbours
are less advanced. Algeria is
attempting to promote new interconnections
with Europe via cable projects
to Spain and Italy, whose overall
transportation capacity would be
3,000MW. The electricity produced in
Algeria could be very competitive in the
Maghreb-Spain sub region, a country
in which we are, furthermore, already
an operator”, he further stated.

ELECTRICITY TRANSPORTATION
grte
The market operator !
By
Mohammed Tayeb Maddi
For what will soon be
a year, within
Sonelgaz, generally,
and GRTE, in particular,
a new structure
has come to light : the
market operator
Project. As this is
something new, and
for which
the activity is badly
perceived, the first
two questions which
are asked are:
• What is an electricity
Market
• What is a market
Operator
o be able to give satisfactory
Tanswers and to give clarifications
to the reader, it is
first of all important to place
the problem in its specific
context. In fact, in the world and already
for a few decades now, profound
changes have affected the electricity
sector, in all its compartments. For a
long time restricted to fixed structures
and outlines, the electricity utilities,
under the pressure of a dominating
liberalism – have began by adopting
more open models, to organise the traditional
activities otherwise by their
separation and their specialisation, to
introduce commercial profitability criteria
and therefore market activities.
The traditional notions of public services,
methods of financing energy
infrastructures have been redefined. In
short, the electricity companies –
having lost their social specificity –
have become no more or less traditional
companies, mainly guided by profit.
These changes are not the fact of a
“political or ideological desire”, but
the result of a new social and economic
situation characterised, amongst
others, by: the drying up of public
financing, the enormous financial
availabilities on the stock markets, the
social needs for better quality of service
and the requirement for transparency,
to cite just a few of these reasons.
Algeria, as for all other countries –
could not escape this reforming wave,
and the earlier the necessary reforms
were started, the sooner the constraints
would be removed and the
situation controlled. Hence, in
February 2002, under no. 02-01, a
new law relating to electricity and to
the distribution of gas by pipelines was
promulgated. This important legislative
text particularly redefined all the
production, transportation and distribution
of electricity activity in Algeria.
Without giving an in-depth analysis of
the contents of the law, which is not
the purpose of this article, and to simplify
matters, the new provisions are
based on :
■ The separation of the activities,
including the re-structuring of
Sonelgaz and identification of the sectors
subject to competition
■ Free access to the transportation
network
■ Freedom to select suppliers
These bases cannot become a reality
unless there is an “Electricity Market”.
As the reform process was started;
hence the putting in place of the
Electricity Market will complete the
reform of the sector.
The Electricity Markets
By definition, a market is the place
where buyers and sellers come together;
in our case, producers and
consumers. And the market Operator
is the body responsible for the harmonious
operating of this market.
The markets for this very specific product,
namely “electricity”, have special
features which make its strange systems
very different from other types of
markets such as the stock markets,
raw materials markets, etc.
Three of these particularities are interesting
to point out :
■ The non-identification of the producer
: an electricity consumer connected
to a network cannot know the origin
of the electricity that he consumers
even through he is contractually bound
to a producer. The product is unique
and likewise characteristic.
■ The non-stockability of the product:
This assumes that all production must
be instantly consumed.
■ The network losses – which are the
laws of nature – the circulation of the
electricity current in a system incurs
losses; a phenomenon which we do
not see in the traditional markets.
However, we come across different
types of electricity market.
☞
Energie & Mines
37
november 2005

ELECTRICITY ELECTRICITY TRANSPORTATION
☞
Energie & Mines
38
Regardless of the type of market, we
find certain constants. This concerns :
■ Third party access to the network
■ The benchmark price
■ The existence of a regulator
■ The independence of the network’s
management (compared to the
actor(s))
■ The scope (link with the System
Operator)
As a rule of thumb, two large types of
market dominate :
■ The “Pool” type markets
■ The “Stock” type markets
Of course, depending on the experience
of each involved, and the specificities
of a country within the same type,
we find several variations :
■ The “Pool” type markets: Bond markets
– these types of markets are mainly
found in North America (PJM, XX-
ISO, etc.), in Australia, in Spain and in
the UK – first version. These last two
countries are in the middle of changing
and are moving towards “Stock” type
markets.
■ The “Stock” type markets: Voluntary
markets – these are so-called “Spot”
markets, particularly in Europe (APX,
PowerNext, etc.)
■ In both types of market, specific
transactions between players may be
made; these are bilateral contracts or
OTC (Over The Counter) contracts.
Before making a brief description of
how these markets operate, we need to
point out :
■ Today, and due to the experience gained,
the tendency is towards developing
“Stock” type markets. A lot of
“Pool” type markets are in the process
of changing towards the “Spot” type.
■ The role of the Electricity Markets is
not to "lower” the prices of energy, as is
the custom to think, but to give a
benchmark price for energy, which
enables the different players to be able
to position themselves. This is why, in
this type of market, dealing with 5 to
10% of the total energy which circulates
in a network is amply sufficient.
Nevertheless, we will always look for a
greater market share insofar as it
increases turnover and adds more credibility
to this market.
november 2005
Regardless of the type of market, it is
essential for two elements to be present :
■ A measurement system (quick, reliable,
automatic and accepted) for the
energy produced or consumed by each
player involved in the market.
■ Capacities to succeed in the liquidations
of transactions between the
players (role which is very often devolved
to the Market Operators). In the
case of our country, the problem of the
banking system’s performance will be
surely posed as a precursor to a performing
market system.
As a rule of thumb, all these markets
are based on simple rules in their operating
and strict rules in their application.
No interference outside the market
and outside its rules is accepted.
The regulators, when they exist, supervise
these questions. We may cite the
main ones :
■ Total transparency: all the transactions
will be made clearly, and can be fully
audited – a posteriori – if necessary.
■ Impartial neutrality of the body responsible
for the operating of the market, i.e.
the Market Operator with, as a corollary,
strict respect of confidentiality.
The latter, in the opinion of a lot of
experts, is a critical point which must be
guaranteed at any price. Confidentiality
does not only concern the Market
Operator, but also the other structures
such as the Manager of the network and
the System Operator.
■ Equality and Equity of treatment, with
no player having a dominant position or a
capacity to disrupt the market.
■ The obligation to strictly respect the
commitments: i.e. existence of sufficiently
clear and fully comprehensive operating
rules, as well as a guarantee system
enable all the transactions to be purified
which are made in the market.
All the markets – in particular the most
current ones: Day Ahead Market – operate
according to the principle of the
fixing :
■ Bids and offers are expressed by the
market players depending on a very
precise timing and for each maturity.
■ At the close of offers, we determine
the price of energy for the maturity:
this is the fixing.
■ All the offers to the left of the fixing
point are retained, and the others are
excluded.
■ The market prices are displayed - this
is the benchmark price.
On the other hand, if we consider the
overall operating of the electric system,
the markets have to offer other services,
the most important of which are :
■ The balancing markets.
■ The network losses’ markets – essential
for the network managers who find
a means here of minimising the costs of
the energy consumed by the network
which they are responsible for.
■ The reserve markets necessary for
the equilibrium of the Productionconsumption
system.
■ The “black start” services.
■ …
■ And now, the so-called "Futures"
markets, i.e. the future weeks and
months markets.
The operating of these so-called secondary
markets – may be done according
to the principle of the fixing or according
to other principles; for example:
the PAB (Pay As Bid).
The market Operator
This is the structure which is responsible
for the operating of the electricity
market. It is, generally, a private company
and/or a company having sufficient
independence in relation to the
market players and other bodies.
It must have the following essential
characteristics :
■ Total independence from the market
players or any other supervisory body.
■ Guarantee perfect confidentiality on
the market transactions.
■ Strictly respect the market rules.
■ Not itself be a player in this market:
principle of neutrality.
Its role consists of :
■ Coordinating the market: registering
the market players
■ Receiving offers
■ Determining the fixing (MCP :
Market Clearing Price)
■ Controlling the execution of market
orders
■ Liquidating the transactions made on
the market
■ Offering other market services
To fulfil this role, the Market Operator
may have :
■ Means of communication and
exchanges of information with the dif-

ELECTRICITY TRANSPORTATION
ferent players – in general, electronic
means : with the internet being the
ideal and the most effective tool for this
activity.
■ Means of communication and
exchanges of information with the partners
: the GRTE, the OS and the
Regulation Authority.
■ A measurement system – in general a
service offered by the network manager
– which is reliable, unquestionable and
adapted to the type of transaction and
the means of repatriation of the measurement
information.
■ Powerful, reliable and redundant
central means of dealing – which must
ensure the functions of the Market
Operator at any time, without any
interruption.
■ Solvency guarantees from each market
player and to ensure the support of
a competent bank to realise all the
commercial transactions in favour of
the players.
The market operator Project
In the Algerian system, this function
did not exist; this is why the law provided
for putting in place a structure
which would take responsibility for the
operation of the electricity market, art.:
41 to 44. In its article 172, the law stipulates
that a structure within the
GRTE will be put in place to constitute
the future Market Operator. Thus was
created the Market Operator Project in
the GRTE and has been working since
the month of March 2004.
The main objective, not to say the only
one, of this structure "Market Operator
Project Division" is the technical establishment
of the Market Operator
(MO), as the technical functionality of
the future operator is the essential and
imperative element to make transactions
on the electricity market.
To achieve this objective, two working
axes have been defined: To bring this
project to successful completion, an
approach was drawn up and validated
by the Executive Committee of
Sonelgaz in its meeting on 9/5/2004.
It is broken down into two main axes :
1. Preparation and launch of an international
appeal for tenders for the
assistance in putting in place the
Market Operator.
This operation will be partly financed
by a credit from the World Bank within
the framework of the EMTAL project
and partly by the company's own
resources.
The operation will be carried out in the
spirit of a “turn key”, i.e. that the
responsibility of the consultant will be
extended to all the phases of the project:
from the design of the market
(operating rules) to the operating tests.
Three important phases have been defined
:
a – The operating rules
b – The market procedures
c – The market systems
The technical equipment will be supplied
by Sonelgaz, according to the
consultant’s specifications.
This appeal for tenders was launched
during the month of November 2004
and a pre-selection of the consultants
was made. The execution period of this
operation is planned over 2 years.
2. Preparation of the environment of
the Market Operator
i.e. preparation of all instruments and
supports so that the market can operate.
This task is entirely devolved to the
project team and is broken down into
three main parts :
a- The meter system
This is the key-element for any electricity
market.
A measurement system for commercial
transactions.
In fact, the market transactions and
liquidations will be done on the basis of
restitutions of the meter system.
Hence, this system must have intrinsic
qualities; namely :
■ accuracy ;
■ reliability ;
■ consistency ;
■ guarantee (non-contestation).
The new generations of electric meters
perfectly respond to these requirements.
The meter system will thus be
the property of the GRTE which is,
remember, neutral towards the market.
b- The information system
The indications (recordings) of the
meters must be able to be repatriated in
quite short time frames (about 10
minutes) and continuously to the
Market Operator. To do this, an information
system will be put in place for
the repatriation of this information.
Studies are underway to integrate this
functionality into the SCADA system,
being put in place within the framework
of the new dispatching system.
c- The communication system with the
market players
This relates to the entire communication
system which must exist between
the market players and the Market
Operator. This system must have the
following characteristics :
■ total availability - redundancy;
■ reliability;
■ total security;
■ ease of access.
The most appropriate solution will be
the internet protocol adapted to the
situation of the country.
M. T. M.
Project Director
GRTE Market Operator
Energie & Mines
39
november 2005

COMPANY FOR THE EXCEPTIONAL
TRANSPORTATION AND HANDLING
OF INDUSTRIAL AND ELECTRICAL EQUIPMENT
TRANSMEX/SPA
SUBSIDIARY OF THE SONELGAZ GROUP
TRANSMEX has, since its creation in 1993,
become the leader in the Algerian market
for exceptional transportation.
Run by a multidisciplinary team, TRANS-
MEX “The Company for the Exceptional
Transportation and Handling of Industrial
and Electrical Equipment” is above all a
subsidiary company, created by Sonelgaz,
the "Algerian Electricity and Gas Company",
currently the Sonelgaz Group, in a strategy
of external growth and whose capacities
continue to be developed, making available
to its client base its remarkable know-how
in the execution of exceptional handling and
transportation services, outside the conventional
framework.
The activity domains
■ Exceptional transportation and handling of equipment (heavy and oversized equipment),
■ Transport engineering,
■ Transportation and handling of conventional
equipment.
TRANSMEX has a great deal of experience
in engineering and executing exceptional
transportation and handling services, outside
the conventional scope, namely :
■ Studying the feasibility of transportation and
handling services by :
• Choosing the itineraries,
• Choosing the equipment adapted to
the specificities of the parcels.
■ The organisation and the management of the
transportation and handling services as well as
the logistical support.
General Division Tél : 00 213 21 83 90 56/51 Fax : 00 213 21 83 90 50/51
Sales Division Tél : 00 213 21 83 90 52 Fax : 00 213 21 83 90 50/51

Quality which conforms to the requirements
TRANSMEX is committed to a quality management process, brought to reality by the obtaining
in 2003 of the ISO 9001 version 2000 certification, and aims in the very short term to put
in place a management system which responds to the environment standards - ISO 14000.
Role of TRANSMEX
TRANSMEX has greatly contributed to the economic
development of an emerging country such as Algeria,
particularly in the key sectors of its economy, namely
hydrocarbons and electricity.
In fact, since its creation, TRANSMEX has succeeded in
the challenge to develop and diversify its panel of clients,
in the image of the past contracts, realised with
international large companies such as:
BRI/USA
JGC/Japan
Nuovo Pignone/Italy
Kellogg/USA
Lavalin/Canada
Ansaldo/Italy
Sonarco/USA
BP/Great Britain
ABB/Pétrofac
The production resources
TRANSMEX’ first concern in the relationship which it develops with its clients is to ensure a quality service with
the best conditions of safety and costs.
This is why TRANSMEX has a large, effective, diversified, reliable production fleet which is adapted to the needs
of the market, which can transport and handle exceptional-type parcels, such as oversized parcels, those of an
inseparable mass (single piece) which can reach up to 400 tonnes.
The handling means
Depending on the case, the handling operations are
carried out using :
■ A jack and special accessory equipment,
■ Hydraulic suspension with modular trailers for auto-loading/unloading,
■ Traditional lifting methods: cranes of 20 to 113 tonnes in
capacity, fork lift trucks.
Hence, all these means enable TRANSMEX to offer is
clients the taking charge of its transfer and handling operations
of all the equipment intended for building and
exploitation projects (electric power station, revamping
projects, natural gas processing projects, sea water
desalination projects, and all the industrial projects, etc.).
The satisfaction of our clients is a constant concern for us.
General Division Tél : 00 213 21 83 90 56/51 Fax : 00 213 21 83 90 50/51
Sales Division Tél : 00 213 21 83 90 52 Fax : 00 213 21 83 90 50/51

performances
PERFORMANCES
DURING THE BAD WEATHER
Sonelgaz and Naftal have
deployed exceptional efforts
In the days from 26 to
31 January, the country
experienced weather
conditions which put
unprecedented pressure
on the national energy
system.
The weather system hence experienced
shortages due to the
maximum pressure which it
underwent during this pressure,
imposing frequent power cuts. The
cuts in the distribution deprived numerous
locations of electricity for hours,
even days.
The capital was also affected and
numerous districts and even important
infrastructures were deprived of electricity.
The cable breakages caused
serious accidents further to imprudent
actions by citizens.
The citizens complained about not
being able to reach the Sonelgaz’ (electricity
and gas) phone numbers made
available to them. Sonelgaz’ mobilisation
was exceptional and its teams
made great efforts, from the initial
hours, to cope with the situation, in
perfect collaboration with the national
and local authorities.
A fall in the gas pressure was also notified
due to intense draw-offs, which
made some facilities have to use fuel.
The city gas power supply experienced
a few cuts and led citizens to take it
upon themselves to carry out dangerous
repairs with the intention of reestablishing
power to their homes.
With regard to butane gas and propane,
the system put in place by Naftal to
cope with the winter was not able to
properly respond to the particularly
large demand due to the extent of the
duration of the bad weather and numerous
locations were not able to be correctly
supplied with power, as the roads
were impossible.
The stocks built up were not able to be
made available to the population due to
the cutting of the roads, the lack of
employees who were able to get to their
work or power cuts. Some bottling
centres were not able to operate or use
their stocks due to the lack of power.
Speculation was exacerbated and
aggravated by the default of some private
carriers who did not respect their
commitments.
The safety system put in place coming
up to winter worked better in regions
where there is usually frost and snow.
The ports’ authority (Béjaïa and
Arzew) aggravated the situation. Cases
of asphyxia were notified, put down to
the lack of knowledge of elementary
safety rues and to imprudence. The
mobilisation of Naftal and its teams
was exemplary.
Specifically relating to the rules of safety
when using gas in towns or the use
of gas, they asked for these rules to be
advertised more with the numerous
explanation campaigns launched by
Sonelgaz being deemed insufficient as
well as those relating to energy savings.
Message from the Wali of Tizi
Ouzou to the Managing
Director of Sonelgaz
“The great amount of snow which hit the territory
of the wilaya caused several locations
to become isolated. To deal with this situation,
the Sonelgaz teams made themselves
available, encouraged by a faultless desire
and commitment to succeed in their mission,
often carried out in difficult conditions, characterised
by random repairs of the networks
by malicious people, hence putting their life
in danger. Even more so, the difficult weather
conditions hardly slowed down their
enthusiasm. These teams were managed by
a manager who was completely up to his
task, in this case, Mr Kacimi Kamel. On this
occasion, I would like to express, through
you, all thanks and recognition of the
wilaya's authorities with regard to the personnel
of Sonelgaz in Tizi Ouzou who are so
outstanding and devoted.”
The Wali of Tizi Ouzou, Hocine Ouadar
Letters from the Director of
Mines and Industry of Béjaïa
to the Regional Director
of Sonatrach/TRC Béjaïa…
“For your contribution to the re-establishment
and the maintenance of the public
service, particularly the strategic utilities
and for the efforts made by your structure
through the latest bouts of bad weather,
I have the honour of giving you my most
sincere thanks for your invaluable contribution,
which enabled the vital needs of the
population to be met. I encourage you
to persevere on this path which honours
your company and Algeria.”
… and to the Sonelgaz
Directors (Béjaïa distribution
centre) Naftal District LPG
Béjaïa, Naftal District CLP
Béjaïa
“In recognition of the efforts made by all the
personnel in your structure throughout the
winter period and particularly during the
latest bouts of bad weather, I have the
honour of giving you my heartiest congratulations
for the exemplary efforts you made,
your sense of duty and responsibility.
I particularly salute the self-sacrifice and the
spirit of solidarity which prevailed and which
honour the public service. I encourage you
to remain on this path, to the sole benefit
of the people and the country.”
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Sonatrach
Awarding contracts :
the appeal for tenders’ rule opens
In the context of
upgrading Sonatrach
to the universal norms
of operating companies,
Mr Chakib Khelil,
Minister of Energy and
Mines, then acting
Chairman and CEO of
Sonatrach, to ensure
the greatest transparency
and competition
in awarding contracts
to Sonatrach, on
11 February 2002,
decreed the decision
A408 (R14) relating
to awarding contracts
to Sonatrach.
This procedure was then
extended to all the contracts
of the subsidiaries of the
Sonatrach Group as well as
to those of the energy and mines’ sector.
The Appeal for Tenders Bulletin
for the energy and mines’ sector
(Baosem) was then created to group
together all the tenders of the energy
and mines’ sector and to thus ensure
the greatest amount of information as
to the existence of all the tenders and
to hence encourage all transparency
and the largest competition for awarding
them.
This procedure stipulates that the
companies interested by the planned
contracts for the structures and subsidiaries
of Sonatrach must submit their
tenders in two phases: the first tender
is technical and the second one is
commercial, taking place after comparing
all the technical offers made by
the tenderers. The opening of each
tender is public. The opening of the
commercial tenders is devoted to
awarding, in the meeting, the contract
to the tenderer who has made the
lowest bid. The application of R14
over two years has shown its interest
through greater transparency, larger
competition, more equity between the
tenderers, a reduction of costs and
substantial gains and a reinforcement
of the commercial ethics.
On 12 October 2004, Mr Mohamed
Meziane, Chairman and CEO of
Sonatrach, signed the directive for
awarding contracts relating to supplies,
supply works and establishing
installations and physically quantifiable
services or the decision A408
(R15) which cancels and replaces the
408 (R14). The R15 hence completes
the architecture of all the R14, taking
account of the arrangements which
have to be introduced after two years
of application, in order to ensure the
continuation of the dynamic of improving
the operating and performances
of Sonatrach by giving it a modern
management tool in terms of commercial
transactions.
Decision no A-408 (R15)
This decision relates to the awarding
of contracts for supplies, supply works
and establishing installations and physically
quantifiable services.
Foreword
Controlling the system for awarding
contracts for supplies, supply works
and establishing installations and physically
quantifiable services requires
putting in place within Sonatrach rules
and terms and conditions for selecting
the suppliers and/or entrepreneurs, in
the best conditions of efficiency,
savings, transparency and equity.
For this purpose, Sonatrach has decided
to adopt the principle of the open
national and/or international appeal
for tenders, in the conditions decreed
by this directive. The mechanisms
inherent to this way of awarding
contracts aims to improve the competition,
giving the possibility for all tenderers
to compete with each other,
whose tenders respond to the requirements
of Sonatrach's appeal for tenders'
documents.
This directive sets out the procedure
for acquiring supplies, carrying out
supply works and establishing installations
and physically quantifiable services
through an open appeal for tenders.
Contrary to the principle of the open
appeal for tenders, recourse may be
made to other methods of awarding
contracts in the conditions set down
by this directive. The application of
this directive, when awarding
contracts, must enable :
a. the needs and requirements specific
to each contract to be identified and
expressed, according to pre-established
rules;
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44
b. all candidates to be given the possibility
to compete for these contracts ;
c. transactions to be made in the best
conditions of savings, transparency and
efficiency for Sonatrach. These are the
objectives of this directive.
Definition, purpose of the
directive
1. Définitions
For the purposes of this directive, the
following terms and expressions mean :
Sonatrach : National company for the
research, production, transportation,
transformation and marketing and sale of
hydrocarbons, called Sonatrach/SPA
whose registered office is in Djenane
El Malik, Hydra, Algiers.
The prime contractor : Any Sonatrach
structure to which is devolved the
responsibility for executing projects
and/or purchasing supplies and carrying
out supply works and establishing
installations and physically quantifiable
services.
Supplier or entrepreneur : Any candidate
or tenderer to a contract for supplies,
carrying out supply works and
establishing installations and services
which are related to them and all physically
quantifiable services.
Supplies : The durable or perishable
goods of all kinds which the supplier or
the entrepreneur must supply and/or
incorporate by virtue of the contract,
particularly include the base products,
the raw materials, the materials, the
machines, the equipment, the devices
and elements, the consumables as well
as the services related to them.
Excluded from this definition is the
equipment which belongs to the supplier
or to the entrepreneur which
remains his property and his sole
responsibility.
Works : The carrying out, particularly
for industrial units, of works related to
the construction of industrial or administrative
buildings, roads, infrastructures,
putting in place hydrocarbon
pipelines or those for other fluids as
well as the services related to them.
Installations : The materials and
equipment to be supplied and to be
november 2005
assembled as well as the assembly services
which the entrepreneur must execute
by virtue of the contract.
Services : The site preparation operations,
including the use of the entrepreneur’s
equipment, the assembly, the
tests, the preliminary commissioning,
the commissioning, the use and training,
etc.
Services related to the supplies, supply
works and establishing of installations
: The services related to
transportation, installation and commissioning,
training, initial maintenance,
insurances and any other service
accompanying the supplies, supply
works and establishment of installations.
Physically quantifiable services : The
industrial services, such as the seismic,
drilling and cartography services and
other similar operations, as well as the
non-industrial services such as the
renovation, accommodation, transportation,
etc.
This term does not cover the immaterial
services and advice.
Complex and extensive contracts :
Contracts whose purpose is the design,
the realisation, the renovation of units,
factories and production, transformation,
packaging and storage facilities
for hydrocarbons and by-products. The
complexity and the extent are assessed
by reference particularly to the technologies
and processes implemented, to
the timeframes and costs to complete
the works, to the expected revenue, to
the implications on the installations,
the production, the environment,
employment, health, safety, etc.
For indication only, we will cite the
transformation factories (liquefaction,
refining, etc.), the hydrocarbons’ production
centres, the large pipelines and
connected works, the packaging and
storage units, etc.
2. Purpose of the directive
The purpose of this directive is to define
the rules for awarding Sonatrach
contracts in terms of supplies, work
supplies, establishing installations and
physically quantifiable services.
These rules particularly govern the preparation
and the establishment by the
prime contractor of the appeal for tenders’
documents for each contract, on
the basis of standard Sonatrach appeal
for tenders’ documents.
The relations between the prime
contractor and the tenderers for a given
appeal for tenders are exclusively
governed by the appeal for tenders’
document.
The general principles
of awarding contracts
The open appeal for tenders
The awarding of contracts in terms of
supplies, work supplies and establishing
installations and physically quantifiable
services is done through an open
appeal for tenders in two (2) distinct
phases, such as described in this directive
(Section IV).
First stage (technical stage) :
Public opening of the tenders, assess-

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ment of the technical tenders not
containing any indication of price and
eligibility for submitting a commercial
tender of the sole tenderers whose tenders
are declared technically conformant
at the end of the first stage.
Second stage (commercial stage) :
Public opening of the tenders, assessment,
conformity control and ranking
of the commercial tenders and appointment
of the successful tenderer on the
basis of the lowest bid with the contract
being awarding in the public tender
opening session. In the conditions stipulated
by this directive, the prime
contractor may, at his own responsibility,
use other forms of appeals for
competitive tendering described in the
provisions herein under, with the
exception of private agreements which
obey specific conditions and forms.
The national and/or international
restricted appeal for tenders
The prime contractor, under his
responsibility, made decide to make use
of national and/or international restricted
appeals for tenders, provided that
they are likely to substantially improve
the competitive tendering process and
when it is established that only a restricted
number of candidates can
respond to the requirements of the
prime contractor. This decision comes
from the exclusive competence of the
highest person responsible for the activity
or the functional structure concerned.
Sonatrach’s Chairman and CEO
is kept informed. The rules and procedures
governing the restricted appeals
for tenders are the same as those applicable
to the open appeals for tenders
such as decreed in this directive.
The national and/or international restricted
appeal for tenders is published
in the Baosem.
Pre-qualification
For the complex and extensive
contracts such as defined in this directive,
and in order to substantially
improve the appeal for competitive tendering
process, the prime contractor
must make use of the pre-qualification
of potential candidates through an opinion
published in the Baosem.
This decision comes from the exclusive
competence of the highest person
responsible for the activity or the functional
structure concerned.
Sonatrach’s Chairman and CEO is
kept informed.
The prime contractor must issue a prequalification
documentation containing
the information relating to the extent of
the services to be provided and the precise
description of the conditions to be
fulfilled in order to enable companies to
claim pre-qualification. This pre-qualification
must be made solely on the
aptitude of the potential candidates to
complete the contract satisfactorily,
particularly :
• their references relating to the execution
of similar contracts;
• their capacities in terms of personnel,
materials and equipment, construction
and manufacturing;
• their financial situation.
The pre-qualification must also take
account of the candidates’ previous
disputes or those still being looked into.
The candidates who have fulfilled the
pre-qualification criteria will be invited
to pick up the tender documentation
and to tender, according to the procedure,
in two stages described in this
directive. The unsuccessful candidates
will be notified of the pre-qualification
results.
The conventions system
For some types of operations and
contracts, subject to variations in prices,
and in order to ensure securisation
and rational management of the supplies,
the prime contractor may make
use of a conventions system with one or
several suppliers through an appeal for
tenders published in the Baosem.
These operations and contracts particularly
concern perishable and non
perishable foodstuffs, supplies of
equipment and frequently renewed
spare parts, consumables for IT and
reprography equipment, catering and
hotel services, ticketing, repair and
maintenance. For these types of
contracts, the prime contract will have
recourse to the appeal for tenders’ procedure
in two distinct stages as follows :
■ Technical stage : submission and
assessment of the technical tenders not
containing any price indication and eligibility
for submitting commercial tenders
of the sole tenderers whose tenders
are declared technically conformant
to the requirements of the briefs.
This stage is sanctioned by the signature
of a convention defining the rights,
obligations, estimated timetable for
executing the services with each tenderer
whose tender is declared technically
conformant.
■ Commercial stage : submission of
commercial tenders upon the express
request of the prime contractor, following
the estimated execution timetable
shown in the convention. The commercial
tenders opened in the public session
will be assessed, ranked and the
contract will then be awarded in the
public tender opening session, for the
period considered on the basis of the
lowest price. The decision to make use
of this method of awarding contracts
comes under the exclusive competence
of the highest person responsible for
the activity or the functional structure
concerned. Sonatrach’s Chairman and
CEO is kept informed. ☞
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Mutual agreements
Exceptionally, the prime contractor
may decide, in the conditions described
above, to make use of the method of
awarding contracts by mutual agreement,
provided that this decision,
which comes under the exclusive competence
of the highest person responsible
for the activity or the functional
structure concerned, has received the
prior agreement of Sonatrach's
Chairman and CEO. The conditions
for making use of mutual agreements
are the following :
• when the appeal for tenders is deemed
fruitless;
• when exceptional circumstances,
duly established on the basis of documents
and evidence, require emergency
operations which are incompatible with
the timeframes required by an appeal
for competitive tendering;
• when additional purchases relate to
standardised equipment or spare parts
which have to be compatible with the
equipment or spare parts already being
used;
• when additional works, supplies or
services which are not listed or cannot
be reasonably provided for in the
concluded contract are deemed necessary
during the execution of said
contract;
• when the equipment asked for is the
subject of exclusive rights and when it
is established, further to an appeal for
tenders, that said equipment can only
be acquired from one supplier.
The awarding of contracts by mutual
agreement must be published in the
Baosem.
Company applications
Sonatrach’s appeals for tenders
Sonatrach’s appeals for tenders are
open to any company whose capacities
and the qualifications fulfil the requirements
of the prime contractor contained
in the appeal for tenders documentation.
As an exception to this principle :
a. no company engaged by the prime
contractor in order to provide consultancy
services for the preparation or
execution of a contract, nor any company
which is affiliated to it, will be
admissible to provide goods or services
by virtue of the same project, apart
from the condition of the consultancy
services previously provided by said
company. This provision does not
apply to the companies (consultants,
entrepreneurs or suppliers) which
compete in their capacity as subcontractors
to the execution of the obligations
of the holder of the design and
construction contract ;
b. a company excluded by Sonatrach,
for lack of rules of ethics decreed by
Sonatrach, will not be admissible to
pick up the appeal for tenders documentation
and cannot submit or be
awarded a contract for the entire period
of its exclusion.
Groups/consortiums of companies
The suppliers and/or entrepreneurs
may combine together in a temporary
group or in a consortium or companies
with the purpose of submitting tenders
for any appeal, as long as the provisions
stipulated in this directive are respected.
However, after the technical tenders
have been submitted, the tenderers are
not authorised :
• to form a group or consortium of
companies;
• to change or to modify the structure
of their group of companies or their
consortium or to transfer to a third
party their participation in the appeal
for tenders.
Submitting tenders
A candidate can only present one tender
per appeal for tenders comprising a
single batch, whether individually or as
a member of a group or consortium of
companies.
No company can be both a subcontractor
and present a tender as an individual
or as a member of a group or
consortium or companies within the
framework of the same appeal for tenders.
If it acts in its capacity as a subcontractor
within the framework of any
tender, a company can be party to more
than one tender, but only in this capacity.
If a candidate presents several tenders
or is party to more than one offer
as a tenderer, all the tenders which he
has presented and to which he is party
are disqualified.
Rules of ethics
The tender submitting suppliers and/or
entrepreneurs are duty bound, subject
to penalties, to observe the rules of
ethics established by Sonatrach. These
rules are an integral part of the appeal
for tenders’ documentation.
Sectoral preference
The terms and conditions for granting
and applying of the provisions governing
the margins of sectoral preference
must be stipulated in the appeal for ten-
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ders' documentation issued by the
prime contractor for each appeal for
tenders.
Use of the national workforce
The prime contractor will bring to the
awareness of the tenderers that they
must maximise the use of the Algerian
and mainly local workforce for all the
jobs.
Fruitless appeal for tender
The appeal for tenders is declared fruitless
only in the following cases :
• when the appeal for tenders has not
given rise to any submission (technical
tender or commercial tender);
• when the appeal for tenders has only
given rise to the receipt of two (2) tenders
(two technical tenders or two
commercial tenders);
• when, at the end of the first stage,
only two (2) conformant technical tenders
are eligible for submitting a commercial
tender.
Cancellation of the appeal for tenders
The prime contractor has the ability to
decide to cancel the appeal for tenders'
process, provided he exercises this
option before the commercial tenders
are submitted. The tenderers, duly
informed of this ability in the appeal for
tenders’ documentation, cannot claim
any compensation of any nature whatsoever.
This cancellation must be
immediately published in the Baosem.
Bodies for opening, assessing tenders
and awarding contracts
The opening, assessing of the tenders
as well as the awarding of the contract
The opening, assessing of the tenders
as well as the awarding of the contract,
in the terms and conditions fixed by
this directive, are done by commissions
created for this purpose by Sonatrach.
The general operating mode of the
appeal for tenders’ process, attached to
this directive, defines the missions and
the operating of these commissions and
the role of all persons involved in the
appeal for tenders’ process.
Recourse of the tenderers
The tenderers may formulate recourse
and introduce requests to the prime
contractor within the framework of the
procedure stipulated in this context by
Sonatrach.
This procedure is an integral part of the
appeal for tenders’ documentation.
The appeal for tenders’
documentation
General considerations
a. The appeal for tenders’ documentation
must be drafted so as to encourage
the largest amount of competition
possible. It must clearly and accurately
describe the works, the services to be
carried out, the supplies and their place
of delivery or installation, the execution
or delivery timeframes, as well as all the
other necessary terms and conditions.
b. The appeal for tenders’ documentation
must indicate the nature of the
contracts to be concluded and the
general and specific contractual provisions
applicable to the contract, which
is the subject of the appeal for tenders.
c. The appeal for tenders’ documentation
must stipulate all the terms and
conditions governing the tender submission,
examination and assessment
process and the awarding of the
contract, respecting the provisions
contained in this directive.
d. The appeal for tenders’ documentation
must also indicate all the qualification
and technical conformity criteria
and others which will be taken into
consideration when assessing the tenders,
and specify how these criteria will
be quantified and evaluated.
If the tenderers are authorised to present
variations for the plans, the equipment,
the completion timeframes, the
payment terms and other elements, the
appeal for tenders' documentation
must expressly indicate the conditions
in which these variations will be admissible
by the prime contractor as well as
their method of evaluation.
e. When the purpose of an appeal for
tenders is the acquisition of supplies, the
supply and establishment of installations,
as well as the distinct execution of
works and physically quantifiable services,
the appeal for tenders' documentation
may leave the candidates the choice
to submit tenders for a single or several
batches with the same deadline for submitting
tenders. In the event the appeal
for tenders’ documentation provides for
submissions on several batches, the tenders
must be submitted in separate and
distinctly identified envelopes per batch.
These tenders will be opened for all the
batches in a single tender opening session
and simultaneously assessed so that
the prime contractor can determine the
lowest tender or combination of tenders
evaluated, according to the provisions of
the appeal for tenders' documentation.
Technical considerations
a. Standards, tests, guarantees
and performances
The appeal for tenders’ documentation
must clearly and precisely describe the
minimum required performance standards,
the conditions of maintenance
and technical guarantee, as well as all
the other necessary terms and conditions.
The appeal for tenders’ documentation
will specify, where appropriate, the
standards, the methods and the tests
which will be used to determine whether
the equipment delivered or the
works executed conform to the specifications.
In the case of contracts related to supplies,
complex projects or works of a
specific nature, the appeal for tenders'
documentation may be drawn up on
the basis of general design or performance
standards' principles. In order
to encourage the largest amount of
competition and to ensure that the supplies
and/or works request can fulfil
the required performance criteria, the
standards and technical specifications
must be clearly defined in the appeal
for tenders’ documentation.
The prime contractor will set down the
standards to which the supplies and/or
methods of executing the works must
respond, referring to Sonatrach’s standards
as well as to the recognised
national and international standards.
The appeal for tenders’ documentation
may, where appropriate, indicate that
the supplies and/or methods of executing
the works conform to standards
other than those specified in the appeal
for tenders' documentation could be
accepted as long as these standards
enable at least an equivalent performance
and quality to be obtained.
b. Use of brand names
The specifications must be defined in
line with the required performance criteria
and characteristics. Any reference
to brand names, catalogue numbers of
similar classifications must be prohibi-
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ted. If it is necessary to cite a brand
name or the catalogue number of a specific
manufacturer to complete a specification
which, without these indications,
would not be precise enough, the
mention "or equivalent" will be added
after this brand name or catalogue
number.
The specifications must enable the supplies'
tenders to be accepted which have
similar characteristics and whose performance
is at least equivalent to those
of the specified supplies.
Financial considerations
a. Price
The price, the subject of the commercial
tender, must be established on the
basis of the constitutive elements defined
in the appeal for tenders’ documentation.
For the supplies’ contracts, the appeal
for tenders’ documentation must indicate
the incoterm(s) used on the basis
of which the tenderers will be invited to
draw up their price tenders at the end
of the second stage in order to be able
to compare the price tenders.
For the works’ contracts, the tenderers
must indicate the unit or fixed rate prices
of the execution of the works.
The tenderers will be authorised to
contact any supplier or entrepreneur
who satisfies the company applications’
conditions set out in this directive in
order to obtain all the input they need
for them to be able to submit the most
competitive tender, with the exception
of the workforce.
For the so-called sole responsibility
installations’ establishment and supply
contracts, the tenderers must indicate
the price of all the costs relating to:
• the studies;
• the supplies;
• the works, the installation and the
commissioning;
• the corresponding works and any
other service included in the contract
(maintenance, exploitation, specialised
training, etc.).
The appeal for tenders’ documentation
must indicate if the tender must be presented
on the basis of firm or revisable
prices. The principle of revision is
applied in case of large variations from
the main elements of the price of the
contract (labour, equipment, materials,
etc.). The prime contractor must stipulate
a price revision clause for the
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contracts whose duration is greater
than thirty (30) months on the basis of
the formulae contained in the appeal
for tenders’ documentation.
b. Duties and taxes
The price, the subject of the commercial
tender, must include all duties and
taxes, including the customs duties,
unless the appeal for tenders’ documentation
stipulates otherwise.
c. Currency of the tender
The appeal for tenders’ documentation
must indicate that the tenderer can
denominate his price tender in the
convertible currency of his choice, as
long as the legal and regulatory provisions
in terms of foreign exchange are
respected. The local price of expenses
must be denominated in Algerian
dinars. The tenderer who wishes to
present a price offer denominated in
several convertible foreign currencies
will be authorised to do so, provided
that the number of currencies used is
not more than three (3).
d. Conversion for the purpose
of comparing the tenders
The tenderer’s price tenders must correspond
to the sum of all the amounts,
denominated in various currencies
converted into Algerian dinars, at the
rates displayed by the Bank of Algeria
on the day prior to the date on which
the commercial tenders are opened.
This indication must be stipulated in
the invitation letter for submitting the
commercial tenders.
Contents of the appeal
for tenders’ documentation
Contents of the appeal for tenders’
documentation
The appeal for tenders’ documentation
must contain the documents and information
relating to the contract, the
subject of the appeal for tenders, necessary
for the tenderers’ to draw up their
tenders. Every appeal for tenders’
documentation must include:
• the appeal for tenders’ notice: the
notice must include, for indication purposes,
a succinct description of the services;
• the instructions for the tenderers:
these instructions include the general
terms and conditions relating to the
submission, assessment of the tenders
and the awarding of the contracts such
as decreed by Sonatrach;
• the specific appeal for tenders’ data:
this data includes the instructions for
the tenderers specific to each appeal for
tenders, such as the name and address
of the prime contactor, the exact place
for sending in the tenders, the methods
and criteria of evaluation, alternative
techniques and options, etc.;
• the draft contract: the clauses and the
contractual documents must clearly
define the works to be carried out, the
supplies, the rights and obligations of
the prime contractor and of the supplier
or the entrepreneur as well as,
where appropriate, the missions of the
consultant engineer, the architect or
the delegated prime contractor with
regard to the supervision and monitoring
of the execution of the contract;
• the technical documentation: the
technical description, the extent and
the limitations of the supplies and services,
the list of the supplies, materials
and equipment, the technical specifications
and plans, the delivery and/or
completion deadlines, etc.;
• the template documents and forms
particularly relating to the tenderer’s
submission letter and letter of commitment,
the bonds and guarantees, etc.
When the appeal for tenders’ documentation
is being drawn up, the prime
contractor must use the standard
appeal for tenders' documentation
(DTAO), set out in this directive.
Standard appeal for tenders’
documents
The application of the provisions of this
directive requires the use of standard
documents governing :
• the drawing up, by the prime
contractor, of an appeal for tenders’
documentation per contract;
• the definition of the relations between
the prime contractor and the tenderers
or candidates within the framework of
the general instructions to the tenderers,
data specific to each appeal for
tenders and draft contracts;
• the drawing up of the assessment
reports on the tenders by the commissions
set up for this purpose for each
appeal for tenders, within the framework
of the general operating mode of
the appeal for tenders’ process, attached
to this directive.

This standard documentation is comprised
of :
• a standard appeal for tenders’ documentation
for the supplies’ contracts;
• a standard appeal for tenders’ documentation
for the works' contracts;
• a standard appeal for tenders’ documentation
for the installation supplies’
and establishment contracts;
• a standard pre-qualification documentation
for the complex and extensive
projects;
• a guide to the assessment report for
the tenders for the physically quantifiable
services.
Tender preparation deadline
The deadline imposed for preparing the
technical tenders must take account of
the conditions specific to each project as
well as to its extent and its complexity.
As a general rule, this deadline cannot
be less than six weeks, commencing on
the date the appeal for tenders’ notice
appears in the Baosem.
When this relates to complex and
extensive supplies and/or works, this
deadline may be increased to twelve
weeks in order to enable the candidates
to prepare their tenders in the best possible
conditions.
Announcement and advertising
For all appeals for tenders, the prime
contractor issues an announcement
published in the Bulletin for appeals for
tenders for the energy and mines' sector,
called "Baosem".
The appeal for tenders’ documentation
is sent to the interested companies
upon presentation of proof of payment
of the fees, indicated in the appeal for
tenders’ announcement. This announcement
must indicate the services
which are the subject of the appeal for
tenders as well as the name and address
of the prime contractor. The announcement
must mention the date on
which the appeal for tenders’ documentation
will be available, the place
where it can be collected from and the
related fees, as well as the place, the
date and the deadline for submitting or
receiving tenders.
In the event the tender deadline is
extended, an announcement is published,
in the same form, in the Baosem.
Clarifications on the appeal for tenders’
documentation
All candidates who have received the
appeal for tenders’ documentation
must receive the same information and
have the possibility of obtaining, where
appropriate and on time, the additional
information enabling them to draw up
their tenders. In this case, the additional
information requested in writing
must be sent out by the prime contractor
as soon as possible. The candidates
may, in writing, ask for clarifications
concerning the appeal for tenders’
documents. The responses to these
requests are done in writing and are
sent to all the tenderers, without the
identity of the author of the request for
clarifications being mentioned or disclosed.
The candidates may be invited to a site
visit, in the conditions stipulated by the
appeal for tenders’ documentation.
During this visit, they may ask the
prime contractor's representatives for
clarifications. The visit report, as well
as all additional information, potential
specification, rectification or modification
of the appeal for tenders’ documentation
must be notified to all the
candidates within a sufficient timeframe
in order to enable them to take this
information into account. Where
appropriate, the deadline for submitting
tenders may be postponed.
Rider to the appeal for tenders’
documentation
The prime contractor may exceptionally
issue a rider to the appeal for tenders’
documentation when he feels that modifications
to the data, to the specific
conditions and to the technical specifications
of the appeal for tenders’ documentation
are necessary. This rider is an
integral part of the appeal for tenders’
documentation. In the event this rider is
made during the technical tenders’ examination
and assessment process, the
prime contractor will invite the tenderers
presenting the necessary qualification
guarantees, and whose tenders conform
to the appeal for tenders’ documentation,
including after updating, to submit
a revised tender on the basis of the aforementioned
rider. The invitation letter
will indicate the date and place for submitting
this tender. In any event, the
appeal for tenders’ documentation can
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only be modified during the period prior
to the invitation to submit a commercial
tender.
The open appeal for tenders’
process
This section defines the open appeal for
tenders' process in two distinct stages,
applicable to Sonatrach's contracts in
terms of supplies, works, supply and
establishment of installations and physically
quantifiable services.
Submission, receipt, opening
and examination of the technical
tenders at the end of the
first stage
The so-called technical stage (first
stage) of the appeal for tenders’ process
concerns the submitting of the
technical tenders, without any indication
or price, according to the process
described herein under.
Submission and receipt
of the technical tenders
The tenderers cannot in any case make
indications of prices in their technical
tenders and can only, subject to rejection,
present one tender per appeal for
tenders comprising a single batch.
The tenderers may send their tenders
by post or hand deliver them to the
prime contractor. In all events, the
receipt stamp of the prime contract’s
general office or of the tenders' receipt
office, indicated in the appeal for tenders'
documentation, will prevail. The
receipt date of the tenders can be
extended by the prime contractor.
The latter will notify this in writing to
the candidates which have picked up a
copy of the appeal for tenders' documentation.
An announcement of the
deadline extension is published in the
Baosem.
Tender opening
The tender opening session by the
commission set up for this purpose
must take place in the place and on the
date fixed by the prime contractor in
the appeal for tenders' announcement
and/or in the deadline extension
announcement. The session must be
public and the tenderers and/or their
duly authorised representatives will be
invited to attend.
The prime contractor must open all the
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50
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envelopes containing the tenders received
within the deadlines. The name of
each tenderer will be read out loudly
and all the information which the prime
contractor deems useful to be given will
be announced when the envelopes are
opened and written down in the register
and in the session report.
The tenders received after the deadline
will not be opened and will be returned
to the tenderers’ concerned on the
basis of the information written on the
inner envelope containing the tender.
If no tender has been received, the
appeal for tenders will be declared
fruitless.
In the event two (2) tenders are received,
the appeal for tenders will be
declared fruitless and the tenders will
be returned unopened to the tenderers
concerned on the basis of the information
written on each inner envelope
containing the tenders.
november 2005
Examination and assessment
of the technical tenders
The prime contractor, by the commission
set up for this purpose, must examine
the tenders in detail, in order to
determine whether the technical,
contractual, commercial aspects and,
where appropriate, those related to the
financing of the contract, conform to
the requirements of the appeal for tenders'
documentation. The prime
contractor must check that the tenderer
who has submitted a tender deemed
conformant to the requirements of the
appeal for tenders’ documentation, has
the technical and financial capacities
required for the execution of the
contract, taking particular account of
his previous performances on similar
contracts. For this purpose, the prime
contractor bases himself on the examination
of the evidence provided by the
tenderer and any other piece of information
he deems necessary to check.
When the tenders do not present all the
qualification guarantees (references,
financial capacity, disputes, etc.), the
prime contractor will ask the tenderer
concerned in writing to provide, in a
sufficient and reasonable timeframe,
the necessary clarifications in relation
to the requirements contained in the
appeal for tenders’ documentation. In
the event the data and information,
provided by the tenderer, do not show
his conformity to the qualification criteria
of the appeal for tenders’ documentation,
his tender will not be taken
into consideration.
For the tenders fulfilling the qualification
criteria contained in the appeal for
tenders’ documentation, the prime
contractor may ask the tenderers for
clarifications on certain aspects of their
tenders.
These requests for clarification and the
responses of the tenderer must be done
in writing and will be an integral part of
their tenders. These requests for clarification
will not in any event have an
impact on competitive tenders.
When requests for clarifications are
made, the prime contractor will bring
to the knowledge of the tenderer any
technical-type aspect which he requires
to be brought into line with the requirements
of the appeal for tenders' documentation
and the making of the desired
modifications.
Subject to the terms and conditions
described above, the prime contractor
may invite each tenderer to a meeting
to clarify and update his tender, during
which only the tenderer’s tender is discussed,
and all the additions, withdrawals
and other modifications are entered
into the minutes of the meeting.
The modifications and changes made
to bring the tender in line with the provisions
of the appeal for tenders’ documentation
requested by the prime
contractor will be listed in a memorandum
entitled “Modifications required
by virtue of the examination of the
technical tenders”, which will be the
subject of a notification to the tenderer
concerned within the framework of an
invitation to submit an updated technical
tender in the context of the first
stage.
Results of the examination and the
assessment of the technical tenders
At the end of the examination and the
assessment of the technical tenders :
a. The tenderers whose tenders are
deemed conformant to the provisions
of the appeal for tenders’ documentation,
including after satisfactory updating
and provided there is a minimum
of three tenders, will be invited to submit
a commercial tender by virtue of
the second stage.
In the event the number of tenderers
whose technical tenders are deemed
conformant to the provisions of the
appeal for tenders’ documentation, at
the end of the first stage, including
after modifications and updates, is less
than three, the appeal for tenders will
be declared fruitless.
b. The tenderers whose qualifications
and technical conformity of the tenders
do not respond to the requirements of
the appeal for tenders’ documentation,
including after clarifications, meeting
and updating the tender, will be informed
in writing of the rejection of their
tenders and that they will not be invited
to submit a commercial tender by virtue
of the second stage.
Confidentiality of the assessment
operation
After opening the envelopes containing
the technical tenders in the public session,
no information concerning the
tender assessment works will be communicated
to any person who is not
qualified to participate in the operation.
The written requests, the potential
meetings for clarifications and additional
information stipulated by this directive
by virtue of updating the technical
tenders will be considered confidential
and treated as such.
Submitting, opening and examining
the commercial tenders
and awarding the
contract at the end of the
second stage
The second stage of the appeal for tenders’
process concerns the submitting
and examining of the commercial tenders
of the tenderers whose technical
tenders were declared conformant to
the requirements of the appeal for tenders’
documentation. This stage includes
the awarding of the contract in the
public tender opening session, on the
basis of the lowest tender.
Invitation to submit a commercial
tender
An invitation letter to submit a commercial
tender will be sent to all tenderers
whose technical tenders were
declared conformant to the requirements
of the appeal for tenders’ documentation,
at the end of the first stage.
This invitation letter must :
• contain all the information necessary
for drawing up and submitting the

commercial tenders by the tenderers
following the financial terms and
conditions contained in the appeal for
tenders’ documentation;
• specify the sufficient period during
which the tenderers remain committed
by their tenders in order to enable the
prime contractor to examine and assess
the tenders and award the contract
during this period;
• require the tenderers to provide, at
the same time as their commercial tenders,
a tender guarantee valid for the
entire validity duration of the tenders,
along with an additional period of thirty
calendar days. The amount and
duration of this guarantee are fixed in
the appeal for tenders’ documentation.
The tender guarantee of the successful
tenderer will be returned to him upon
the signature of the contract and
against the issue of the required bank
guarantees and, where appropriate, the
guarantee of the head office or shareholders.
The tender guarantees of the
unsuccessful tenderers, at the end of
the appeal for tenders, will be returned
to them upon the signature of the
contract with the successful tenderer
and, at the latest, at the end of the validity
period stipulated in the appeal for
tenders' documentation.
Receipt and opening of the tenders
The receipt as well as the opening of
the tenders at the end of the second
stage must take place, in the conditions
set out in the appeal for tenders' documentation,
on the dates, at the times
and addresses indicated in the invitation
letter to submit a commercial tender
sent only to the tenderers whose
technical tenders were declared conformant
to the requirements of the appeal
for tenders' documentation. The tenders
will be opened in a public session
and in the presence of the tenderers
concerned or their duly authorised
representatives, invited for this purpose
and who wish to attend.
If no tender has been received, the
appeal for tenders will be declared
fruitless. In the event two tenders are
received, the appeal for tenders will be
declared fruitless and the tenders will
be returned unopened to the tenderers
concerned on the basis of the information
written on each inner envelope
containing the tenders.
The prime contractor must open all the
envelopes containing the tenders receiving
within the deadlines.
The name of each tenderer, the amount
of the tenders and any other information
which the prime contractor deems
useful to be given will be announced
when the envelopes are opened and
written down in the register and in the
session report. The tenders received
after the deadlines will be rejected and
returned unopened to the tenderers on
the basis of the information written on
the inner envelopes of the tenders.
Examination and comparison of the
commercial tenders
The examination of the tenders must
enable the prime contractor, under his
responsibility, to compare all the tenders.
The examination and the comparison
of the commercial tenders must
enable the prime contractor, under his
responsibility, to determine the lowest
bid on the basis of the sole criterion of
price.
With regard to the complex and extensive
contracts such as defined in this
directive, the prime contractor, for the
purpose of determining the lowest bid
in terms of price, may stipulate other
selection parameters in the appeal for
tenders’ documentation. These parameters
must be brought to the knowledge
of the tenderer in the appeal for
tenders’ documentation or in the invitation
letter to submit a commercial
tender. In any event, these parameters
must be expressed in monetary terms.
Ranking, appointment of the tenderer
and awarding of the contract
On the basis of the examination and
checking of the conformity of the commercial
tenders, the prime contractor,
by the commission set up for this purpose,
in the public tender opening session,
will :
• rank the tenderer’s tenders;
• appoint the tenderer on the basis of
the tender declared the lowest;
• announce the awarding of the contract
to the successful tenderer, respecting the
provisions of this directive.
A detailed report of the examination
and the checking of the conformity of
the commercial tenders indicating the
precise elements and the selection
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parameters which have been used to
rank the tenders and award the
contract is drawn up by the commission
created for this purpose.
Contract award notification
The contract award notification must
be made within forty-eight hours after
the date on which the commercial tenders
are opened in public.
This notification must include an invitation
to sign the contract and must
take place, unless in exceptional circumstances,
within two weeks after
said notification. Should the successful
tenderer be deemed to have defaulted,
the prime contractor may award the
contract to the tender ranked second
and invite the tenderer concerned to
amend his offer to the level of the price
of the tender made by the successful
tenderer. Should this tenderer refuse to
do so, the prime contractor may call
upon, in the same forms and conditions,
the tenderer ranked third.
This invitation must in any event take
place during the tender validity period.
In the event neither of the two tenderers,
requested by the prime contractor
in the conditions stipulated above,
accept reducing their price tender to
the level of the tender of the successful
tenderer, the appeal for tenders will be
cancelled. The award or the cancellation
of the appeal for tenders is published
in the Baosem.
Final provision
The provisions decreed by this directive
may, where need be, be the subject of
procedures and terms and conditions of
application on specific aspects of the
Sonatrach contract awarding procedure.
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Sonatrach study day
Internal audit : to correctly
audit management actions
Energie & Mines
52
november 2005
By
H. Chekired
The Group’s centre
Audit Division organised
a study day on internal
auditing in the oil sector,
on 10 January 2005
at the Hilton hotel. The
objectives sought after
in the organisation of
this day consisted of :
1. Making managers
aware that correct
control of management
actions is only possible
through the implementation
of an efficient and
modern internal audit
system.
2. Making the Group’s
management aware of
the necessity to reinforce
the internal audit
function and to give it
its entire support for
better control of the
risks at all
levels of the organisation.
3. Showing that internal
audit is now a function
universally recognised
as a strategic tool to
help the good governance
of the company.
Corporate governance
This theme inevitably led to debating
on the type of corporate governance
which is the most appropriate.
Mr Pinel, in his announcement,
gave the main criteria of good corporate
governance.
Internal control
The new practice of internal audit
has been the subject of several
reports, recalling the definitions, its
objectives, it component and the
evaluation tools. It is particularly
specified that internal audit affects
all the company's activities and
functions.
In fact, whilst the financial and
accounting domain has been historically
the place where it was initially
developed (accounting aspects of
IC), today it applies to all the company's
functions and activities
(administrative aspects of IC).
The new laws on financial security
in France (LSF) and in the USA
(Sarbanes/Oxley law) now force
company managers to make a
report on IC and to the CAC (statutory
auditors) a report on the
managers’ report. However, due to
its specificities (nature of the processes,
risks of non-discoveries,
large extent of the costs, specificities
of the contracts, cost methods,
accounting principles, etc.), the oil
sector requires the putting in place
of specific and appropriate controls
to deal with several types of risks.
The responsibility of the quality of
internal audit is located at several
levels :
• the management which is responsible
for its development,
• the IC which has a strategic supervision
and management consultancy
role,
• internal audit which plays a determining
role in the evaluation of the
system and its maintenance, thanks
to the recommendations for improvement.
Evaluation tools have been
presented to us in this sense.
Internal audit
This is a function which has experienced
huge upheavals as set out in
the new definition which came into
force in 2002, stipulating :
“Internal audit is an independent
and objective activity which gives
an organisation insurance on the
degree of control of its operations,
gives it its advice to improve it, and
contribute to created added value. It
helps this organisation achieve its
objectives by evaluating, using a systematic
and methodical approach,
its risk management, auditing and
corporate governance processes,
making proposals to reinforce their
efficiency.” This new definition
which translates better today the
scope as well as the contribution of
internal audit, at the same time
poses challenges which await the
internal audit professionals (consultancy
activities, risk management,
corporate governance, added value,
etc.).
External Auditing and internal
auditing
Auditing is a profession with the
public interest in mind. The auditors
are and will remain essential
elements of the trust of third parties,
thanks to the credibility which
they give to the reliability of the
financial and accounting informa-

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tion produced and published by the
company. Although they are only
one of the links in the security
chain, they are essential players in
the transparency of the companies’
accounts and of the reliability of the
financial and accounting information
which they publish. By virtue
of the right of communication
which the law confers to him, the
auditor may use the works carried
out within the company or its subsidiaries
by the internal auditors.
Internal audit must therefore be
considered as an additional tool to
the action of the external auditors.
At the end of the works, and on the
basis of fruitful exchanges which
have characterised this day, the following
recommendations are formulated:
1. Generalising the putting in place
of internal audit structures in all the
Group’s structures. The company’s
management must ensure the independence
and the universality of
internal audit. In fact, to be able to
exercise its mission with total objectivity,
internal audit must be found
in a situation of independence to all
structures and services where it is
called to intervene.
2. Internal audit must be raised to
Internal audit
Contract between Sonatrach
and an international firm
A contract relating to the organisation and development of
Sonatrach’s function was signed yesterday in Algiers between the
national hydrocarbons company Sonatrach and the international
audit firm Deloitte and Touche.
The contract was signed by the director of Sonatrach’s Audit division,
Mr Hocine Kechired, and the Deloitte and Touche manager, Mr
Joseph El-Fadhel, in the presence of the Chairman and CEO of
Sonatrach, Mr Mohamed Meziane. This international firm, which
was selected following an appeal for consultancy, must help
Sonatrach in its project to organise the internal audit function and to
train the Group’s internal auditors. The signing of this contract falls
into the framework of the implementation of a process adopted by
Sonatrach to improve its activities and its operating methods, particularly
the consolidation of internal audit, and will enable the company
to have the tools and key indicators necessary to monitor the performance
and coordination of its projects. “We expect from this firm
high level services and advice based on the best practices and on the
most pertinent realisations, everywhere in the world" said Mr
Meziane. The latter, who stressed the necessity of a managerial culture
with more transparency of information, particularly financial
information, and greater strictness in the management methods,
confirmed that he will ensure that "the Audit division has high level
executives with varied profiles to enable the function to contribute the
added value expected of it which consists of evaluating the extent to
which the risks are controlled, assessing the quality of the management
and playing the role of consultant".
For its part, Mr El Fadhel committed to "use all efforts and everything
necessary to succeed in this mission" and wanted this first step to
announce the start of a "strategic cooperation" between Sonatrach
and the firm which it manages.
the level of a privileged function to
help the correct management of the
company. Neither must the internal
auditor be confined in this secondary
role of evaluation of the quality
of the procedures, but must be invested
with a mission of prospecting
problems and random events which
might entail the realisation of the
company's strategic objectives.
Internal audit must be considered as
a tool which enables the company’s
risks to be identified and controlled.
3. To enable the internal audit function
to be confirmed, the Group’s
management must give it their permanent
support.
4. The management, with the help
of internal audit, must ensure that a
culture of internal audit is encouraged
at all levels.
5. The Group’s top management
must support the information and
awareness actions of all the company’s
structures as to the contribution
of internal audit in the rationalisation
of the company's management.
6. Putting in place an internal audit
charter which defines the organisation
of the function, its missions, its
objectives, its responsibilities, its
working procedures, etc. This charter
upholds the universal rules and
principles for the professional practice
of internal audit (standards,
deontology code, declaration of
responsibilities).
7. The efficiency of an internal audit
department depends on the quality
of the men and women which compose
it. Two key factors of success
are, for this purpose, essential :
• ensuring the recruitment (internally
or outside the company) of high
level executives with real professional
aptitudes;
• implementing a continuous training
policy to reinforce the technical
nature and the professionalism of
the internal auditors.. These must
acquire a high level of competence
to master the new domains of intervention
such as risk management, ☞
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53
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the security of information technologies,
etc. and hence become a true
source of added value.
8. The company’s internal audit
structure, to be freely operational,
should be composed of a team of
highly motivated auditors with
regard to the statutes, with an appropriate
and multi-disciplinarian stratification
as gauges of efficient operating.
9. The internal audit report is not an
end in itself. Its objective is to highlight
to the managers the malfunctions
relating to the internal audit
system applied to a given process
and corresponding to the company's
different categories of objectives.
The transmission of the report must
therefore constitute the starting
point of a process to improve internal
audit within the entity concerned
by the mission which must lead
to concrete decisions and actions to
remedy the malfunctions found
during the internal audit missions.
These corrective actions are incumbent
upon the people who are audited
and not upon the internal auditor
who must ensure the follow-up
of the implementation of these
actions.
Conference on the Extractive Industries
Transparency Initiative (EITI)
Fighting corruption
The conference on the Extractive Industries Transparency Initiative
which has just finished in London focussed the majority of its works
on the themes of good governance as a means of fighting corruption,
particularly in the energy and mining sectors. This important meeting,
in which top world personalities took part, particularly the Chairman
of the World Bank, several heads of government, ministers and
renowned experts as well as a high level delegation from the Ministry
of Energy and Mines was initiated by the International organisation
EITI, which is endeavouring to make its work a benchmark for international
transparency. This initiative particularly wanted to benefit
countries developing towards a market economic by improving the
socio-political environment, and helping them to attract foreign direct
investment thanks to the promotion of values of transparency in the
management of revenue and financial flows generated by their energy
resources. In his opening speech, the Chairman of the World Bank,
Mr James Wolfenson, focussed on the necessity to accelerate the
implementation of the EITI initiative launched in 2003, indicating
that 14 countries have already made the commitment to achieve the
objective assigned to fight against corruption, in accordance with the
principles of transparency in governmental management. For his
part, the representative of the International Monetary Fund announced
the fund’s intention to refuse any financing to countries which do
not conform to the principles of good governance defined by the
Initiative (EITI). Mr Takatoshi Katao, who is the Director General of
the IMF, feels that the transparency may help to establish solid institutions,
hence creating the conditions of good governance and also to
reduce the risk of tension, instability, poverty and propagation of corruption.
10. The concepts of the new definition
must be adopted by the hierarchy
of the Group and be a major
concern for them :
• A “process” approach, generalised
to the entire organisation;
• Management by the real risks;
• Real corporate governance. This
concept will have no meaning if the
board of directors does not become
the favoured representative of internal
audit.
11. Encouraging the putting in place
of audit committees with auditors
who will have the objective, on the
one hand, of supporting internal
audit and, on the other hand, coordinating
the actions of the control
bodies.
12. Internal audit must maintain
trusting relations of cooperation
with all the bodies responsible for
the company’s external auditing.
Hence, internal audit must be considered
as an additional tool to the
action of the auditors.
13. Setting up a forum for exchanging
opinions and reflecting on
issues, which periodically brings
together all the control bodies at the
Group level, internal auditors,
inspectors, management controllers,
etc. These exchanges will be extended
to the community of experienced
internal auditors in other organisations.
H. C.
Directeur Central
Audit Groupe Sonatrach
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mines
The mining sector
4.9 % growth in 2004
The mining sector has
initiated, since the promulgation
of the mining
law 2001 which has opened
up this domain,
which has been underexploited
for a long time,
in spite of the importance
of the existing potential
for private national
and international investment,
its development by
becoming a productive
sector, creating jobs and
ensuring State revenue.
The mining activities make quite
significant productions even if
they remain far from those of
hydrocarbons.
Hence, for the year 2004, the productions
index for mines and quarries
achieved production growth of 4.9%,
according to a report by the Ministry of
Energy and Mines.
This growth was particularly made by
the aggregates and salt sectors with rates
of 12.9% and 2.6% respectively. By product,
an increase in the production of
gold should be pointed out which
increased from 365kg in 2003 to 597kg
in 2004, i.e. 63.6% growth, mostly
coming from the Algerian-Australian
joint venture Goldmines in Hoggar. For
iron ore, the production was
1,414 million tonnes in 2004 compared
to 1,378 million tonnes in 2003.
This production mostly comes from the
steel manufacturing complex of
El Hadjar, which belongs 70% to the
Indian partner Ispat with 1,196 million
tonnes compared to 1,176 million tonnes
in 2003, whereas the public company
Ferphos only produced 218,000 tonnes
in 2004 (compared to 202,000
in 2003). The production of phosphate
and pozzolan did, however, record
reductions, of 13.4% and 12.8% respectively
(784,000 tonnes and 436,000
tonnes). The production of salt also
decreased by 18.6% to reach 183,000
tonnes in 2004 (226,000 tonnes in
2003).
As for sand, its production rose by
19.8%, reaching 1,463 million tonnes,
whereas it produced 1,221 million tonnes
in the previous year. The turnover
made by the sector amounted to 23.278
billion dinars, 13 billion dinars of which
for the private sector and 10.278 billion
dinars for the public sector. With its 7
companies, the public sector employed
12,266 people in 2004, up compared to
2004 which recorded 11,740 workers,
i.e. an increase of 4.5%.
The amount of investments made last
year by these 7 companies reached 495
million dinars, down by 13% compared
to 2003, revealed the Ministry.
As for the private sector, which has over
1,000 companies, due to the opening up
to the competition, and working in the
domain of extraction of gold, marble,
salt, aggregates and other substances, it
employed 13,962 people compared to
13,468 in 2003.
The private sector invested last year in
topographical works and geological surveys
for the mining exploration activity
an amount of 54 million dinars.
In parallel to these physical results, the
sector’s reform process was continued
in 2004 with the publication of 5 mining
law application decrees concerning the
internal regulations of the two agencies
(National Mining Estate Agency and the
National Mining Control Agency whose
boards of directors were set up in the
beginning of 2005), and the remuneration
system of the personnel of the agencies
and the mining industry.
As to the promotion of the sector, three
contract awarding operations for small
and medium-sized mines were made last
year. These operations enabled 54
mining titles to be granted for exploration
and 49 others for exploitation, i.e.
35 additional mining titles awarded
compared to 2003.
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Meeting organised by Ferphos
The industrial project of the phosphatic
fertilizers would cost 1 billion dollars
3,000 direct jobs and 15,000 indirect jobs will be created
by the industrial sector.
The integrated project to create an industrial
sector for phosphatic fertilizers,
which will be set up in Jijel, should mobilise
an investment of 1 billion dollars,
indicated Mr Chakib Khelil. This project,
presented at the time of a meeting organised
by the company Ferphos, will enable
Algeria to produce 6 million tonnes/year
of phosphates, 2 million tonnes
of which to be exported as an enriched
ore, and 4 million to be transformed
locally by 2013, specified the Minister.
Mr Khelil emphasised that Algeria, which
has large reserves of 2 billion tonnes,
highlighted thanks to public funds, only
produces 1.2 million tonnes a year out of
an installed capacity of 2 million tonnes.
“This placed Algeria very far from its
neighbours: Morocco produces 23
million tonnes thus becoming the world’s
no. 2 producer of phosphates and Tunisia
7.7 million tonnes, thanks to the use of
new units and the development of partnerships
with foreigners.”
To achieve the fixed objectives, “following
the example of our neighbours, all other
sectors concerned by this project
(Ministry of Transport, Industry and
Public Works, and the Environment, local
authorities, etc.) must participate in
making this project a reality”.
“For the structuring projects of such a
large size, other than creating favourable
legal and regulatory conditions, all the
constraints must be raised and then we
must ensure the adequate infrastructures
exist and respond to the requirements of
this project", the Minister added.
The project, which must create 3,000
direct jobs and 15,000 indirect jobs,
consists of the installation of phosphate
transformation units in the industrial
zone of Bellara, of a port terminal in the
port of Djen Djen, in addition to the reinforcement
of the Tébéssa-Aïn Melila-Jijel
railway line.
According to the Chairman and CEO of
Ferphos, Mr Lakhdar Mebarki, the setting
up of this project in Jijel has already
aroused the interest of several foreign
partners which were reticent about investing
in the region of Tébéssa, which has
fewer infrastructures.
Among the investors which responded to
the appeal for showing an interest are
particularly the Ingro group of Pakistan,
the Lebanon group and the French group
and another American one.
For the project financing, whose feasibility
studies should start in 2005, the
Banque extérieure d’Algérie (BEA), the
Cnep/Bank and the Badr are said to be
“ready”. Foreign banks such as the
Islamic Bank of Djedda as well as Société
Générale have also shown their interest.
Asmidal
No. 1 producer, excluding hydrocarbons
The Asmidal group is pushed to the rank of the number
one producer, excluding hydrocarbons, making, for the
year 2004, record turnover for exports, i.e. 138 million US
dollars. The figure represents 18% of the world’s national
exports excluding hydrocarbons, whose value reached
some 750 million US dollars for the same year 2004. The
group's turnover, in constant progression since 2001, reached
15.5 billion dinars at the end of the year 2004, i.e. an
increase of 4% compared to the year 2003. The firmness
of the price on the foreign market, the increased production
rate of the subsidiary Fertiale and the diversification
of the range of products exported led to the realisation of
results which were deemed satisfactory by the Group’s
board. The performance market was down compared to
2003, particularly due to the high cost of the inputs which
had a repercussion on the sale price. In spite of the sales
effort made in 2004, the expected objectives were not
achieved. It should be reminded that in the context of the
Group’s development programme, Asmidal made an
investment effort estimated at 161 million dollars since
2001, 34 million of which in 2004, devoted to increasing
the value of the production potential on the two platforms.
The domestic market recorded a stagnation which is particularly
explained by the low use of fertilizers and the
importance of leaving fields lay fallow. These two factors
mean that Algeria only consumes 11% of the norm, i.e.
11km/ha with a global average of 100km/ha. For Asmidal,
the increase in the volume of sales of fertilizers in Algeria
necessarily means an increased use of fertilizers and a
reduction in the amount of land lying fallow. The farming
of 5 million hectares for growing cereals in the conditions
of an average rain fall of 250mm/year would give, with a
return of 20 quintals per hectare, an annual production of
100 million quintals, covering the cereal needs of the
domestic market.
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Mining
Impacts and protection
of the environment
By
Arezki Zerrouki
The event of the
mining law 2001
induced a highly performing
dynamic, leading
to the acquisition
of several hundreds of
mining titles for exploration
and exploitation,
in addition to a thousand
quarries listed
on the entire national
territory.
The contract awarding campaigns,
carried out every
quarter, have enabled the
launch of several exploitations,
which is encouraging for the
sector which is booming. This
contribution needs an approach on
the consequences which the exploitations
may cause if “corrective”
actions are not taken at the right
time, as the legislation stipulates on
this matter. The closing of mines
and quarries is likely to have disastrous
consequences on the environment
if strict measures are not
put in place.
The processes for exploiting and
processing ores using chemical reagents
(cyanide, sulphuric acid, organic
floating agents, active carbon,
etc.) explosives, oils, lubricants, etc.
which may be mixed with mine
drainage water (which may be deemed
very acidic) and with liquid
effluents from crushing. The noncontrol
of these agents may cause
devastating effects for nature and
the environment, if appropriate
measures are not take as soon as the
mining begins. The problems with
which we may be confronted are
linked to :
• the stability of the residual open
areas in the rocks: for example, gypsum
quarries, salt mines;
• the hydrological impact on the
water system during and after the
sinking of the works;
• the impact on the quality of the
water: saline content higher than
the norms (case of gypsum and salt)
or appearance of metals in traces
(case of metallic mines with sulphur
paragenesis). This concerns the previous
mining works, the steriles,
the residues from processing ores,
even the fills used to stabilise the
excavations ;
• the change in the gaseous atmosphere
likely to be enclosed in the
deep, large extension mines (case of
collieries);
• changes to the landscape due to
the storage of steriles.
The majority of mining residues
contain particles of metals which
biologically and chemically react in
the presence of oxygen, humidity
and bacteria. Pyrite, for example,
triggers the oxidation of other
minerals which may lead to sulphuric
acid. The acid lixiviates coming
from the steriles (with sulphur
minerals) and mining residues cause
a deterioration or a destruction of
aquatic environments, which may
cause the disappearance of fauna.
The mining also causes a direct
impact on the biodiversity, the animal
and vegetal species and the ecosystems.
The quarries and sand pits
cause direct pollution of the environment
by emissions of dust in the
air and in the water, vibrations
from using dynamite and noise caused
by heavy ore transportation
vehicles. The large scale mining causes
serious problems for the people
living near these sectors.
Hence, to preserve the well-being of
the populations, the public authorities
have adopted a series of laws
and decrees which protect the environment.
The rational use of the area and its
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protection from the proliferation of
the waste produced by different
industries should be a perpetual operation,
if we want to preserve the
environment and win the challenge
of land planning in the context of
sustainable development: arriving at
a symbiosis of industrial and environmental
development which assumes
good knowledge of the industrial
activity and its impact on that
of human health. This means that a
remarkable change in the exploitation
process increasingly integrates
the environment and means that a
lot of modern mines work in a closed
system as often as possible (in
Canada for example) : the waste is
treated and stored on the site; the
effluents are emitted into the environment
after being chemically
and/or physically treated.
If the treatment of the water is not
done in the mine, the crude effluents
are only emitted into nature if the
rainfall exceeds the evaporation rate.
The mining legislation is increasingly
inclined towards managing the
life cycle of products (production,
utilisation, reutilisation, recycling
and elimination) and of the processes
(exploration, exploitation, treatment,
slagging up until the site clean
up) and integrates the sacrosanct
principle of security utilisation.
These aspects go a lot further than
the assessment and management of
risks taken on until now.
In this sense, the mining law, its
application decrees, as well as the
law on the protection of the environment
in the context of sustainable
development has overcome a
legal vacuum and put in place a certain
number of measures which protect
the environment, in general,
and the citizen, in particular.
The mining law stipulates an environment
audit (articles 149 to 152)
which must be translated by :
• analysing and measuring the
impact which mining may have on
the environment,
• studying this impact and the
effects of the mining on the environment.
The companies are therefore subjected
to technical and administrative
supervision (policing of the mines)
in order to respect the rules and standards
specific to hygiene, safety and
the conditions of exploitation according
to the mining practices (title V,
chapters 1 and 2, articles 53 to 72).
In addition to these stipulated
actions, the mining law requires the
mining entrepreneur to put in place
an annual provision (0.5% of annual
pre-tax turnover) for cleaning up the
sites (article 176).
The law relating to the protection of
the environment in the context of
sustainable development sets out :
• the fundamental principles and the
rules of environmental management,
• the preservation of the biological
diversity and non-deterioration of
natural resources,
• the integration of the prescriptions
relating to the protection of the
environment in the implementation
of the sectoral plans and programmes,
• the preventative and corrective
actions for attacks on the environment
• the principle of the paying polluter.
All these actions show that the environment
has become a priority for
the public authorities so that the citizen
feels safe in the environment in
which he lives today, for him to
bequeath to his descendants a prosperous
nature.
An awareness work must be almost
done on a daily basis, as well as collecting
data on the pollution in
order to prevent and draw the attention
of the public authorities and the
local collectives to the dangers
which may be caused by the mining
and industrial activities, making
available to them vulnerability maps
as a document to help decision
making.
A. Z.
Directeur de la Division
des projets et réalisations
(DPR-ORGM)
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MINES
MINING ACTIVITIES AND SUSTAINABLE DEVELOPMENT
A few elements of environmental
protection
By Raihana Haddad
With the increase in
the world’s population,
the industrial activity
and their impact on
the environment, man
is becoming increasingly
aware of the
importance of this
environment.
Hence any project
directly or indirectly
affecting the environment
must today, before
being implemented,
be the subject of studies
to integrate the
parameters of the
implantation site, provide
for the harm
which it may cause,
examine the possible
measures to limit its
effects, compensate
them, or even remove
them and implement
these measures.
The mining industry, whose
purpose is the studying and
extraction of natural nonrenewable
substances,
must adapt to increasingly strict
requirements, from two integrated
businesses :
• The first, its core business, which
is the extraction and transformation
of the ores,
• The second, just as demanding in
competence as the first, the safeguarding
of the environment and its
conservation for the future generations.
This industry must positively
contribute to improving life by providing
the raw materials necessary
for several industries (food, construction,
textile, electronics, etc.), it
may, at the same time, help to
remodel its deteriorations. As, for
example, the mines and the quarries,
themselves, which reconfigure
entire landscapes, and if we are not
careful, risk affecting the equilibrium
of entire regions.
Two ways of protecting the environment
can be considered :
• either to keep it as it is, refusing
the economic and industrial progress.
This means forgetting that this
environment of our daily lives and
that of our future generations is the
result of centuries of transformations.
• Or protecting the diversity of the
environments and landscapes,
whilst ensure progress and economic
growth. This second way must
integrate into its approach specific
precautions and provide for sometimes
very heavy measures, both
technically and financially. Hence,
the government of the Algerian
Democratic People’s Republic has
undertaken a reform of the legal
and institutional framework of the
mining investment, through the law
on the mining activities promulgated
on 3 July 2001.
This law created two agencies, the
National Agency for geology and
mining control (ANGCM) responsible
for geological-type missions
and environmental and technical
control and management, and the
National Mining Estate Agency
(ANPM), responsible for managing
the national mining estate, and particularly
the mining land register,
whose staff was officially put in
place on 24 January 2005.
This law stipulates, in terms of protection
of the environment, specific
requirements, in exchange for specific
benefits.
To take a look at the whole planned
system, and what the central administration
and the agencies will have
as missions to be started off, such is
the purpose of what will follow,
through :
1. the general economics of the new
mining law on the protection of the
environment;
2. the approach for the economic
and financial evaluation at the different
stages of the study of the
impact on the environment in the
mining activities.
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☞
General economics of the
mining law
Within the framework of protecting
the environment, the new mining
law is based around the following
points :
The concept of domaniality
The mineral substances are assets
owned by the national collective;
this principle, already stipulated by
the provisions of article 17 of the
Constitution, implies the management
of the mining estate according
to the principle of this wealth, is the
responsibility of everyone, under
the control of the state, for the welfare
of persons and the conservation
of the living environment.
A specific scope
The mineral substances contained in
the public hydraulic domains and
forests are exploited after advice
from the ministerial departments in
charge of these sectors and all exploitation
requires the prior advice of
the departments in charge of the
environment.
The State’s bodies
To exercise the role of control and
regulation of mining, particularly
with regard to the environment, the
State relies on the following bodies :
• the central mining administration,
with the Minister in charge of
Mines, responsible particularly for
the mining policy, strategy and legislation
and regulations;
• the National Mining Estate
Agency (ANPM), an autonomous
regulation authority, particularly in
charge of issuing and managing
mining titles and other authorisations,
basing itself particularly on
the elements relating to the protection
of the environment;
• the National Agency for Geology
and Mining Control (ANGCM), an
autonomous regulation authority,
particularly responsible for the technical
and environmental control,
through the tool which includes the
policing of the mines.
The activities and the mining titles
The terminology of the mining activities
by the following law :
• The geological infrastructure
works. This relates to all works
whose aim is the acquisition of basic
knowledge on the geology of the soil
and subsoil, particularly by the geological
cartography.
• The mining research. This relates
to mining prospecting and mining
exploration works which come
under the goods sphere and are subjected
to the mining titles called
mining prospecting authorisation
and mining exploration permit
• The mining exploitation, subdivided
into five forms, including
exploitation, industrial, small and
medium sized exploitation, artisan
exploitation, the collecting and/or
gathering activities, the exploitation
of quarries and sand pits; apart from
the collecting and/or gathering activities,
the exploitation of quarries
and sand pits, which are carried out
on the basis of administrative authorisations
which do not have the
same capacity as mining titles, the
other activities are subject to obtaining
mining titles called mining
assignments, small or medium-sized
mining exploitation permits and
artisan mining exploitation authorisations
• The protection of the environment
and sustainable development
Other than these provisions, relating
to the concern for sustainable
development, the law sets up a system
for the effective taking charge of
environmental concerns, including
the financing, which is based around
the following points :
• prior carrying out of a study into
the impact on the environment by
the planned exploitation, with an
environmental management plan,
• putting in place, at the expense of
the operator, of a system to prevent
the major risks which its activity
may cause,
• annual carrying out of environmental
audits,
• taking out of a special insurance
policy against the major risks,
• cleaning up the sites, preferably
according to the so-called “gradual”
method, i.e. during exploitation,
• annual constitution, before determining
the profits, of a provision
equal to 0.5% of the annual pre-tax
turnover, into an escrow account
open with the Public Treasury in
order to guarantee the financing of
cleaning up the sites.
In exchange, the mining taxation is
specific and provides for facilities
such as the arrangement of the
depreciation rates, with the fixing of
new rates by the law, the authorisation
for constituting provisions for
reconstituting a field, with a maximum
rate of 1% of annual pre-tax
turnover, the authorisation of the
losses reported over ten years, the
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TAP tax exemption, the land tax on
built property, the VAT on equipment
specific to mining and customs
duties on the specific equipment and
the materials and products imported
for the mining.
The income from these taxes and
duties are intended both to finance
the agencies and to contribute to the
budget concerning the local authorities.
This system in its entirety currently
operates since :
• the obtaining and mining titles are
dependent upon briefs and an agreement
and are required with the
requests for these mining titles;
• these briefs and agreement are
accompanied by prior environmental
studies;
• workshops group together the
departments of the mining agencies
with those of the ministerial department
in charge of the environment
to ensure consistency of the regulations
and the flow of information
aiming to eliminate losses of time;
• a training programme for the
employees responsible for environmental
control is being drawn up
• the staff of the agencies were put in
place in January 2005;
• the agencies are in the process of
getting a database and simple management
systems enabling the realisation
of procedures linked to the
application of the law, particularly
in terms of protecting fields, the
environment and persons;
• studies are underway to put in
place a technical and environment
control and management system;
• a sectoral environmental study is
being launched.
Economic and financial economic
assessment approach
at the different stages of the
study into the impact on the
environment in the mining
activities
What follows has specifically dealt
with what the State has put in place
to assume its role in the protection
of the environment. What needs to
be assumed by the operators and
civil society remains to be examined.
For the investor, who systematically
needs a fine evaluation of the costs
to make the final decision, it is essential
to integrate the following elements
:
• the study into the environmental
impact;
• the environmental management
plan;
• the system for preventing major
risks, where appropriate;
• the environmental audits.
The study into the impact on the
environment, in spite of its relatively
modest cost compared to the capital
to be invested in mining, constitutes
an unequalled source of information
for decision making.
The environmental management
plan which arises from this constitutes
the reference point for the annual
environmental audit which is the
operator’s responsibility, on the
basis of the guides published by the
MINES
Agency for geology and mining and
environmental control.
Breakdown of the impact
study with mining research
The impact study is an uninterrupted
process over the phases of the
mining activity.
To understand the close link between
the impact study and the
mining research, you have to keep in
mind these two stages and their
contents (the mining prospecting,
which is “… the topographical, geological
and geophysical examination,
the reconnaissance missions of the
places and other preliminary researches
for the minerals found on the
surface in order to determine the
mineralogical attributes and the geological
characteristics of a plot of
land" and the mining, which is "...
the execution of geological and geophysical
studies relating to the structures
and to the underground geology,
the evaluation works by excavation,
sounding and drilling, analysis
of the physical and chemical attributes
of the minerals, and the examination
of the economic feasibility of
the development and the commissioning
of a field".
If the results from the mining prospecting
are negative, the mining
exploration stage will not be initiated
and the impact study will be
stopped.
On the other hand, if the impact
study, from the start, highlights
constraints which cannot be overcome
or are financially too cumbersome,
it is possible to stop the mining
prospecting and, in the worst case,
not to start the mining exploration
at all. This is the case for the following
phases.
The integration
of the financial costs
To be a decision making tool for the
investor, the study into the impact
on the environment integrates the
"numbering" of the costs of the mea- ☞
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sures considered during the process
explained herein under.
Chronogram of the impact
study
In the domain of investment in the
mining sector, the study into the
impact of the environment progressively
provides information phases
to make decisions.
Hence the chronogram can be presented
as follows, according to the
practice of the experts :
• To bring together the information
on the initial status for the human
activities, the constraints and the
public servitudes and only to go
onto the next stage if the situation is
favourable.
• To concomitantly start the mining
prospecting and the collection of
information on the initial status for
the natural environment (fauna and
flora), the superficial and underground
waters and their quality, the
countryside and only to go onto the
next stage if the situation is favourable.
• To bring together the information
on the initial status for the vibratory
phenomena, the dust emissions, the
noise, the problems linked to
transportation.
• To start the mining exploration.
• If the results are favourable on a
technical-financial level, go onto the
next stage.
• Draw up the operating plan.
• If the results are favourable, go
onto the next stage.
In parallel to these stages, and to
constitute its elements as exhaustively
as possible, the elements to be
brought together concern :
• “The field” in all its components,
by providing, in numbers, the cost
of the recommended measures.
• “The “effects" and “measures”
components for the natural environment
: fauna and flora, the superficial
and underground waters and
their quality, the countryside, the
vibratory phenomena, the emissions
of dust, the noise, the problems linked
to the transportation, in the
order in which they are cited, taking
account of the indications provided
by the exploitation plan and providing
numbers for the costs of the
recommended measures.
• “The site clean up” from all the
information available, by providing
numbers for the costs of the recommended
operations.
• At each of these stages, the investor
will take the decision which he
deems favourable to his interests.
These two components concerning
the actions of the State and of the
operators are the framework on
which the policy of sustainable development
of mining activities is
based, whilst associating the civil
society which :
• gets involved at the time of the
surveys, prior to any project realisation;
• benefits from the employment
generated by the activities, in the
conditions stipulated in the employment
laws (provided the conditions
are equal and capacities are equal,
the national candidates are priorities);
• benefits from the social, educational
and cultural infrastructures of
the State and of the operators;
• benefits from the health and safety
protection systems put in place.
Hence the link is made between
managing the environment and
instruments. Planning (Study into
the impact on the environment,
environmental management plan),
and hence the mining inspection stipulated
ensures, particularly, that
the rules of hygiene and mining safety
are respected.
All this is done by respecting the law
on the environment, the texts relating
to the missions and organisation
of the agencies, the environmental
processes and procedures and
mining control (Guide for carrying
out a study into the impact on the
environment, Guide for putting
together an environmental management
plan, Guide for administrative
inspections, Guide for technical
inspections, Guides for carrying out
internal and external audits, etc.)
It is obvious that the effort is being
continued in order to put in place
additional tools such as:
• guides for using earth and ores
• refining of the functions of the
institutions in charge of the environment
• definition of the functions / roles
of all the related institutions
(Ministry of Energy and Mines,
Ministry of the Environment,
Ministry of the Interior, Ministry of
Health, Ministry of Employment,
etc.)
• additional instruments for
applying the policy such as the guide
and control measures, the protection
measures, the market measures, protection
measures, etc.
• refining of the obligations of the
holders of mining titles;
• the preventative and curative measures;
• the recourse;
• and the reporting.
R. H.
Advisor to the Ministry
of Energy and Mines
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performances
Mr Ahmed Ouyahia at a press conference
“2004 was the fifth consecutive
year of growth”
This is the fifth consecutive year of
positive growth which the Head of the
government, Mr Ahmed Ouyahia presented
at a press conference ran at the
El Mithak residence. A meeting which
enabled him to point out that the
growth for 2004 is estimated at a minimum
of 5.2%.
A number which is, however, lower
than the one recorded in 2003, which
was 6.8%, but which reveals an interesting
phenomenon induced by the fact
that the growth, excluding hydrocarbons,
in 2004, was 6.2% and excluding
agriculture 6.8%, according to
Mr Ouyahia, who indicated in this
context that the economic growth of
the previous year will have been the fact
of the buildings and public works
(BTP) sector with 8% and of the services
sector with 7.7%.
“The national industry has also continued
its recovery which started in
2002, with a rate of 2.6% in 2004. “In
any event, I would say that this growth
is within the government’s forecasts,
which was reckoning on a threshold of
5% annually during the five year period.”
With regard to the gross domestic
product, Mr Ouyahia pointed out that
this reached 84.6 billion dollars in
2004 (whereas it was 54.7 billion dollars
in 2000). This GDP per inhabitant
reached 2,620 dollars in 2004, he indicated,
confirming that Algeria is thus in
the middle of catching up with the level
of its GDP per capita of the 1980s, in
spite of the large devaluation of the
dinar.
“In 1987, a year which had the highest
level since Algeria's independence, the
GDP per capita was 2,892 dollars, with
one dinar worth 4.8 dollars, whereas in
2004 it is 2,620 dollars, with one dollar
worth DZD72.1”. Because of this,
according to him, “the development
effort will be without precedent” in the
next five years.
A five year plan which he qualified in
this context is in the "last phase of economic
transition", in reference to all the
reforms and international commitments
undertaken by his government,
coming from the guidance given
by the President of the Republic,
Mr Abdelaziz Bouteflika.
With regard to the phenomenon of
inflation, the Head of government said
that the strong injection of public
expenditure, particularly for the development
as well as the increases in salaries
which took place in 2004, led to an
increase in inflation which was 2.6 in
2003, to 3.6%, "this level is still reasonable,
but we should remain prudent,
particularly with regard to the level of
the salary policy, at the risk of harming
the entire economy and the purchasing
power of households in particular".
Foreign financial balances, for their
part, have a positive balance of payments,
according to
Mr Ouyahia, who stated that this
balance is 9.6 billion dollars, “i.e. a 5th
year of continuous positive balance
(...)” A finding which made him remark
that if the prices of oil experience a
decline in the future, "we will not be
able to cope with import invoicing
which already represents almost 25% of
the GDP”.
According to The Economist Intelligence Unit
Algeria is one of the 12 countries in the
world with the highest growth rate
The African continent houses the countries which
will record the highest growth rates in the world.
But, amongst these, it will also record the countries
in the world which there are the lowest growth rates,
which are often, furthermore, negative.
According to the publication The Economist
Intelligence Unit, a periodical similar to The
Economist publication, which gives these evaluations,
Equatorial Guinea, for example, which is one
of the new oil players which counts, should record in
2005 a growth rate of 19.4%.
This speck of countries, in terms of surface area,
will outstrip the entire world, in terms of the rate of
growth. Italy or the Netherlands may only count,
according to the publication, on a growth rate of
1.5%, Japan and Germany will be satisfied with a
rate of 1.4%.
As for Zimbabwe, it should have a negative rate – a
regression - of 3.1%. Algeria is looking particularly
good after exceeding a rate of 7% growth in 2004;
we credit it with a rate of 5.7% to 5.8% which ranks
it among the 12 most dynamic countries of the
world. This is something.
Energie & Mines
63
november 2005

PERFORMANCES
Macro-economic parameters for Algeria for 2004
Very significant increase in GDP
PIB
By Mohamed Medjelled *
Year 2002 2003 2004
GDP (billions of dinars) 4 538 5 264 6 112
Exchange rate (DZD/US$) 79,69 77,39 72,2
GDP (billions of dinars) 56,95 68,02 84,65
Change Evolution in du GDP PIB in en billions milliards of de USD US$
90
80
Breakdown of GDP per sector of activity
2002-2004
Customs duties
and VAT
8%
2002
Public admin. services
11% Agriculture
9%
70
Billions Milliards US$
60
50
40
30
20
Services
23%
Buildings, Public Works
9%
Hydrocarbons
33%
Indust. sector
7%
10
0
2002
2003
2004
Algeria’s GDP recorded highly significant growth these last
few years:
• 4.7 % in 2002,
• 6.9 % in 2003,
• and over 5.3 % in 2004.
Customs duties
and VAT
8%
2003
Public admin. services
11% Agriculture
10%
Energie & Mines
64
The GDP per capita in 2004 amounts to almost 2,600 dollars.
Breakdown of GDP per sector of activity
VA of the sectors (GDA) 2002 2003 2004
Agriculture 417 510 561
Hydrocarbons 1 477 1 873 2 319
Industry 326 345 370
Buildings, Public Works 410 447 507
Services 1 031 1 133 1 282
Customs duties and VAT 378 403 439
Public admin. services 499 553 635
GDP 4 538 5 264 6 113
Indust. sector / GDP % 48,8 50,6 52,3
Indust. sector Excl. Hyd / GDP % 16,2 15,0 14,3
The industrial sector in its entirely participates with 52.3% in
2004 in the Gross Domestic Product, compared to 50.6% in
2003 and 48.8% in 2002, i.e. respective increases of 3.27%
and 3.82%. This performance is mainly drawn from the
hydrocarbons sector which recorded an increase, going from
33% in 2002 to 39% in 2004.
november 2005
Services
21%
Customs duties
and VAT
7%
Services
21%
Buildings, Public Works
8%
Buildings, Public Works
8%
Public admin. services
10%
2004
Hydrocarbons
35%
Indust. sector
7%
Agriculture
9%
Hydrocarbons
39%
Indust. sector
6%

performances
Importing of goods
Unit : (billions of dollars) 2003 2004
Consumer goods 5,08 6,71
Intermediary goods 4,92 6,36
Equipment 4,14 5,89
Total import of goods 14,14 18,96
Breakdown of imports for the year 2003
Breakdown of exports for the year 2004
Intermediary
goods
0,25%
Consumer
goods
0,16%
Equipment
29%
Consumer
goods
36%
Equipment
99,59%
Intermediary
goods
35%
The exports of goods for the year 2004 reached 32.32 billion
US dollars in 2004 compared to 24.66 billion US dollars for
the year 2003, i.e. 31% growth. This growth is mainly structured
by the intermediary goods (hydrocarbons and raw
materials) which represent 99.59% in 2004.
Equipment
31%
Breakdown of exports for the year 2004
Consumer
goods
35%
Balance of payments
U : 1b American dollars 2003 2004 Growth rate (%)
Balance of payments 7,752 10,168 31,17
12
Change in balance of payments
10
Intermediary
goods
34%
The imports of goods for the year 2004 rose to 18.96 billion
US dollars compared to 14.14 billion US dollars in 2003, i.e.
an increase of 34%. They concern:
• consumer goods: 35% in 2004 compared to 36% in 2003,
• intermediary goods: 34% in 2004 and 35% in 2003,
• equipment goods: 31% in 2004 compared to 29% in 2003,
Billions US$
8
6
4
2
0
Exporting of goods
2003
2004
Unit: billions of US dollars 2003 2004
Consumer goods 0,083 0,08
Intermediary goods 24,547 32,19
Equipment 0,031 0,05
Total exports of goods 24,66 32,32
Equipment
99,54%
Breakdown of exports for the year 2003
Intermediary
goods
0,34%
Consumer
goods
0,13%
The balance of payments experienced a positive evolution of
31% in the last two years: it is established at 7.75 billion US
dollars in 2003 and at 10.16 billion US dollars in 2004.
Crude reserves
U : 1b American dollars 2003 2004 Change (%)
Crude reserves 32,94 43,1 30,84
The accumulation of crude reserves reached 43 billion US
dollars in 2004, compared to 32.94 billion US dollars, i.e.
31% growth corresponding to over 27 months of imports
and over two times the balance of this foreign debt.
☞
Energie & Mines
65
november 2005

PERFORMANCES
☞
50
Change in gross reserves
Equipment
32%
Breakdown in budgetary expenses in 2003
40
Billions US$
30
20
10
Operating
68%
Breakdown in budgetary expenses in 2004
0
Equipment
35%
2003
2004
Budgetary income
Unit : GDA 2003 2004 Growth rate (%)
Oil taxation 1 285 1 486 15,64
Ordinary taxation 682 724 6,16
Budgetary income 1 967 2 210 12,35
Ordinary
taxation
35%
Breakdown in budgetary expenses in 2003
Oil taxation
65%
Inflation rate
Operating
65%
Growth rate (%)
(%) 2002 2003 2004 2003/2002 2004/2003
Consumer prices 1,4 2,6 3,7 85,71 42,31
The consumer price in 2004 was around 3.7% compared to
2.6% in 2003, and 1.4% in 2002.
(%)
4
3.5
3
Breakdown in budgetary expenses in 2004
2.5
2
Fiscalit
ordinaire
35%
Fiscalit
p troli re
65%
1.5
1
0.5
0 2002 2003 2004
Energie & Mines
66
Algeria’s budgetary income is around 2,210 billion dinars,
i.e. an increase of +12% compared to the year 2003. The oil
taxation represents 67% of the total of this income in 2004,
compared to 65% in 2003.
Budgetary expenditure
Unit : GDA 2003 2004 Growth rate (%)
Operating 1 199 1 199 0,00
Equipment 554 652 17,69
Budgetary expenditure 1 753 1 851 5,69
The budgetary expenditure for the year 2004 recorded an
increase of 6%, mainly due to the increase in equipment
expenditure (+18%).
november 2005
Exchange rate
Growth rate (%)
(%) 2002 2003 2004 2003/2002 2004/2003
Exchange rate $/DZD 79,69 77,39 72,2 -2,89 -671
In 2004, the Algerian dinar appreciated by about 7% against
the US dollar, and depreciated by 2.5% against the euro, and
4.5% compared to Pound sterling.
82
80
78
76
74
72
70
68
2002 2003 2004
M. M.
MEM Director
Sources : Délégation à la planification

performances
Foreign trade
A surplus of 13.5 billion dollars
in 2004
The results in terms
of Algeria’s foreign
trade in the year 2004
recorded a balance of
trade surplus of 13.5
billion US dollars, i.e.
an increase of almost
22% compared to the
year 2003, which is
explained by the substantial
increases in
exports (28.85%) and
imports reaching
34.47%.
Hence, the coverage rate of
imports by exports is
around 174% for the past
year compared to 182% in
2003, according to the latest date from
the National Centre for Information
and Statistics (Cnis) under the general
customs direction. The exports in this
period reached 31.7 billion dollars,
whereas the imports also experienced
an increase to total 18.2 billion dollars.
Hydrocarbons, whose price trend is
upwards, remain the main resource of
the financial income of the country with
97.52% of the total volume of exports,
recording an increase of 29.18% compared
to the same period in 2003. With
regard to exports excluding hydrocarbons,
they still remain very low with a
total rate of 2.48% of the general structure
of Algerian exports, i.e. a volume
of 788 million dollars, thus recording a
minute increase of 17.09% compared
to the years 2003, according to the
same statistics. The main products
excluding hydrocarbons exported are
largely made up of the “semi products”
group which represents 1.74% of the
total volume of exports, i.e. the equivalent
of 552 million US dollars. The
“crude products” group comes in
second position with 0.32%, i.e. 102
billion US dollars, followed by the
“good” groups with a share of 0.21%
(65 million US dollars) and, finally, the
“industrial equipment” with a share of
0.16% corresponding to 52 million US
dollars and the “non-food consumer
goods” with a share of 0.05%.
As for imports intended for equipment
which occupy the top position and
represent 39.72% of total imports, they
increase from 5.08 billion US dollars to
7.23 billion US dollars in the periods
considered, i.e. an increase of around
42.17%. The increases have also
concerned the goods destined for the
production tool with 4.6 billion dollars
(25.74%) and the non-food consumer
goods increased from 2.1 billion to 2.7
billion US dollars, representing
30.92%.
In this category of main products, the
goods destined for operating the production
tool which represents 25.29%
of imports are mainly constituted of
building materials and oils intended for
the food industries. The “food goods”
group continues to represent a significant
proposal given that it occupies
third place in the structure of imports
with a share of 19.80% representing a
volume of 3.6 billion dollars. The
imports of cereals, semolina’s, flours
and milks represent over 62% of the
overall structure, i.e. 2.1 billion US
dollars. Furthermore, Algeria's main
clients in the past year undisputedly
remain the United States of America
(USA), Italy, France and Spain, whereas
the top suppliers are France, Italy,
Germany, the United States of
America, China and Spain.
Energie & Mines
67
november 2005

PERFORMANCES
Bank of Algeria
Increase in foreign exchange reserves
and reduction in foreign debt in 2004
The downwards trend of Algeria’s
foreign debt was confirmed in 2004,
thanks, particularly, to early repayments
of over 1.2 billion dollars whereas
the foreign exchange reserves,
boosted by never equalled increases
and the international oil price, significantly
increased, even exceeding the
government’s forecasts.
“The improvement of all the indicators
of foreign debt and the increased
rebuilding, since 2000, of the official
foreign exchange reserves are proof of
the solidity, even more reinforced in
2004, of the foreign financial position
of Algeria and of the medium term viability
of the balance of payments”,
emphasised a memo from the Bank of
Algeria, communicated yesterday to the
APS. According to this memo, the
medium and long term foreign debt did
in fact fall by 23.2 billion dollars
(USDb) at the end of 2003 to
USD21.411b as of 31 December 2004,
i.e. a reduction of almost 1.7 billion
dollars. The determination of the
Executive to "manage the foreign debt
well" seems to be fully committed but
does not see however to affect the level
of foreign exchange reserves, hoisted to
USD43.1b in 2004 compared to
USD32.9b in 2003 and thus exceeding
the government's forecasts which was
counting on a balance of 40 billion dollars
in 2004.
“In spite of the early repayments of
USD1.218b (in 2004), the level of the
official foreign exchange reserves
increased to USD43.1b at the end of
the year" congratulated the Bank of
Algeria. The foreign debt servicing
ratio, excluding early repayments, did,
for its part, improve to reach around
12.6% in 2002, according to the press
release which recalls that this same
ratio was 47.5% in 1998. This reduction
in the debt servicing ration, i.e. the
relationship between the volume of
debt and the income between the volume
of debt and export income, "today is
a good reflection of the sustainability of
Algeria’s foreign debt”, states the same
source. The unquestionable improvement
of the relationship between the
volume of the foreign debt and export
income, which decreased from 215% in
1999 to 94% in 2003, then to only 60%
in 2004, as well as the relationship between
this debt and the gross domestic
product (GDP) which, for its part,
decreased from 35% in 2003 to 26.4%
in 2004, confirms this “sustainability”
of the current level of foreign debt,
according to the bank.
Detailing the structure of this debt, the
same source emphasised that the part
of the restructured debt represents
53.1% of this, whereas the multilateral
credits represent 19.7% of this. 95% of
Algeria's credits come from the
Organisation for Economic
Cooperation and Development
(OECD) and 69% from the European
Union, added the press release. Hence,
the percentage of the debt in euros is
becoming preponderant to reach
39.9% at the end of 2004 whereas the
share in dollars is maintained at 39%.
The percentage of the yen and other
currencies reduced to 21.1% compared
to 26% in 2003, further specifies the
press release.
Investments excluding hydrocarbons
2 billion euros in 2004
In 2004, Algeria attracted foreign direct investment
(FDI) of 6 billion (b) euros, 4b euros of which in the
hydrocarbons sector and 2b euros excluding hydrocarbons,
indicated yesterday in Algiers Mr Djamel
Zeriguine, head of the FDI and conventions division
at the National Investment Development Agency
(Andi).
This FDI, excluding hydrocarbons, declared by
Andi, represent the sectors of communications, the
desalination of sea water, the food processing industry,
the banking and financial services, steel industry,
pharmaceuticals, tourism as well as the property
promotion and the realisation of business centres,
emphasised Mr Zeriguine on the airwaves of the
National Radio. The majority of the investment projects
recorded in 2004 constitute the extension of
large projects started a few years ago by foreign
investors, particularly Arabic ones, according to the
same manager, who added that Egypt was the number
one investor, excluding hydrocarbons, in
Algeria.
“Out of the 2 billion euros of investment declared to
Andi, there are projects which will be started soon
and others which are awaiting the finalisation of
administrative procedures", he specified, stating that
"land remains a major problem" for the investors.
Almost 3,000 national and foreign investment projects,
excluding hydrocarbons, of a total amount of
328 billion dinars (some 4.5 billion dollars) were
declared to Andi in the first 9 months of the previous
year.
Energie & Mines
68
november 2005

performances
Arabies
“Algeria – a regional
economic power”
“Since 1962, Algeria has
built up an economy from
nothing”, and today “has
the necessary maturity to
impose itself as a regional
economic power”, writes
the monthly publication
Arabies.
In a four page article on
the evolution of the
Algerian economy since
its independence, the
January edition of Arabies
notes that "the taboos of
yesterday have given way
to an unprecedented realism”.
We cannot deny all the things accomplished in the
period since Algeria’s independence, often in a hostile
environment, continues Arabies, emphasising
the fact that “the Algerians have this particularity of
recovering from the worst situations”. What
“remains” of the past “is not negligible” considers
the monthly publication, quoting the example of the
Algerian educational policy
whose extent of infrastructures
and the generation
of education represents
“one of the greatest
feats”. After retracing the
large stages of the economic
development, the
monthly publication
reveals a return of security
and a good financial
foundation which “will
enable Algerians to regain
confidence”.
In a short reading of the
finance law 2005, Arabies draws on the indicators of
an “important recovery of the economy in a context
where Algeria's most important partners “once again
trust it”.
“This is a sign of credibility which is not wrong” and
that “at 42 years of age, everything is possible” for
Algeria, the monthly publication concludes.
Read in “Jeune Afrique l’Intelligent”
FDI : “The proportion of
commitments, excluding
hydrocarbons, is colossal”
The proportion of commitments, excluding hydrocarbons, in
terms of foreign direct investments (FDI) in 2004 in Algeria
“is colossal”, considers l’Intelligent which came out in Paris.
In an article entitled “Algeria : “massive FDI”, the weekly
publication reveals that out of the 6 billion FDI attracted last
year, 4 billion was attracted in the hydrocarbons sector and
2 in the sectors excluding hydrocarbons.
“Usually, the proportion is around 98 % for the first and little
scraps for the rest”, it notes. For the weekly, “this bit of
news relates to the performances made by the mobile telephony,
the building materials, the buildings and public works
(BTP) and the financial services sectors”.
“The increase in FDI, excluding hydrocarbons, does not
seem to be an ephemeral phenomenon”, continues the weekly,
referring to the “analyses (which) estimate that the numbers
for 2004 should see an exponential increase in 2005 and
in the coming years should reach an average of 3.5 to 4
billion euros a year”.
Energie & Mines
69
november 2005

PERFORMANCES
Exports, excluding hydrocarbons
A new support policy
being studied
The National Agency for the support of exports, excluding hydrocarbons
(Algex) will submit for study to the government a new policy to promote
exports excluding hydrocarbons.
The Chairman & CEO of Algex
declared in a statement devoted
to this case on the national
radio Channel 1 that "this has
become necessary with regard to the
implications of the association agreements
with Europe and the future
membership of our country to the
WTO which exclude the subsidising of
products.
It will, however, enable the faults of the
current system to be corrected”.
Clearly, we now intend to target the
downstream subsidies which will be
tolerated by the provisions of the WTO.
Hence, the freight and handling, study
for the protection of foreign markets,
the packaging, the certification segments,
which rely a lot on the structure
of the prices of the Algeria products,
will be subsidised by the State, according
to the proposal of Algex’ managers
who do not doubt the capacity of
the Algerian exporters to conquer certain
markets where their farming products
particularly are highly sought
after, in line with the Gulf countries,
Canada, Europe and Libya.
The new framework for promoting
exports, excluding hydrocarbons,
according to Mr Benini, which will be
studied at the government level, will
enable, furthermore, the implementation
of an upgrading policy in favour of
our operators and a re-launch of the
trade representative offices abroad; a
proposal which dates back a few years
and which will enable us to set up trade
missions at our embassies and which
will be able to support the promotion of
exports.
This initiative is capable of overcoming
the gaps in market prospecting in
favour of our exporters which seem to
be a long way off from mastering this
strategic function. In the immediate
future, according to the Algex representatives,
we intend to begin with the
five countries which totalise the bulk
flow of exports. As an example, the
countries of Europe absorb 70% of this
volume. Since 1996, the authorities
have set up a system to promote an
export policy which may diversify the
nomenclature of the products and protect
itself from the instability of currency
receipts dominated by the instability
of the price of hydrocarbons.
Institutions have been created in the
image of Promex, Cagex and Export
support Funds. The new structure –
Algex – has new prerogatives such as
the management of the subsidies and
the training of exporters. Its managers
are counting on the new consultant
whose secretariat is going to Algex.
Placed under the authority of the Head
of State and grouping together several
ministries, it should, as we are explained,
encourage a new more dynamic
policy, put together transparently in
terms of promoting exports, excluding
hydrocarbons.
The exports, excluding hydrocarbons,
are a long way off from reaching
the decreed objective of 2 million, the
income since the end of the quotas, in
order to cover the Russian debt, are
around the derisory amount of 500
million dollars.
Energie & Mines
70
november 2005

Exports, excluding hydrocarbons
“It’s a fight",
declares Mr Yalaoui
performances
“The exports, excluding hydrocarbons, constitute a real fight” declared the
Chairman of the National Association of Algerian exporters (Anexal), Mr Idris
Yalaoui, who was invited by the El Moudjahid press centre within the framework
of the cycle of its debate forums.
He emphasised, in fact, that
the volume of exports,
excluding hydrocarbons,
which is around 3% of the
total volume of exports, remains practically
“stagnant” in the years 2001, 2002,
2003 and 2004, in spite of support
efforts given by the public authorities.
“This volume does not, in the best case,
exceed the 700 million dollars' level”,
he further stated, whereas the forecasts
are to reach the objective of 1 billion
dollars, according to the Chairman of
Anexal. The objectives are still multiple
and, said Mr Yalaoui, mainly relate to
the problems of bureaucracy, the quality
of the products likely to be exported
and the lack of professionalism on the
part of the exporters. “No one can
become an exporter just by wanting to
be one, even if their products are of an
excellent quality”, felt an expert present
in the room who insisted on training
company directors specialised in the
exporting of very specific products.
This, he said, means creating “an
exporter mind” in the long term. Which
assumes, furthermore, the knowledge
of the export market, he added. He
does however consider that the potentials
for export are “real, if only there
are relays at the administration level
and that we take care to examine them
in the context of a focussed policy for
this purpose”.
Another person in the room felt that,
certainly, the reforms are necessary,
but for the time being they only favour
the imports, remarking, by way of an
illustration, that “the devaluation of the
dinar has not encouraged the growth of
exports, excluding hydrocarbons”. For
another expert, you're deluding yourself
by only talking about exports when
the products made in Algeria do not
manage to find buyers on the domestic
market, highlighting the extent of the
gap in terms of quality and competition
on the domestic market. “We need to
upgrade the national production and
seriously prepare ourselves with the
price dismantling and Algeria’s membership
to the WTO”, he emphasised
on this matter.
The Chairman of Anexal then reviewed
the different aid mechanisms given by
the public authorities to favour exports,
excluding hydrocarbons, in the sense of
the promotion as exporters taking
responsibility for participating in the
international trade fairs and specialised
conferences as well as market prospecting,
specifying that no less than
2 billion dinars are devoted to this each
year.
“We are continuing to make our members
aware of the situation, to develop
specialised niches in the exports within
their companies and to provide the
necessary assistance”, confirms
Mr Yalaoui, considering, furthermore,
that the Ministries of Foreign Affairs
and of Trade must put more effort into
promoting and dealing with exporters
which launch themselves into conquering
the export markets.
The year 2005 will be marked by the
improvement of the volume of exports,
he concluded. Note that Anexal came
to life in 2001 and groups together a
certain number of potential exporters.
Energie & Mines
71
november 2005

PERFORMANCES
Energy
Algeria’s refining capacity
is 22 million tonnes a year
Mr Salah Gherouana, Chairman &
CEO of Naftec, indicated in an interview
with Pétrole et Gaz arabes that
Algeria's current refining capacity is
about 22 million tonnes a year
(22mt/year) and is divided up between
5 refineries. The Algiers refinery has a
capacity of 2.7mt/year, but over 45%
of its production is exported.
The Arzew refinery has a capacity of
2.5mt/year. The Skikda refinery has a
capacity of 15mt/year. The majority of
its production is exported. The Hassi
Messaoud refinery has a capacity of
1.2mt/year whereas the one in In
Amenas has a capacity of
300,000t/year.
The consumption of oil products
increased by 5.9% in the first half of
2004 and this growth will last, according
to the Chairman & CEO. With
regard to the programme to modernise
the refining fleet, he emphasised that its
objectives are to maintain the same
refining capacity, or even to increase it
to 20% and to produce, by 2009, products
which respond to international
standards.
In 2009-2010, the Algeria market will
be opened up, which will induce competition
from other refiners and also
from distributors which will import
refined products, according to the
Chairman & CEO.
The total cost of the renovation and
adaptation programme will be over 1.2
billion dollars in the 2004-2009 period.
There is also the project for a new refinery
in Adrar which is currently being
carried out and Sonatrach is going to
build a condensate refinery in Skikda
with a capacity of 5mt/year.
The Adrar refinery will have a capacity
of 600,000t/year to reach capacity of
around 700,000b/d by 2010.
The Chairman & CEO reminded that
since 2001-2002 the company began
to supply private distributors. The
volumes sold to these newcomers is
constantly increasing and today represents
about 200,000t/year.
Several international companies are
included here, including the French
company Total. The operation with the
aim of getting certification for the refineries
was started in 2004, so that all
refineries will be certified ISO 9001-
2000 by the end of 2005.
Energie & Mines
72
november 2005

CASE STUDY
Sea water desalination
The challenge
of blue gold

CASE STUDY
Message from the President of the Republic
“Rational water management
is now an imperative”
On the occasion of the celebration of World Water Day, the President of the Republic,
Mr Abdelaziz Bouteflika, gave a message whose text is as follows :
“J
Just like all the world’s
countries, on 22
March 2005, Algeria
is celebrating World
Water Day, under the
slogan of “Water – source of life”.
Far from being a simple temporary slogan,
this announcement shows the extremely
vital nature of water, as the Koran so rightly
emphasises: “From water, we have made
everything which is living.”
This affirmation, rich in symbolic meanings,
calls out to humanity as to the multiple stakes
which underlie the issue of water, notwithstanding
the diversity of the natural
contexts, the cultures or national priorities.
An essential natural source for life and
man's activities, water is found everywhere
at the heart of the problem of sustainable
development and its rational management is
now an imperative due to the vulnerability
of its natural cycle, and particularly the climate
changes and the increased pollution
caused by its multiple uses.
Algeria, a semi-arid country due to its climate
and geography, is seeing its water
resources dominated both by the rarity and
the frequency of periods of drought. These
natural characteristics must lead us to integrate
a real water culture. Hence, we must
individually and collectively ensure strict
rules are respected in managing and protecting
this wealth – hence the necessity to
fight against any forms of waste and deterioration
of its quality.
Mindful of reinforcing the public consciousness,
the public authorities are dealing with
this sensitive and strategic issue of water as
a major challenge of absolute national priority.
To start with, the State, at the highest level,
has over these last few years worked hard to
greatly encourage the mobilisation of all the
resources and energies in order to guarantee
regular and safe supply, both quantitatively
and qualitatively, within the framework
of an integrated approach, targeting the
achievement of the main objectives fixed.
In this perspective, the national water policy
was designed according to three options.
The first option consists of intensifying the
mobilisation and exploitation of the water
resources of all kinds, including through
controlled recourse to so called “non
conventional” resources.
Working to achieve the expected goals of
the unprecedented investment effort, which
we have devoted to these actions, putting
together water distribution networks’ and
systems’ renovation programmes, have been
“We must individually
and collectively
ensure strict rules
are respected
in managing and
protecting the water,
hence the necessity
to fight against
all forms of waste
or deterioration
of its quality.”
implemented with a view to reaching, in the
short term, the standards in force with
regard to water saving.
The second option relates to the more
intensive development of the actions of collecting
and treating waste water in order to
make healthier and preserve the framework
of life in accordance with the health regulations
and to regenerate the water resources
in accordance with the environmental standards
and reutilisation criteria in the
domains of agriculture and industry. The
third option concerns managing the water –
a complement to the first two options, but
an essential one for their sustainability. It is
an action to which we must now give particular
attention (…)
The obvious stake is the development of the
professionalism which is, itself, closely linked
to the reinforcement of the managerial
capacities and to the acquisition and the
transfer of know-how in the water technologies
and industries.
All these imperatives are linked to the
improvement of the quality of the system
which is imposed on investors in order to
instigate a proximity relationship with the
consumers marked by trust, through the
guarantee of equitable distribution, even in
a situation of economic restriction.
The continual question for improvement of
the water services necessarily implies the
contribution of all the users - households,
managers of collective infrastructures, farmers
and industrialists - which must be
constantly made aware of water savings;
water being a common, rare and vital
wealth. This duty of participation must not
only be translated by active contribution, but
also by respectful behaviour of the social
and economic value of the water resources.
With this rigour and this perseverance, the
State and the citizens will instigate an
approach of sustainable development likely
to ensure the quantitative and qualitative
durability of the water resources.
It is at the cost of all these individual and
collective efforts, which our country will
give itself the means to full contribute,
through a constantly renewed social and
political commitment, to the implementation
of the resolution of the General
Assembly of the United Nations for a decade
of international action.”
Energie & Mines
74
november 2005

Sea water desalination
Algeria-USA
The financing of the Hamma water
desalination project is approved
The financing of the
project to build a sea
water desalination factory
in Hamma
(Algiers), for a cost of
200 million dollars, was
approved by the
American agency
Overseas Private
Investment Corporation
(Opic) during the meeting
of its board of
directors on 27
January, indicated the
Algerian Energy
Company (AEC) in a
press release.
This financing, the first of its kind to be
put in place in Algeria, has been put
together according to the formula of
Project Financing without the State’s
guarantee and without any bank guarantee,
specified AEC.
The only guarantee for the financial
backers is the project itself, whereas the
cash flow which will be managed by the
company will be used to repay the debt
(principal and interest) and to pay the
shareholders, the same source further
states. The loan will be given to the
project company Hamma Water
Desalination (HWD SPA), whose capital
of 68 million dinars (1 million dollars)
is 70% owned by the American
company Ionics and 30% by AEC and
Algérienne des eaux (ADE). According
to the terms of the agreement, the company
HWD will sign a 25 year water
sale and purchase contract with
Sonatrach and ADE.
This financing, as well as the capital
made available by the Ionics and AEC
shareholders, will be used by the HWD
to build, within a period of 24 months,
a sea water treatment factory with a
capacity of 200,000m3/d using the
reverse osmosis process.
The partner Ionics will provide the
desalination equipment and will ensure
the running and maintenance of the
factory for a period of 25 years.
The investment amount of this project,
which must provide Grand-Algiers with
drinking water, is 225 million dollars.
The building, running, maintenance
and sale project which was won, in
October 2003, by the American company
Ionics and entrusted to the company
HWD built up between AEC and
Ionics in December of the same year.
The factory will be made up of three
units comprised of 9 trains with a capacity
of 25,126m3/d each and must
temporarily employ in the building
stage 900 workers and 70 others in the
operating phase.
With regard to the sale price of the
water produced - this has been fixed at
0.8182 dollars, i.e. DZD65/m3 we are
reminded.
Letter from the dean of the
University of Laghouat to
Chakib Khelil
“Dear Minister,
Further to the holding of the international
seminar “Water and risks in the Saharan
context”, I would like to express my sincere
thanks and on behalf of the entire academic
community at the Ammar-Telidji University of
Laghouat for interceding on our behalf with
companies in your sector, Sonatrach and
Sonelgaz. The seminar took place in good
organisation and working conditions.
Different workshops and display units enabled
the participants to deal with this so
important issue of water, in all its facets. In
addition to the scientific activities themselves,
the organisers added cultural and tourist
activities to these days, which enabled
our foreign guests to discover the immense
potentials hidden in our country. Their walkabouts
in the towns of Laghouat and
Ghardaïa denotes that our country is finding
peace once again and the pleasure to welcome
and encourages us to intensify these
different scientific and cultural exchanges for
the good of the academic community, in particular,
and the country, in general.
Yours sincerely,”
El Hadj-Aïssa Ben Harma
Energie & Mines
75
november 2005

CASE STUDY
Algerian Energy Company
Sea water desalination in Algeria…
An ambitious programme which is
becoming a reality
The use of sea water desalination in Algeria,
from an alternative towards a necessity.
Algeria is ranked once of the
countries of the world which is
under the water shortage threshold
adopted by the Wold Bank.
The origin of this situation is the great
drought which Algeria experienced in the
last decade, but mainly due to the irregularity
of the rainfall which almost the entire
region experiences (North Africa and
Middle East). In addition to these climate
changes, leading to droughts, the pollution
factor and the reduction in conventional
water resources such as the surface waters
and ground waters, have only accentuated
and amplified the problem of water resources
in our country.
Sea water desalination was an alternative in
Algeria in the 1970s-1980s; it was most
often used by large industry to overcome
any water defection, such as Sonatrach in
its petrochemical units. Over the years, sea
water desalination became a necessity dictated
by the caprices of nature, on the one
hand, and by the need to secure this resource
for an ever-growing population on the
other hand. Hence, Algeria chose to turn
towards the sea, an inexhaustible source,
available over the 1,200km of the Algerian
coastline.
A large sea water desalination
programme is given to AEC
Given this new order, the public authorities
decided to launch a large programme to
build sea water desalination factories,
spread out over the entire Algerian coastline.
This programme will consist of the
installation of a daily capacity of over
1,100,000m3 of drinking water by 2009 –
a regular capacity not depending upon the
weather factor.
The development of this programme was
entrusted to the Algerian Energy Company
(AEC) by the public authorities in order to
implement this large sea water desalination
programme, by development desalination
projects with national and international
partners. The choice of AEC as the promoter
of this programme is justified by the
experience this company has acquired in
putting together projects in partnership,
particularly the experience gained in the
Arzew sea water desalination and electricity
production project, more known under the
name of Kahrama.
Who is Algerian Energy
Company
Affiliated to the Ministry of Energy and
Mines, Algerian Energy Company
(AEC/SPA) is a joint stock company created
in May 2001, whose shareholders are
Sonatrach and Sonelgaz, the two most
important Algerian groups in the energy and
mines' sector. Since its creation, AEC has
worked to make the objectives given to it a
reality. Its main mission is to develop its
activities through taking stake holdings,
creating subsidiaries and acquiring assets.
Strategy adopted by AEC for
the development of the sea
water desalination programme
The putting in place of sea water desalination
projects is based on the following
principles :
• No State involvement.
• Project Finance financing without
recourse with an equity/debt ratio of
30/70.
• Projects established according to the
model “BOO” (Build, Own & Operate).
• The process adopted is reverse osmosis
“RO” (except for the Kahrama project
which uses the Multi Stage Flash – MSF
– process).
• The selection of a partner for the creation
of a project company “SPC” is done
from an appeal for investors in two phases
(a technical phase and a commercial
phase).
• AEC’s stake holding in the capital of
the project company varies from 30% to
49%, depending on the project.
The figure below outlines the financing
of the sea water desalination projects,
according to the BOO model.
Energie & Mines
76
november 2005

Sea water desalination
Consistency of the sea water
desalination programme
undertaken by AEC
The sea water desalination programme
consists of building 11 sea water desalination
factories (including the Kahrama project)
over the entire Algerian coastline, totalling
a capacity of around 1,190,000m3/d.
The table below gives the capacities as well
as the location of each factory, according to
the chronological launching order.
Kahrama-Arzew complex 86 880 m 3 /j
HWD-Hamma factory 200 000 m 3 /j
ADS-Skikda factory 100 000 m 3 /j
BWC-Béni Saf factory 150 000 m 3 /j
Cap Djinet (East Algiers) factory 100 000 m 3 /j
Tipaza (West Algiers) factory 100 000 m 3 /j
Mostaganem factory 100 000 m 3 /j
Honaine factory 150 000 m 3 /j
Sidna Ouchaa factory 50 000 m 3 /j
El Tarf factory 50 000 m 3 /j
Mers El Kebir factory 100 000 m 3 /j
Kahrama-Arzew complex
(Figure 2 and 3)
The first sea water desalination factory is
located in the industrial zone of Arzew
(Oran). It is an important building site
whose works started in September 2003.
This project will deliver its first cubic metres
of desalination water for the city of Oran in
August 2005. The commissioning of the
entire complex is scheduled for the end of
the month of November 2005; this complex
will enable the satisfaction of both the water
requirements of the industrial zone of
Arzew, a core of the Algerian oil industry,
and a part of the requirements of the city of
Oran, and will produce a power of 321MW
thanks to its three gas turbines.
Hamma-HWD sea water desalination
factory (Figure 4 and 5)
The second factory is located in Hamma, in
Algiers. This project will be carried out by
the company HWD, created for this purpose,
in partnership with the company GE-
INOICS of the United States.
With a production capacity of
200,000m3/d, the Hamma factory will be
the largest sea water desalination factory
using the reverse osmosis process in the
world. The preliminary works have already
began on site and the provisional commissioning
of this factory is scheduled for the
fourth quarter of 2007.
group) and 40% by AEC and ADE. As a
reminder, Geida won the project at the time
of the public tender opening on 3 April
2004. The Skikda factory, which should be
finished in 24 months, should start its production
at the end of the year 2007 and will
deliver its first production to the group
made up of ADE and Sonatrach lasting
25 years.
Sea water desalination factory
of Béni Saf-BWC
On 17 November 2004, the company Béni
Saf Water Company “BWC" was created,
whose capital is 60% owned by Geida Béni
Saf and 40% by AEC, to build a sea water
desalination factory with a capacity of
150,000m3/d in Béni Saf. This factory will
deliver its production at the end of the year
2007 to Oran.
Projects in the technical
evaluation stage
AEC is working on 5 other large capacity
sea water desalination projects. These projects
are at the technical stage and the opening
of the commercial tenders is scheduled
for the fourth quarter of the current year.
This concerns the following factories :
• Tipaza (West Algiers) with a capacity of
100,000 m 3 /d
• Cap Djinet (East Algiers) with a capacity
of 100,000 m 3 /d.
• Mostaganem with a capacity of
100,000 m 3 /d
• Honaine, in the Wilaya of Tlemcen, with
a capacity of 150,000m 3 /d.
• Sidna Ouchaa, in the Wilaya of Tlemcen,
with a capacity of 50,000m 3 /d.
Projects being launched
Two projects are currently being launched.
These projects are the El Tarf project with a
capacity of 50,000m3/d and the Mers El
Kebir project with a capacity of
100,000m3/d. For the El Tarf project, the
appeal for investors has been launched and
the opening of the technical tenders is scheduled
towards the end of 2005. The Mers El
Kebir project, in Oran, will be launched very
soon. Through these projects, AEC will
contribute to the achievement of one of the
most ambitious sea water desalination programmes
in the world and, through this way
of financing, AEC is counting on being the
first Algerian company to develop Project
Finance projects.
Sea water desalination factory
at Skikda-ADS
Aguas de Skika “ADS/SPA”, whose capital
is 60% owned by Geida Skikda (Spanish
Energie & Mines
77
november 2005

CASE STUDY
The water bill
is adopted
Energie & Mines
78
This new law which
will replace the 1983
law, amended in 1996,
takes responsibility for
the insufficiencies and
inadequacies highlighted
by the diagnosis of
the current legal framework
for water and
puts an end to the
delay it has experienced
in relation to the
evolutions of the institutional
and national
economic system.
For this purpose, the law refocuses
on, adapts, reinforces
and modernises the legislative
system governing water,
posing the principles and rules applicable
for the use, management and the
sustainable development of water
resources, as a national asset.
In this framework, the new law :
• clarifies the provisions relating to the
consistency, the demarcation, the use
and the protection of the public
hydraulics domain;
• establishes a whole set of State intervention
instruments which target reinforced
qualitative and quantitative
management through protection perimeters,
anti-erosive layout planes,
measures and prescriptions for preventing
the risks of pollution and intervention
and prevention devices aiming to
safeguard and protect the areas threatened
by the increase in water levels.
• redefines the content and the scope
of the strategic planning instruments;
• establishes a legal system for using
the water resources which includes two
differentiated systems depending on
the nature of the waters or the impacts
and requirements linked to their usage;
november 2005
• establishes a new management framework
for the public water and sanitation
services, built around a basic
mechanism of the assignment granted
by the State to the legal entities of
public law and a complementary
mechanism of contractually delegating
public services by the State or the assignors,
to public or private operators. A
system is also planned which gives the
possibility to small communes to ensure
its management by rules with financial
autonomy;
• clarifies the management system by
assignment of irrigation infrastructures,
according to a typology built
around the large, medium and small
farming hydraulics.
Finally, this law establishes a water
policy with reinforced prerogatives,
whilst adapting the sanction of breaches
to the gravity of facts.
Intervening at the end of debates on the
bill, in the Council of Ministers, the
President of the Republic was keen to
recall that no so long ago, Algeria narrowly
missed catastrophe in terms of
the drinking water supply of the populations
of the large urban agglomerations
and which, to confront this situation,
required the putting in place of a
series of very expensive emergency programmes
for the community. Hence,
the relatively relaxed situation which
currently prevails in this domain must
not, in any event, stop us in our duty of
vigilance at all levels. This is, in fact, an
issue which is one of the priorities for
national security.
This is why it is essential for the
government to continues the efforts
already undertaken by mobilising all
resources which help to satisfy, as quickly
as possible, the requirements of all
the users. It is also imperative, added
the Head of State, that strict measures
are quickly implemented to fight
against any form of waste and to ensure
rigorous and rational management
of this rare resource.
Continuing his speech, the President of
the Republic emphasised that the
public investments to mobilise the non
conventional resources, dictated by the
necessity of guaranteeing the safety of
the drinking water supplies of the
populations, whose cost remains relatively
high, must be done within the
limits of the objectives already fixed,
and also to mobilise the conventional
resources, which are potentially large,
less expensive and not yet exploited.

Sea water desalination
Abdelmalek Sellal, Minister of Water Resources
“One of the major problems
of the 21st century”
The water shortage in the world and the management of hydric resources
are one of the major problems of the 21st century. The climate changes and the
droughts which have, for several decades, harmed different regions of the
world, particularly affect the countries of Sub-Saharan Africa, and have a
negative impact on the water resources of these countries, and hence,
on their socio-economic development.
By Abdelmalek Sellal
This drought, which risks getting
worse in the coming
years, could cause in this
country a real water crisis,
which encourages them to study the
systems capable or preventing such a
risk.
Algeria is located in a low rainfall area.
The weakness of our hydric resources
is accentuated by :
• the poor spatial distribution of this
resource;
• the seasonal and inter-annual irregularity
of rainfall;
• the hydric erosion.
The current situation is therefore characterised
by an imbalance between the
requirements and the available resources.
The demographic growth and the
economic and social development of
the country have, furthermore, for the
last two decades caused a considerable
increase in the drinking water requirements
– both from industry and agriculture.
An overall approach has been
developed to define our requirements,
our capacities and the investments
necessary to increase our possibilities
of mobilising this resource until 2025.
This national development strategy of
the water sector has two objectives: the
securisation of the drinking water supply
of the populations and the improvement
of the food safety rate by the possibilities
offered to the extension of irrigated
lands.
The volumes of water currently mobilised
by the dams and the drilling works
are 6 billion cubic metres a year. By
2025, these volumes, including the
desalination, will increase to
12.1 billion m 3 /year for requirements
of 12.5 billion m3/year.
Currently, the sector equipment programme
underway amounts to
4.7 billion American dollars. In the next
four years, the same effort will be
maintained with projects evaluated at
over 5 billion American dollars.
By 2025, the amount of the investments
to be granted will be around
25 billion American dollars.
This means the State must make an
effort to achieve its hydraulic development
programme – a sector which is
deemed to be key. In order to compensate
for the lack of water recorded, it
has been deemed necessary to focus on
a mobilisation policy, making use of the
non conventional water resources
through, essentially, the sea water
desalination. This technology mastered
and implemented in a large number of
countries both for industrial requirements
and for the drinking water supply,
enables us to overcome the climate
changes especially given that the capacities
of the stations are variable.
The sea water desalination opens up
new perspectives in the management of
water resources since the restricting
factor is no longer the quantity of crude
water but the quantity of energy implemented.
In Algeria, the water desalination is
made possible by the existence:
• of a 1,200km coastline;
• of a practically unpolluted and inexhaustible
source;
• of large demand for water located
near the coast, which also reduces the
cost price of water by eliminating the
transportation costs.
The energy and mines sector, through
the Algerian Energy Company (AEC)
and, in collaboration with Algérienne
des eaux, has therefore launched an
ambitious programme to build 10 desalination
factories with a total capacity
of 1,040 million m 3 /d. In parallel, the
water resources sector continues to
mobilise the conventional waters by the
dams, the transfers and the drilling
winks, to purify and to recycle the
domestic waste water, to renovate the
water distribution and conveyance networks
and, above all, to improve the
management of the public water service
which remains one of our main
concerns.
In fact water – a rare and exhaustible
resource, must be considered as a trade
product which has a cost and a price.
A. S.
Minister of Water
Resources
Energie & Mines
79
november 2005

CASE STUDY
Water
Humanity’s number one challenge
This year, 2.2 million children will die of hydric origin diseases. The Water Supply and
Sanitation Collaborative Council (WSSCC) criticises in a report the international community
for lack of results from drinking water access and sanitation policies, pointed
out as being “the most serious failure of development of these last five years”.
Is water a strategic stake Of course –
but it is also a health stake. At the time
of the Summit on sustainable development
which was held last year in
Johannesburg (South Africa), managers
from around the world accept reducing by
half the percentage of people who do not
have access to drinking water and sanitation
by 2015.
Overall, it is, in fact, estimated that in the
world, one out of six persons does not have
enough clean water for drinking, washing,
cooking and cleaning their house or their
clothes. Furthermore, over half the poor
people in the developing world are ill due to
reasons linked to water. Hence, diarrhoeal
diseases alone are responsible for the death
of 60,000 children a year.
These diseases cut appetite, inhibit the
absorption of nutrients, burn additional
calories (fever, infections), evacuate the
nutrients (vomiting and diarrhoea): hence
infant malnutrition is less an issue of availability
of food than an issue of good hygiene
and good water supply.
In its new publication entitled “Listening”,
the WSSCC criticises the international
community for the failure of its policies on
the subject; a failure attributed to the
attempts to provide ready made solutions
(usually in the form of equipment installation)
to populations which are not made to
participate in the process. It is therefore less
a problem of resources than a problem of
the strategies employed points out the
report. Hence, 5 billion dollars are spent
each year by the planet’s governments.
In the majority of developing countries, only
1 to 2% of this expenditure is devoted to
cheaper solutions with a view to improving
the water supply and sanitation conditions.
The remainder of the report covers the
improvement of expensive services, aimed
at a lower percentage of the population.
Finally, the report emphasises that if all the
countries, or few if need be, have a national
water management policy, this most often
acts according to the agricultural and industrial
requirements, which generally represent
80% of even more of the total water
consumption. Those largely forgotten in this
matter are the local community, who are
rarely called upon when an action needs to
be undertaken.
By reading the report, it becomes obvious
that the solution proposed is less an issue of
increasing the resources available than an
issue of finding another way of dealing with
the issue of water.
There are hence tried and tested and cheaper
water supply and sanitation technologies
(such as hand pumps, toilets made of
holes in the ground and the collection of
rainwater) which the communities can
manage and maintain themselves and which
can be adapted to all the sites and all the
countries.
But, without the participation of the populations
concerned, any attempt at change
seems to be doomed for failure.
“Everything relies on the trust which is
given to the local populations, to their organisations
and to those who work with them,
notes the report. This means providing aid
which does not sap the confidence and does
not make the spirit of initiative disappear.”
No longer asking the State to provide turnkey
solutions or to subsidise the purchase of
equipment, but favouring the participation
of the local populations. This is indeed a
cultural revolution.
Energie & Mines
80
november 2005

Sea water desalination
Blue gold
The thirsty planet
By Hervé Kempf
A billion people do not
have access to truly
drinking water. The number
of countries in a
shortage situation could
double by 2050.
Diarrhoea, dysentery, cholera, typhoid,
poliomyelitis, schistosomiasis, onchocerciasis
– river blindness - are some of
the diseases which are almost forgotten
by the rich countries, but which continue
to decimate a number of poor or
developing countries. A common
cause: water, or more precisely the
poor quality of daily water. Between
two and eight million humans die of
these diseases every year – a figure
which places the diseases linked to
water on the same level as AIDS, or
even above, on the scale of blights
which afflict humanity.
Meaning that the Water Day, organised
by the United Nations on 22 March,
which starts the International Water
Decade (2005-2015), hardly takes on
the allure of a celebration: over a billion
of the planet’s inhabitants lack simple
access to really drinkable water.
Furthermore, the increase of the population
continually reduces the quality of
water available. Hence, the quantities
of soft water have decreased from
12,900m3 per inhabitant in 1970 to
6,800m3 today, and they will be
around 5,000m3 in 2025. We also estimate
that the number of rich countries
are not completely spared. These countries
also have to increasingly faced up
to hydric constraints. Just like France,
which is preparing for another summer
drought, or the South of Spain, Italy or
the United States, which are in a state
of structural shortage.
Whilst the situation is not improving, it
is now part of the concerns of the political
managers. Hence, in 2002, the
Johannesburg summit on sustainable
development gave itself the objective of
reducing by half, in 2015, the number
of persons who do not have access
either to drinking water or to sanitation
services. In 2003, the World Water
Forum in Kyoto guaranteed the
Camdessus report – the name of the
former director of the IMF
(International Monetary Fund) who
ran it -, which deals with the question
of the financing of the infrastructures
necessary to achieve this goal.
An ever-lively debate
“Things are beginning to change, feels
Michel Camdessus. The World Bank
has accepted several of our recommendations,
such as, for example, the
authorisation of loans to local authorities
which are often the most effective
agents on the territory. And this week
in Paris, with the African Development
Bank, we are starting a process to find
14 billion dollars between 2005 and
2015 for water financing in Africa.”
Whilst the water situation is bad everywhere,
a number of emerging countries
should succeed in confronting this problem.
For example, China, where 70%
of the population does not have clean
water or 400 of the 600 large cities are
confronted with shortages, and which
has adopted water laws. In these countries,
the investments into the water
treatment equipment should increase
from 19 billion dollars in 2004 to 23
billion in 2005 and to 33 billion in
2010, according to the German company
Helmut Kaiser. The policies to be
adopted are however arousing an everlively
debate. An alternative water
Forum, which was held in Geneva from
17 to 20 March, hence reconfirmed the
desire of the associations of the alterglobalist
movement “to exclude water
from the sphere of trade and market
regulations” and their requirement for
“a status for water at the global level”.
Partnerships
with the private sector
The alternative movement particularly
relies on the resistance of several Latin
American countries to the development
of private water management in several
large cities. In Bolivia, in Argentina and
in Chile, movements have been established
leading to the rejection of companies
such as Suez or Bechtel. The
alterglobalists are also concerned about
the development of bottled water multinationals
– a market which prospers
on the poor quality of public water –
which would look to make use of the
ground waters. Hence the Geneva
Form adopted a motion supporting
“the putting in place of a court to rule
on the condemnable behaviour of private
companies, aimed to appropriate
water” and denouncing the companies
Suez-Ondéo, Véolia, Nestlé, Abengoa
and Bechtel. The case of Africa is
however arousing more nuanced positions.
“To say that we are “against privatisation”
does not resolve the water
problems in Africa, recalls Jean-Luc
Touly, from the Association for the
world water contract. We accept on this
issue several proposals of the
Camdessus report.” The alternatives
therefore recognise that the African
States are not capable of remedying the
water crisis by themselves. Hence the
necessity to call upon external assistance,
and undoubtedly, partnerships with
the private sector. But whilst recognising
the we have to look for original
solutions. “In the field, says Pierre-
Frédéric Ténière-Buchot, of the World
Water Council, the NGOs are doing are
better job that the States. Likewise, the
local authorities of the North may provide
a large amount of assistance,
through voluntary contributions from
the consumers of the North on their
bills to help the projects in the South."
The Geneva Forum furthermore
emphasised the importance of alternative
technical solutions: recovery of
rainwater; reduction in the losses of
water in irrigation and in the distribution
networks. It also calls upon “the
promotion of knowledge and local traditional
practices of water management”.
Whilst water is in a crisis situation,
it is no longer forgotten.
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CASE STUDY
The Himalayan glaciers, reservoirs
of Asia, threatened by drying up
BY
Hervé Morin
Edmund Hillary and the Sherpa
Tenzing Norgay today attempted
to climb Everest; they would
save themselves 5 kilometres of
climbing on the perilous Khumbu glacier,
which has receded so much since their
1953 expedition. Nicknamed "Asia's water
castle", the Himalayan massif is seeing its
glaciers melt under the effect of global warming.
The World Wildlife Fund (WWF)
which has collected three studies on India,
Nepal and China is alarmed in a report
made public on 15 March.
Himalaya's glaciers, which cover
33,000km2, supply seven of Asia’s main
rivers: the Ganges, the Indus, the
Brahmapoutre, the Salween, the Mekong,
the Yang-Zi (Blue river) and the Huang He
(Yellow river). The 8.6 million cubic metres
which each year flow from the summits
provide soft water to millions of people.
The accelerated melting of the glaciers
could mean for them more floods initially -
a few decades - before a shortage which
follows.
The hydro-electric energy, agriculture and
some industries directly depend on the soft
water supply: the economic impact will therefore
be substantial, worries the WWF
which, on the subject, calls for regional
cooperation.
Desertification is increasing
Forecasts to one century show for India a
contrasted situation over time and space:
in a high Indus, the outflow will increase
from 14 to 90% in the first decades,
before decreasing in the same proportions
by 2100. For the Ganges, the upstream
part will experience the same type
of variation, whereas the more downstream
zone, where the water supply mainly
depends on the precipitations of the
monsoon, the impact of the de-glaciation
will be practically negligible. These differences
come down to the fact that the
water from glacier melting only represents
5% of the output of the Indian
rivers, but that it largely contributes to
their regulation, in particularly during
the dry season. Hence, for the Ganges,
the loss of water from glacier melting
would reduce the output by two thirds
from July to September, which would
cause a water shortage for 500 million
persons and would affect 37% of the
Indian irrigated cultures, assures the
report.
The WWF also emphasises the increase
risks of the sudden draining of glacier
lakes. Over-supplied due to the melting
of the glaciers, these are in fact more
likely to break through the natural dikes
which contain them. And to cause catastrophic
floods down below, sometimes of
tens of kilometres. Out of the 229 glaciers
identified in the Arun basin, in
Tibet, 24 “are potentially dangerous”,
notes the report.
In China, the Yangzi basin and the basin
of the Yellow river are experiencing a
reduction in the surface areas of the wet
areas and lakes. Desertification is increasing.
The Yellow river was not able to
reach the sea for 226 days in 1997 - a
record year.
“All the observations concur”, confirms
Yves Arnaud, IRD, Grenoble Laboratory
of Glaciology). The topographic and
satellite data which he, himself, analysed
shows a decrease in the thickness of the
Himalayan glaciers varying from 0.2m to
1m since fifty years ago… H. M.
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Sea water desalination
Coming out of “waterism”
By Patrice Burger
The fragmented and often
disjointed analyses on
water concern not only the
confusion, but make us
lose sight of the essential
view, namely water, like air,
earth, the biodiversity of
the living and their complex
interactions, is constitutive
of our biological life.
At the risk of altering our ego,
remember that we are constituted,
just like any other living
being, of 70% water – of 80%
even for our brain. The production
of our food is, also dependent on
access to water. The numerous declarations,
of Stockholm in 1972, of Dublin in
1992, the Hague conference in 2000, the
declaration of Bonne in 2001, the
Millennium goals, the Johannesburg action
plan show an awareness which we should
rejoice over.
But should we not be surprised at the same
time that these declarations mainly
concern the first truths with regard to
good governance, the public service… of
which only an arrogant and dominating
attitude seems to have to explain our past
remoteness
And these declarations, some of which are
contradictory and on the incantatory
mode, are they not the reflection of a certain
already thirty year incapability of
changing things in practice Whilst nature
gives us a stable amount of water to the
point that it constitutes the number one
substance on the planet, soft water usable
by humans only represents 2.5 % of this.
Poorly distributed naturally in the world
and between the humans where they live -
one Icelandic person has access to
600,000 m 3 a year whereas an inhabitant
of Ghaza has to make do with 70 m 3 /year
– it is also poorly distributed according to
the distribution methods; the majority of
those which do not have access (1.4 billion
people in the world) live in Asia and Africa.
In terms of availability in relation to the
resources, the Mediterranean itself
concentrates 60 % of the so-called waterpoor
population (according to the standard
of less than 1,000 m 3 a year and per
capita).
And the latest estimates on the consequences
induced by the climate change are
increasing the aggravation of the rarity of
water of 20 % in the world.
Finally, the use made of water essentially
depends on the development methods: in
Europe, 11 % are dedicated to increasing
domestic uses (even disputable : 40% is
consumed by toilet flushes), 30 % in agriculture
and 59 % in industry; in the countries
with the lowest income, agriculture
consumes 82 % of the water resources
with only 8 % for domestic uses. Whilst the
challenges posed by access to water are a
common threat for the world, they are also
an extraordinary opportunity for cooperation
between men. According to a recent
study, the cross-border questions and
management of basins are the subject of
more convergences than divergences.
Good news for the planet ! The challenge
consists of our capacity to respond to the
equation to the contradictory parameters
on a global scale, knowing that, for the
most deprived humans, the response is
vital.
Are we not then summoned to invent a
new water culture – a new culture quite
simply – on the way in which we mistreat
all natural resources From claim to
claim, delegations into individual and collective
resignations, a country such as
France has its water 80 % managed by private
companies which have become some
of the most powerful multinationals in the
world. May we, therefore, only point an
accusing finger at them “Prudently
management”, said the rural beams. But
adding to it a dimension of a world to
limits now known.
Would not the first and the last recourse be
to call upon individual responsibility, the
“principle of responsibility”, as Hans Jonas
said, to protect man “to which science
confers still unknown forces and the economy
its frantic impetus” and which
claims an ethic, which, “by freely consented
restrictions, prevents man from becoming
a curse for himself”.
Impregnated with anguish linked to his
survival and which leads him to do everything
which was “possible”, is man now
condemned to do everything which nature
and his genius has given him to capacity to
do, or has the time come to opt for “what
should not be done”
Relying on the majority of international
declarations–- including article 14 of the
European water directive – which reports
encouragement to the participation and
awareness of civil society, undoubtedly
there is material here to make citizenship
more dynamic rather than somnolent on
this issue. The information is central: who
would fight against a problem which they
are not aware of But it the awareness
(feeling concerned) and training must be
added to this, in order to know how to
settle the problems.
Estimates made by the Blue Plan for the
countries in the Mediterranean basis, on
the theme of the management by demand,
note a possible gain of around 30 % on the
additional consumptions to come by 2025,
avoiding the crisis scenario in numerous
countries.
Europe must resolve the problems of subsidised
water (agriculture particularly)
which does not represent its true value, of
an unconscious collective which has for a
long time delegated the issue to water specialists,
advantages acquired by certain
users which are not ready to question
them. As for the thirsty countries and their
inhabitants – between them, a billion people
who lived in arid areas or areas affected
by drought –, they are waiting, but with
less and less patience, for a bit more
solidarity.
P. B.
Head of the Water Solidarity
Programme of the Mediterranean
Project (PSA)
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PARTNERSHIP
11 th African Oil Congress, 16-17 February 2005
Promoting Inter-African
cooperation
The APPA is an organisation created in 1987 whose objective is to promote
cooperation in the domain of exploiting hydrocarbons as well as the common
initiatives in terms of policies and strategies to manage oil activities.
BY
M. Hanifi Mustapha
APPA’s mission is to enable
the member countries to
draw the best profits from
oil exploitation in terms of
socio-economic development and the
welfare of their populations. With the
new memberships of Chad and South
Africa announced in the 22nd Session
of APPA’s Council of Ministers, held on
15 February 2005 in Algiers, the APPA
today has 14 member countries, namely,
Algeria, Angola, Benin, Cameroon,
Congo, RD Congo, Ivory Coast, Egypt,
Gabon, Equatorial Guinea, Libya,
Nigeria, Chad and South Africa.
APPA’s headquarters is located in
Brazzaville, in the Congo. The oil production
of the member countries of
APPA is around 8mb/d, which constitutes
about 7% of world production.
The promising perspectives of the
continent enable it to how for a significant
growth in the place of the members
countries of APPA both regionally
and internationally. The Association is
aware that the achievement of its
cooperation objectives requires financial
resources. Consequently, it has
decided to create an APPA fund for the
technical cooperation. The purpose of
the fund is :
• to provide all financial assistance with
a view to achieving the goals and objectives
of APPA,
• to contribute to the financing of studies
and specific projects in the hydrocarbons
and energy sector.
This fund has registered capital of 5
million American dollars and registered
office is in Cotonou, in the Republic of
Benin. APPA, just like Afrec, is a
cooperation and development instrument
of our continent's energy sector,
particularly with regard to hydrocarbons.
The complementarity between
APPA and Afrec is even more reinforced
given that all the member countries
of APPA are also members of Afrec,
with this being the structure created by
the African Union to deal with energy
development programmes, strategies
and policies in Africa.
Two large events took place in Algiers
in February 2005 :
The ordinary meetings of the
APPA
Namely :
• 6th Forum of the national hydrocarbons
companies of the member countries
of APPA
• 1 st
Meeting of the Human Resources
Committee
• 29 th Meeting of the Experts’ Committee
• 22 nd
Meeting of the Council of
Ministers
All the member countries of APPA were
present at this Council, as well as 5 non
member countries in the capacity of observers.
The member countries of APPA :
Algeria, Angola, Benin, Cameroon,
Ivory Coast, Democratic Republic of
the Congo, Gabon, Republic of Congo,
Libya, Nigeria, Egypt, Equatorial
Guinea.
The observer countries :
South Africa, Chad, Sudan, Sao Tome
et Principe, Mauritania. During this
Council of Ministers, several cases linked
to the operating of this association
were debated.
Among the main points adopted by the
Council of Ministers, we may cite:
• operating and start-up mechanism of
the APPA fund;
• the membership of two new members
to APPA : Chad and South Africa.
These two countries have officially joined
the APPA association.
The 2nd African oil Congress
and exhibition
This congress, initiated by the Council
of Ministers of APPA, is a place where
the players in the African energy scene
(national hydrocarbons companies,
international oil companies, internatio-
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nal organisations responsible for the
issue of energy, financial institutions,
experts, etc.) met to exchange their
respective experiences and debate on
ways and means likely to enable the harmonious
development of this vital sector
at the continental scale.
What is expected
of this congress
1. Direct meetings between decision
makers and major players of the
African oil sector in a context of a
strong regain in interest for the expansion
of investments in the African oil
sector.
2. Sharing of ideas and political orientations
on the large current issues
affecting the development of the hydrocarbons
sector in Africa.
3. Opportunity for the exhibitors to
highlight their technologies, products
and services to potential clients.
4. Ideal place for securing new business
relationships and strategic partnership
in the hydrocarbons sector.
High participation
This second congress, which was held
on 16 and 17 February 2005 in Algiers,
saw the participant of eminent persons
in the international energy scene; the
presence of delegations from several
countries and numerous companies
operating in the oil sector.
The congress recorded the presence of :
• over 700 participants
• 80 companies coming from the following
companies: South Africa, Algeria,
Germany, Angola, Saudi Arabia,
Australia, Belgium, Cameroon,
Canada, China, Ivory Coast, Congo,
Denmark, Egypt, United States,
France, Greece, Italy, Japan, Kuwait,
Libya, Nigeria, Norway, United
Kingdom, Switzerland.
• Participation of 11 African ministers :
South Africa, Algeria, Angola, Benin,
Ivory Coast, Gabon, Equatorial
Guinea, Mauritania, Nigeria, Chad,
Sudan.
• Participation of managers from
regional and international organisations
and institutions: Afrec, APPA,
Cnuced, International Energy Forum,
Olade, Opec, Opaep, African Union,
World Energy Council.
• Contribution of 13 sponsors :
Sonatrach, ENI, Baker Hughes, BP,
Total, Weatherford, Schlumberger,
Burlington Resources, Hess,
Woodside, Petronas, BHP Billiton,
PetroSA.
• Participation in the Exhibition of 205
companies representing 35 nationalities :
- Africa : Algeria, Angola, Cameroon,
Ivory Coast, Egypt, Libya, DR Congo,
Congo, South Africa, Tunisia.
- Europe : Germany, England, Austria,
Belgium, Denmark, Scotland, Spain,
France, Greece, Italy, Malta, Norway,
Netherlands, Poland, Portugal, Russia,
Switzerland
- America : Canada, USA
- Middle East/Asia : Saudi Arabia,
China, Iran, India, Syria, UAE
PARTNERSHIP
Objectives assigned
to this “Cape II” congress
This second African oil congress (Cape
II), which was held under the great
sponsorship of His Excellency, the
President of the Republic, grouped
together, other than the Ministers of
Energy of the member countries of
APPA, other personalities acting on the
energy scene as well as managers from
regional and international organisations
and owners of oil companies.
Themes debated in this congress
• The African hydrocarbons industry
faced with the challenge of sustainable
development
• The oil pollution of the coasts
• The oil and gas income
• Strategies to reduce the flaring of
natural gas
• Training
Challenges and outlooks
At the end of the works of this African
Congress, the report on the works of the
congress which was drawn up by a committee
comprised of experts from the
APPA countries is presented as follows :
Summary report : the main congress
themes
Session no. 1 :
Oil pollution of the coasts
During this session, the problem of
marine pollution caused by hydrocarbons
was reviewed by different international
institutions and the oil industry.
It emerges that whilst the overall situation
of the oceans remains generally
acceptable, according to the majority of
independent institutions’ studies, marine
pollution caused by hydrocarbons
remains a major concern for the coastal
areas.
Dealing with this concern is illustrated
through the presentation of the experience
in the management of risks of
coastal pollution in the region of West
and Central Africa, and of the strategy
developed in the framework of the
Rempec for the Mediterranean.
The international oil industry has developed
the concept of tiered response
faced with an accidental spillage of
hydrocarbons for dealing with accidental
oil spillages.
This concept particularly focuses on
the necessity to prepare and plan for ☞
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PARTNERSHIP
dealing with accidental spillages of
hydrocarbons in cases of accidents.
This preparation is illustrated through
the example of the strategy developed
by Total, which relies on a clear definition
of the technical response options,
legal and financial aspects, as well as
public relations and communications.
The lack of preparation, planning and
intervention resources for facing up to
an accident is illustrated through the
feedback on the Tasman Spirit accident
of 27 July 2003 at the entrance of the
port of Karachi. The planned creation
of a multinational company to intervene
against the major risks of marine
pollution for the South bank of the
Mediterranean and the West coast of
Africa will overcome the lack of an
intervention tool to deal with the risks
inherent in these two regions, in line
with what already exists.
Session no. 2 : The oil income
Session no. 2 was devoted to oil income.
The different participants shared a
general opinion, summarised by one of
the speakers in terms of the paradox of
abundance. The mass of income triggered
by the growth of the oil sector in
Africa over several decades has not
enabled it to face up to the requirement
of economic development in a perspective
of sustainable development. As
illustrated by the history of the oil
industry in several countries, this
growth is often made to the detriment
of the other economic activities sectors
and particularly agriculture. This
means taking account of the limitations
of the past policies as to the use of the
oil income.
For this purpose, the different speakers
in turn insisted on the necessity to
initiate deep reforms and to rely on new
strategic options with a view to definitively
breaking away from the paradox
of abundance and to make the hydrocarbons
sector in African and the income
it generates play the role which is
incumbent upon them, in favour of
achieving the objectives of sustainable
development. These reforms must, in
particular, favour the establishment of
attractive institutional frameworks for
the private sector in order to integrate
the major contribute expected from it
into an overall development strategy
which puts the human dimension at the
centre of its concerns, in accordance
with the renewal objectives assigned to
Nepad.
Some participants insisted on the
necessity to :
• learn from the lessons of the past,
• favour reflections and rationales
which enable the oil income flows to be
guided towards their investment in
Africa;
• keep in mind the objective of an
effective and efficient contribution of
the hydrocarbons sector to the reduce
of the weight of debt and the promotion
of sustainable development.
One of the speakers representing an
international oil company spoke outside
the congress of these concerns of
the African producing countries. He
highlighted his company’s efforts in
contributing to the welfare of the populations
in the sites where it operates.
Session no. 3 :
Reduction of gas flaring
This session included seven speeches
from representatives of Sonatrach,
Petronas, Statoil and SNC, as well as
the Minister of Energy of Equatorial
Guinea and experts from Econ Analysis
and the WEO.
The different participants reviewed the
situation of flaring, the stakes and the
perspectives, particularly in Algeria,
Nigeria, Cameroon, Equatorial Guinea
and in Malaysia.
It should be noted that the equivalent of
40 million tonnes of oil are flared
annually in Africa. This engenders
considerable financial losses, harms the
environment and contributes to global
warming. The participants talked about
the efforts undertaken and the future
perspectives for eradicating this problem.
Hence, several flared gas recovery
projects have been created these last
few years; they aim to recover the gas
associated with the production of oil, to
treat them and produce LPG, condensates
and other by-products. Hence
South-South synergies have been created
between African countries, such as
the large trans-Saharan gas pipeline
project initiated by the Algerian and
Nigerian governments. The challenge
aims to route towards the European
market almost 20 billion cubic metres
of gas, mainly what is currently flared
in the delta from Niger to Nigeria.
Given that gas flaring engenders considerable
emissions greenhouse gases
and mainly carbonic gas, CO 2 sequestration
projects have been realised lately,
particularly the In Salah project,
Algeria.
In this same context, the recourse to
the clean development mechanism of
the Kyoto protocol is deemed to be an
interesting solution to make the gas flaring
reduction projects more attractive
and more profitable. This is done
through selling carbon credits which
represent an additional income to the
often marginal projects.
The speakers also emphasised the need
to improve the legislative and fiscal framework
in order to encourage this type
of project, particularly in the Gulf of
Guinea.
Session no. 4 :
Training: challenges and perspectives
The remarks made in the last session
dealt with the challenges and perspectives
in terms of training.
After the presentations on the different
methods of training which exist both
regionally and internationally, all the
speakers agreed on saying that training
is a driving force which must be integrated
into the strategy of our African
countries.
Resource capital is the element which
will make all the difference in terms of
competitiveness between the companies.
The speeches also insisted on the
necessity to create synergies between
the different companies and associations
through exchanges and cooperations.
The partnership route with international
business schools is also something
which should be exploited from
which our African institutions can
benefit which, for the majority of them,
are starting to emerge and be put in
place.
H. M.
Director or
hydrocarbons studies
and forecasts,
APPA national
representative

PARTNERSHIP
The African hydrocarbons industry faced with
the challenge of sustainable development
Algeria has been honoured
by the organisation
of the second African oil
Congress which was
hold on 16 and 17
February 2005, under the
sponsorship of His
Excellency Mr Abdelaziz
Bouteflika, President of
the Algerian People’s
Democratic Republic.
This African Congress brought together,
other than the political managers
and executives of the business world,
the Ministers of the African oil and gas
producing countries as well as the
managers of international organisations
and institutions and owners of oil companies.
Focussing on the key issues of
the oil and gas industry in Africa, this
congress has significantly contributed
to the growth and sustainable development
process of our different countries.
The energy resources of our African
continent, which are largely underexploited,
are capable of responding to
its requirements and sufficiently engender
export income to support the economic
and social development of our
countries. Africa's hydrocarbons' reserves
represent no less than 7% of world
reserves.
It should be emphasised that the
African continent largely remains
under-explored, comparatively to the
other regions of the world. Because of
this, the outlooks are very promising
for updating new discoveries, provided
that the necessary resources are mobilised
and that an appropriate regulatory
framework for promoting investment
in the hydrocarbons' sector of our
continent is put in place.
The redeployment of the large international
oil companies towards the oil
regions of Africa shows the growing
interest of the consumer countries for
our continent.
The growth of the African offering in
terms of hydrocarbons demands a larger
commitment from the consumer
countries, through the investment
efforts in favour of the African countries.
The highly capitalistic nature of
the hydrocarbons’ sector campaigns in
favour of this involvement of the
consumer countries.
The development of the partnership,
through innovative formulae, between
the oil companies of the African countries
with their counterparts in the
industrialised companies, will enable
harmonious development of the oil sector
of the African countries to take
place. Such an approach will enable the
African countries to ensure the socioeconomic
development at the scale of
the aspirations of their peoples and will
ensure the consumer countries of stable
sources of supply.
This cooperation with the industrialised
countries must not make us lose
sight of the necessity for cooperation
and permanent discussions between
our countries. This awareness has
always been at the heart of the
concerns of APPA.
The solutions to the energy problems
must be sought after whilst taking
account of their connection with the
problem of the environment.
In fact, the problems of water, desertification,
soil deterioration and deforestation
are still closely linked to the
energy problems. This is why efforts
must be made between the different
regional and international institutions
to support the global solutions to the
problems which are continent is facing.
In this context, the APPA is committed
to this outlook and has started an effort
with the partner institutions at the
international level in order to study
together the appropriate responses to
be made to the problem of developing
the oil sector in Africa.
Apart from the institutions, energy
must constitute a basis of cooperation
at the continental level.
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november 2005

PARTNERSHIP
☞
It is in this in perspective that at process
of discussions between the African
countries and the Latin American
countries falls – whose history and destiny
converges with us.
The Conference of the African
Ministers and the Latin American
Ministers who Algeria welcomed in
2004 has thrown down the bases of a
cooperation between the two continents
in the domain of energy. This
conference, organised both by the
African Energy Commission (Afrec)
and the Latin American Energy
Organisation (Olade), has been sanctioned
by the Algiers declaration which
defines the outlines of a promising
cooperation between the two continents.
The themes which were discussed
during the African meeting enabled the
participants to outline recommendations
capable of enabling this strategic
sector to assume its driving role in the
economic development of the continent.
During this congress, the problem
of the natural gas industry and the
implications of the oil sector on the
environment have been at the centre of
the debates. We feel that focussing on
the natural gas industry in African, in
the current world context, is highly justified,
given the increasingly important
role given to this resource on the world
energy scene.
Natural gas is one of the strategic
resources of the development of the
hydrocarbons’ sector in Africa given,
on the one hand, the large gas potential
hidden in the continent and, on the
other hand, the structuring role of this
energy source.
The African natural gas reserves represent
about 7 % of the proven reserves
of natural gas in the world. This percentage
will increase over the coming
years with the intensification of the
exploration works. Algeria is one of
the precursor countries in the development
of the gas industry. The history
of the Algerian gas industry dates back
to the 1960s with the construction of
the first natural gas liquefaction factory
in the world and the commissioning of
the giant Hassi R’mel field. Other
African countries, such as Libya, Egypt
and Nigeria also have a consequent gas
industry. The gas industry is one of the
most promising vectors of cooperation
between the African countries. Among
the examples of cooperation through
the structuring gas projects, we can cite
the Trans-Saharan gas pipeline (TSGP)
intended to route natural gas from
Nigeria to the Algerian coasts, over a
length of 4,400 km and with a capacity
of 25 billion cubic metres a year. One
of the major concerns of the oil and gas
industry, both in African and in other
regions of the world, resides in gas flaring
and the risks of marine pollution
by the hydrocarbons. These two fundamental
issues fall within the framework
of the valorisation of the gas and
the preservation of the environment.
Whilst the environmental impacts are
accepted as being a consequence of the
collateral effects of producing oil and
gas, this constitutes the primary
concern in the oil production regions
as well as a collective challenge for the
operators, the regulators, the political
elite and the entire international community.
The same environmental safety
standards observed in the countries
of the partner international companies
must be adopted and respected in the
oil producing countries.
The trade and profit objectives are
important; they stimulate risk-taking,
innovation – everything in relation to
looking for a better life; they must therefore
take account of the protection
and the quality of living. The fight
against the major risks of marine pollution
by the hydrocarbons constitutes
the concern of the hour. The governments
and the oil companies have a
large role to play; it is our duty to
seriously deal with this harmful phenomenon
and whose consequences may
be disastrous for the environment. On
this occasion, a lively appeal has been
launched for the collective awareness
through the creation of a multinational
entity to fight against the marine pollution
caused by hydrocarbons.
This entity, will be have institutional,
regulatory, legal and organisational systems,
must draw up a plan to fight
against the accidental spillage of oil and
prepare appropriate means of intervention.
Africa is resolved to work in common
interest groups with clear objectives
which fall within the framework of
the continental orientations. Algeria is
actively committed to working in this
framework. Algeria, with the other
brother African countries, is at the
forefront of promoting good political,
economic and managerial governance
as pillars of the new partnership for the
development of Africa.
H. M.
Director or hydrocarbons
studies and forecasts,
APPA national representative
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The review African Economy paid
great tribute to President
Bouteflika, “the man of peace”,
who it described as a “builder of
socio-political bridges and a facilitator
of African integration”.
The review draws up President
Bouteflika's biography and recalls
his political itinerary. Highlighting
his transition to the head of
Read in African Economy
“Bouteflika, a builder
of bridges”
Algerian diplomacy, the review
writes that “the emergence of
Bouteflika as an authentic African
leader began well before he presided
over the fate of Algeria”. The
review further writes that the
President of Algeria is a man if State
with real international stature, and
he is respected for his role of re-unifier.
Conference on energy and safety in Africa
The Algerian experience
is honoured
The conference on energy and safety in Africa, which
has just ended its works in Abuja, the capital of
Nigeria, accorded particular interest to the themes of
good governance, establishing a direct link between
the good issue of energy resources and the establishment
of safety and stability.
It also emphasised the important of the role of civil
society in the appeasement of conflicts and looking
for solutions through dialogue and working together
as well as on the sustainable development and the preservation
of the environment.
About hundred participants, including several
Ministers, personalities as well as senior officials from
African countries, the United States and France,
including a large Algerian delegation, took part in this
conference organised by the Centre of strategic studies
for African (Cesa) whose headquarters is in
Washington.
During this meeting, the Algerian experience was talked
about at length, holding the attention of the participants
who cited it as a concrete example of good
management of energy resources through a programme
of appropriate reforms, the development of energy
capacities, the intensification of the research and
exploitation programme, the rural electrification, the
extension of the natural gas, propane and butane distribution
networks, making energy profitable in
favour of the welfare of the populations, as remote as
they are, the encourage to consume clean energy, the
new environmental policies, sustainable development,
the renewable energies, etc.
In his opening speech, Mr Fulfod Carlton W. Jnr.,
director or Cesa, cited and described the services
which his establishment has, specifying that Cesa is
above all an academic institution which, for the
African countries, constitutes a form for discussion
and putting forward strategies for approaching and
resolving the problems linked to safety. He also
emphasised the United State’s desire to share these
strategies with the countries of the African continent.
The centre’s motto, he said, is to listen, discuss, communicate
and prepare the managers to combat the
existing or emerging threats on safety in a democratic
context.
Energie & Mines
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november 2005

PARTNERSHIP
The issues of national energy in Africa
Working towards
strategic reflection
For the entire country, the strategic goal of the energy sector is
to improve the economic welfare of the nation, by providing a varied
range of energy products through reliable delivery methods for optimal
use without harmful effects on the environment. In short, accomplishing
the “Socio-economic safety” through “Energy safety”.
By
Hussein Elhag
AHaving access to “Energy
safety” requires a national
comprehensive and cohesive
energy strategy. Yes,
“Strategy”, this Golden word must
penetrate the minds and hearts of the
energy directors, the planners, the policy
formulators and decision makers
everywhere where there is supply and
demand for energy.
What does “strategy” mean As one of
the strategists said: “Strategy is a term
which refers to a complex chain of
thoughts, ideas, perspicacity, experiences,
goals, competences, memories,
perceptions and expectations. This
strategy provides general advice for
specific actions for the pursuit of specific
objectives.” As for the energy sector,
these objectives could be combined, as
mentioned above, in two words:
“Energy safety”. To achieve such an
objective, the strategy becomes a general
method to accomplish specific
objectives. It describes the essential
energy sources and the quantities
which must be committed to make the
country’s economic machine work. It
hence evaluates how the resources will
be leased, organised and the policies
applicable to their management and
use.
Who makes the “strategy” Different
groups with different motivations focus
on developing strategies for issues
which interest them. With regard to the
formulation of the energy strategy, the
private energy experts as well as those
of the government do the same thing.
Whereas the researchers and the private
“think tanks” play a more important
role in formulating energy strategies in
the highly industrialised countries, this
role is assumed by the employees of the
Ministries of Energy in the developing
world. However, the employees, just
like their Ministers of Energy, do this
with little enthusiasm as they find that
their working hours are entirely devoted
to settling matters which are often
badly managed in their Ministries.
Unfortunately, this is generally true for
a lot of African energy sectors - something
which we, Africans, should admit
to enable us to improve ourselves.
The problem of formulating cohesive
strategies in the African energy sectors:
Almost all the energy sectors in Africa
are state-owned; consequently, the role
of the directors of State, particularly
the Ministers of Energy, are becoming
more important. Given that the largest
amount of work of the Ministers of
Energy, just like their employees,
would be devoted to the daily management
of the affairs of their Ministries,
they consequently have very little time
left to put in place significant and profound
strategies which would enable
them to achieve the fixed objectives of
their sectors. Generally, it would be
very difficult for them to keep a clear
enough mind for productive strategic
thinking, and the work provided by
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PARTNERSHIP
their subordinates, in this field, would
still remain insufficient.
How to deal with the issue of strategic
thinking in the African energy sectors
First of all, it must be clear that the
strategy does not in any way concern
daily matters; rather it relates to long
term fixed objectives. An African
Minister of Energy may not need to
formulate alone several strategies. This
should rather be left to the “system”
functions! Which means the creation of
a specialised body to undertake such
activities of strategic thinking, such as
is the custom in the developed world.
An African Minister of Energy should
have a small office, directly linked to his
own, solely reserved for strategy thinking
on the national and world energy
issues. This office should be comprised
of a well selected group (approximately
Having access
to “Energy
Safety” requires
a national
comprehensive
and cohesive
energy
strategy.
five members at most) to intensively
look into a variety of energy issues,
particularly those concerning the national
economy and energy safety. This
group should become the mind and
soul of the strategic thinking of the
energy sector. They should also be chosen
to represent a group of experts,
specialised in energy supply, extreme
demand, economics and public ecological
politics. They must also be selected
according to their established reputations
and their experiences, with a
capacity for objective thinking. Such a
group should always remain focussed
on its strategic thinking functions, free
of any daily error in management.
They may come from different sectors
– public as well as private. They should
be assisted by adequate equipment
which will enable them to monitor the
quick evolution of energy trends, at the
national, regional and global scale.
Such equipment could exclude,
without being exhaustive: specialised
energy periodicals, books and reports,
the internet, national, regional and
international conferences, workshops
and round tables, and any energy
forum likely to support their thinking
functions. It would be desirable that
these experts have multilingual talents
in order to be able to look at the image
of global energy from larger angles.
Finally, it is obvious to state that this
group will be useful to the Minister of
Energy, to the political directors and
decision makers of the energy sectors
with views, ideas, plans and strategic
approaches on the way of negotiating
the national, regional and global energy
issues. Generally, this group must
public periodical reports which reflect
their views and their understanding of
the role of energy in the national economy
and the socio-economic development
of the nation based on the inputs
of strategic data. The Minister of
Energy and his deputy must follow the
advice of this group and consult it before
taking a decision on any strategic
plan or project.
H. E.
Executive Director
Afrec
This message represents the author’s personal opinion
and may not, at any time and in any way, commit that of
Afrec for any action which it might have to undertake.
Energie & Mines
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november 2005

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Algeria-USA
Working towards the creation
of a free trade area
The Republic Deputy of
California, and member of
the Chamber of
Representatives
International Relations
Committee (CRICR),
Mr Edward Royce, declared,
at the international
airport of Houari-
Boumediène, just a few
minutes before his departure,
that the possibility of
creating a free trade area
between Algeria and the
United States is currently
being studied at the
American Ministry of
Trade.
“I have personally made contact with
our representative at the Ministry of
Trade to study the possibility of creating
a trade free area between the two
countries.” This declared desire oft he
American diplomats wishes to reinforce
furthermore the relations with Algeria
and the logical completion of a work
carried out by the President of the
Republic, Mr Abdelaziz Bouteflika. An
action initially started with the return of
the civil peace and the significant
improvement of the security situation
then by the choice of the democratic
option confirmed furthermore in April
2004.
These two aspects have not escaped the
American diplomat: “It is by leaving
this country that we have the feeling,
even the conviction, that we know
Algeria better and that we are going to
reinforce the relationship with this
country which is very important. We
are leaving Algeria with greater and
better knowledge of the difficulties
which it has experienced, of all the difficulties
which it had it is battle to overcome
all the challenges and in particular
the challenges of the last decade and
all the efforts accomplished currently in
order to establish a democracy and the
progress made in this domain.” For Mr
Royce, the trip to Algeria was an
important contribution due to the fact
that this also enabled members of the
delegation accompanying him, and
more particularly Mr James A.
McDermontt, democrat deputy, who is
responsible for the sub-committee in
charge of financial and tax issues, who
has displayed an enormous amount of
interest in there being economic reinforcement
with Algeria.”
Neither did Mr Royce hide his admiration
for and interest in the national
reconciliation policy advocated by the
Head of State. “I believe we have a lot
to learn from Algerians and this is why
we are listening with an enormous
amount of attention to the remarks and
observations made by the members of
the Algerian government or by certain
members from the business world. The
measures which have been taken to
fight against terrorism but also to offer
a solution to certain persons who
would like to return and integrate into
the society are very interesting”, he stated.
Citing one of the bases of discussions
which he had with the Algerian authorities,
the Head of the delegation of
American deputies emphasised that
“we have also had discussions on fighting
terrorism and on what Algeria is
doing, particularly in cooperation with
the Sub-Saharan countries”. With
regard to the international cooperation,
Mr Joyce recalled the role played by
Algeria in the settlement of the Eritrea-
Ethiopia conflict as well as in other crises
which are shaking the African
continent.
“Over the years, we have had the
opportunity to note how Algeria has
ensured reconciliation between Eritrea
and Ethiopia, ensured the settlements
of conflicts and ensured peace for other
conflicts on this continent. And we are
in the process of seeing what ways and
means are able to manage to resolve
these crises. And, as you know, Algeria
has been very useful in helping to come
to an agreement of peace between
Southern Sudan and Khartoum. And
we hope that Darfour is included in the
agreement so that both parties find
themselves around the negotiation table
to pursue the process of negotiations
and that Algeria helps to find a negotiated
solution to this problem."
With regard to the case of Western
Sahara, the American deputy reiterated
the position of his country which relies
on international law which confirms
the rule of self-determination for the
Sahraoui people. “We wish for a resolution
to this problem on the basis of
the resolutions of the United Nations
and we firmly believe that justice and
peace must prevail in order to find a
solution which is able to give the
Sahraoui people the recognition of
their rights. The head of the American
delegation, whilst praising the tourist
capacities of the country, stated that
“this is a country which may become a
large tourist attraction”, also was keen
to say that “express on behalf of all
members of the representatives of
Congress our gratitude to President
Abdelaziz Bouteflika for his welcome
and his commitment to fight against
terrorism and succeed in the reforms
and for all the work which he has
accomplished in favour of peace and
progress in and beyond the entire
region.
In two words, this was a fruitful visit
and, upon our return to Washington,
we will endeavour to speak about the
importance of Algeria as well as the
growth in the relations between Algeria
and the United States”, he declared.
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november 2005

PARTNERSHIP
Economy
The United States - Algeria’s
number one client in 2004
The United States remains Algeria’s number one client
for the year 2004, by absorbing 23.15% of Algerian
exports, i.e. an amount of 7.34 billion America dollars,
learnt the agency AAI from the National Algerian
Customs Statistics and IT Centre (Cnis). The USA are
followed by Italy with 5.29 billion American dollars
(16.70%) and France with 3.61 billion American dollars
(11.40%). Spain, for its part, has bought from Africa
exports worth a total of 3.56 billion American dollars
(11.25%), followed by the Netherlands with 2.36 billion
American dollars (7.44%), Canada with 1.8 billion
American dollars (5.69%), Brazil with 1.78 billion
American dollars (5.61%), Turkey with 1.06 billion
American dollars (3.36%), Belgium with 848 million
American dollars (2.67%), Portugal with 569 million
American dollars (1.79%), Great Britain with 553
million dollars (1.74%), Egypt with 521 million
American dollars (1.64%) and Germany with 282
million American dollars (0.89%).
Northrop Grumman
Launch of the Algerian Industries
Development Group
Northrop Grumman Corporation
(Nyse/NocO has officially launched
the AIDG “Algerian Industries
Development Group” to help the creation,
the development and the management
of Algerian independent companies.
“The launch of AIDG commits
Northrop Grumman in a long term
partnership with the Algerian industry”,
said Mr Ismail Abdelaziz, chairman
of AIDG. “AIDG will support the
development of infrastructures with
foreign investments and, more important
still, by creating quality jobs."
AIDG will operate like a holding company
and will keep in its possession a
quality part of the capital of each company,
as it will play the role of advisor
in order to help these companies achieve
their strategic commercial objectives.
Initially, the organisation will focus
its efforts on the development of four
important sectors of the industry:
medical, communication, IT, electronic
and development of infrastructures.
“We would like to point out that we
want to develop certain sectors of the
industry, which are essential to the
establishment of a solid economy, in
order for these latter to be able to have
the greatest impact on the improvement
of the quality of life in general”,
stated Mounir Ghaly, AIDG manager.
“Hence the fruit of this initiative will
directly support the maintenance of the
stability, the security, the development
and peace”. Northrop Grumman has
established excellent commercial relations
with Algeria within the framework
of numerous initiatives, has a large
portfolio of products and programmes,
maintains a large number of prosperous
overseas companies and posses
the knowledge and skills specific to the
Algerian market. Northrop Grumman
Corporation, whose headquarters is in
Los Angeles, is a global defence company.
Northrop Grumman offers a
large range of innovative and technologically
advanced products, services and
solutions in the integration, electronic
systems and those creating a new generation
of aircrafts, shipbuilding and
spatial technology. The company
employs 125,000 persons and operates
in the 50 American states and in 25
countries. It works to serve its military,
government or civil, American or international
clients.
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PARTNERSHIP
Algeria subscribes to the
American programme
for training directors
of the Mena region
Energie & Mines
94
The American
Department of State will,
from December 2004,
launch two training sessions
open to the directors
of Algeria and 14
other countries of the
Middle East and North
Africa (MENA) region,
learnt APS from the
Department of State.
This programme called
“The Middle East
Entrepreneurship
Training Program” enters
into the framework of in
the Middle East
Partnership Initiative
(MEPI), which sponsors
this training.
This training programme, managed
pedagogically by the Beyster Institute
of the University of California, will take
place at the Entrepreneurial
Management Center of the University
of San Diego (California) and will be
geared to 35 heads of small and
medium-sized companies from the
countries of the region, 40 % of which
will be female managers.
As to the content of the training programme,
which also plans a visit to
Silicon Valley, it will be focussed on the
themes relating to “managerial skills”
and to “business strategy”. The first
session, which will take place in
December 2004, will last for two weeks
and is geared to heads of industrial
SME with over ten years’ experience in
the business world.
november 2005
The second session, which will be staggered
over three weeks in 2005, targets
young directors with between 5 and
10 years' experience, working in the
domains, particularly, of IT, communications,
technologies and services. The
other beneficiary countries of this training
programme are Bahrain, Egypt,
Iraq, Israel (the Israeli Arabs), Jordan,
Kuwait, Lebanon, Morocco, Oman,
Qatar, Saudi Arabia, Tunisia, the
United Arab Emirates, the West Bank,
the Ghaza Strip and Yemen.
Algeria was recently retained among
the six beneficiary countries of a new
financing problem which the United
States has started in the framework of
the MEPI.
This new programme, of an amount of
18.5 million dollars, will be mobilised
by the United States for the financing
of partnership projects with Algeria,
Tunisia, Morocco, Egypt, Jordan as
well as the West Bank and the Ghaza
Strip, particularly in the educational
(primary and secondary schools) and
academic domains, including refreshing
training courses, as well as specific
programmes for promoting women
in these six countries.
For the universities of the six successful
countries, a total amount of 700,000
dollars is provided for them to contribute
to the improvement of research
teaching and for buying equipment.
With regard to Algeria, the cooperation
programme will be, for the time being,
particularly focussed on the educational
and academic system, the legal
reform and the non governmental organisations.
The MEPI programme was launched
19 months ago by President George W
Bush to support the political, economic
and educational reforms as well as the
emancipation of women in the Middle
East and North Africa region.
Out of a total package of 200 million
dollars approved by the American
Congress two years ago, in favour of
this programme, an amount of 129
million dollars has been disbursed to an
amount of 29 million dollars in 2002
and 100 million dollars in 2003.
Furthermore, an amount of 89 million
dollars was voted on in 2004, to which
100 million dollars will be added for the
financial year 2005.
Currently, this initiative, whose coordination
has been entrusted to the Vice
Secretary of State, Mr Richard
Armitage, is restricted to 17 countries
in the region. These countries are
Algeria, Tunisia, Morocco, Egypt,
Syria, Lebanon, Jordan, Iraq, Saudi
Arabia, Bahrain, Kuwait, Oman, Qatar,
the United Arab Emirates, Yemen, the
occupied Palestinian territories and
Israel.

PARTNERSHIP
American gas stations
Algeria might take
an interest in it
Several options for taking an interest in the gas stations in the United
States are offered to Algeria, but no decision has yet been made
by Algeria, indicated, to the APS, the Minister of Energy
and Mines, Mr Chakib Khelil, at the end of a working visit made from
20 to 22 December 2004 in the American federal capital.
“These options concern a total of 4 stations,
3 of which are operating”, specified
the Minister. As for the fourth station,
an off-shore type station in the
Gulf of Mexico, it is at the project stage
for which discussions have been initiated
with its promoter, according to Mr
Khelil. A large part of the American gas
policy depends on the LNG development
on the other side of the Atlantic.
A development which assumes the
construction of new gas stations.
Currently, the United States only has 4
methane carrier ports, built in the
1970s. Now, with an annual growth of
liquefied natural gas consumption of
11%, the United States must commission
new capacities for treating and
storing LNG. With regard to the level
of Algerian interest in these stations,
the Minister specified that Algeria
might take a higher or lower percentage,
which could go from 5 to 15%.
This means studying all the possibilities
on offer to increase Algerian gas
exports to the United States, he
emphasises.
In fact, explains Mr Khelil, these stake
holdings may be assimilated to a payment
of entry rights which give to the
participating hydrocarbons' companies
the right to benefit from preferential
treatment in terms of introducing their
LNG in the stations. Explaining the
recent declaration of the American
President, George W. Bush, who had
called for the development of gas stations,
Mr Khelil considered that the
insufficient number of these stations
effectively constitutes, for the United
States, a bottleneck restricting the
LNG imports. Consequently, any measure
taken by the American government
to accelerate the opening of new
stations is favourable not only for the
LNG producing-exporting countries
but, also, for the United States where
the price of LNG is the highest in the
world due to the lack of stations,
explained the Minister.
During his trip to Washington, Mr
Khelil also met the Secretary of Energy,
Mr Spencer Abraham, with whom he
particularly discussed the oil and LNG
market as well as the activities of the
American oil companies in Algeria.
Questioned on the appointment of
Samuel Bodman to the position of
Secretary of Energy as a replacement
for Mr Spencer Abraham, Mr Khelil
indicated that Mr Bodman “has perfect
knowledge of the problems posed in the
energy sector”. For him, “Mr Bodman
is a competent man with whom we are
going to have very good relations”.
Before going to Washington, Mr Khelil
made a visit to Trinidad and Tobago,
where, with his counterpart in this
country, a memorandum to develop the
LNG activities, particularly in terms of
transportation and selling, and to
undertake common activities in the
domains of oil production and exploration.
Located in the Caribbean archipelago,
Trinidad and Tobago, which
exports its gas to the United States and
Europe in particular, will organised on
1 and 2 March next year, a forum for
gas producing and exporting countries.
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november 2005

PARTNERSHIP
American MEPI Initiative
Algeria benefits from
a new programme
The Department of State retained Algeria among five beneficiary
countries of another programme of the Middle East
Partnership Initiative (MEPI), announced the spokesman for
the Department of State, Mr Richard Boucher.
This new programme concerns the granting of financial
contributions of a total amount of 2.5 million dollars which
will be particularly allocated to the financing of the programmes
which "will enable the capacities and professional qualifications
of the candidates (from the countries concerned)
contributing in the reforms, to be reinforced", according to
the Department of State.
A large part of these new measures concern training programme
for women from the five countries.
Hence, Algeria and Tunisia will benefit from a similar programme
which will relate to “developing the capacities of
Algerian and Tunisian women in terms of business management
in order to reinforce their economic opportunities and
their ability to play a larger role in their respective countries”,
specifies the Department of State.
It should be remembered that Algeria, last January, was retained
to benefit from a development programme for using the
internet, entitled “Global Internet Policy Initiative” (GIPI)
for a duration of one year. The GIPI is a joint programme
between Internews (based in California) and the American
Centre for democracy and technology.
In the year 2004, Algeria was also among six beneficiary
countries of a financing programme which the United States
initiated in the educational (primary and secondary schools)
and academic domains, including the refresher training, as
well as specific programmes to promote women.
The MEPI programme was launched by President George W.
Bush to support the political, economic and educational
reforms as well as the emancipation of women in the Middle
East and North Africa region.
Algeria-Canada
New gas discovery
in Berkine
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96
Sonatrach and the company First
Calgary Petroleum Ltd announce the
discovery of a condensate gas discovery
in the Berkine basin, in the Ledjmet
perimeter, block 405h, further to the
drilling of the South Ledjmet wells
(LES-2). The tests carried out on the
LES-2 wells in the TAG reservoir have
given the following results :
• TAG-1 Lower Reservoir : 8,378 m/h
(7.1 mmef/d) of gas 13 38 m3/h
(2 090 bpd) of condensate, with head
pressure of 2 944 psi.
• TAG.1 Upper Reservoir: of 28/64 6
726 m 3 /h (5.7mmef/d) of gas and
9.12 m 3 /h (of gas and 9.12 m 3 /(1 377
bpd) of condensate with head pressure
of 2 422 psi.
• TAG-M Reservoir: 5,428 m 3 /h (4.6
mme/d) of gas 7.38 m 3 /h (1,115 bpd)
november 2005
of condensate, with head pressure of
1,516 psi.
Other delineation drilling works are
planned on these fields to assess the
condensate gas reserves. This discovery
is the fifth made by the association
Sonatrach-First Calgary Ltd in block
405b.
Talisman plans
an investment
of 55 billion American
dollars in 2005
The Canadian company Talisman
Energy plans to invest 55 million
dollars in Algeria in 2005 for the
exploration and the development,
compared to 15 million dollars in
2004 and 34 million American dollars
in 2003, indicates Pétrole et
Gaz Arabes in its latest edition.
According to the same source, the
production in Algeria of Talisman
last year was equivalent to what
the Canadian firm made in Sudan
in 2003, i.e. 13,039b/d - a country
which Talisman left after numerous
criticisms in North America on its
presence and its relations with the
governmental forces.

PARTNERSHIP
Algeria’s membership to OLADE
Cooperation programme
with the Latin American Energy
Organisation for 2005
In its 35th ordinary meeting held on 29 October 2004 on
Margarita Island (Venezuela), the Council of Ministers of Olade
adopted a resolution concerning an energy cooperation programme
for the year 2005.
This resolution (XXXV/D/428) plans
the implementation of a cooperation
programme with Algeria for the year
2005, based on the following :
1. cooperation in the domain of energy
regulation systems (experience in putting
in place regulation agencies, pricing
systems, etc.);
2. searching for partnership and investment
opportunities in the energy projects
and identifying sources of financing;
3. putting in place training programmes,
participation in training courses, seminars
and other events organised within
the framework of Olade’s activities.
The action plan used for the 2005 period
is based around the following axes :
• regulatory and institutional framework;
• training;
• exchange of experts;
• searching for partnership and investment
activities.
This cooperation programme for 2005
is not exhaustive. Other actions may be
integrated into this preliminary programme
when it matures. The implementation
of the actions used will be
financed from Olade’s voluntary
contributions fund to which Algeria
contributes annually. This contribution
is exclusively designed for the financing
of training and technical cooperation
activities.
Additional actions have been retained
for the year 2006 :
• Organisation of a seminar on the
organisation system of the energy sector
in Algeria and Latin America.
The participants will have to analyse
the organisation of their energy sector,
in general, and of the Ministry, in particular.
This analysis will be done by the
description of the responsibilities and
tasks of the personnel, of the structures
and of the departments, the identification
of the challenges to which they
have to face up, the design of a guideline
or recommendations with a view to
developing the good practices for optimal
operating of the sector.
• Participation in the Venezuela trade
fair on the activities of energy companies
in 2006;
• Organisation of visits by a delegation
representing the sector to the
Ministries of Energy of the Latin
American countries in order to identify
business opportunities.
Olade is a regional organisation created
by the Lima agreement in 1973.
Its mission is to provide technical support
to the member countries for energy
development and integration.
The meeting of the Ministers of the
Latin American Energy Organisation
(Olade), in its 31st session which was
held on 14 and 15 October 2000 in
Paraguay, ratified the decision
XXXI/D/382 which established the
status of participating country. This
decision gives the possibility to States,
located outside the geographic sphere
concerned, of participating in the activities
of Olade, concluding with this
organisation a participating country
agreement.
The signatory countries of this agreement
to participate in the works of
Olade may benefit from the know-how,
share the experiences and gain from the
training and technological development
programmes of the energy sector.
Energie & Mines
97
november 2005

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Algeria-France
Mr Chakib Khelil presents the market
outlooks to the students of the EPM
The Minister of Energy and Mines, Mr Chakib Khelil, felt at the Ecole
française du pétrole et des moteurs (EPM), located in the Parisian region,
that oil “will continue to play a major role in the satisfaction of energy
demand in the long term”.
In a speech given at the EPM, on the
occasion of its sponsorship of the class of
2005 of this specialised school, Mr Khelil
showed a table of the world oil situation.
“All the forecasts agree to focus the issue
of energy on three essential concerns”,
namely “the accessibility to energy of the
developing countries, the protection of
the environment and energy availability
and supply”, he specified. Mr Khelil
emphasised the fact of the lack of access
energy requirements apart from fossil
fuels”, he continued. He specified that
“the world primary energy production
still includes 80% of fossil energy”, 58%
of which for the liquid and gaseous
hydrocarbons and 22% for coal.
The large energy projects
The availability of primary energy, which
must not be confused with the problem of
supply, is ensured for several decades to
increase in the world's oil demand.
The global investments “have significantly
declined” compared to the peak of 170
billion dollars reached in 1981. The
second destabilising structural factor is
"the sudden growth of global demand for
the year 2004, which took the majority of
analysts by surprise", he added. China’s
new requirements have “played a determining
role” in this. “The maximum use
of OPEC’s production capacities has
Chakib Khelil sponsors
in Paris the class of 2005
The Minister of Energy and Mines, Mr
Chakib Khelil, confirmed, in Paris, that the
Algerian-French relations in terms of the
energy industry were “excellent and are to be
developed”. Mr Khelil emphasised the excellence
of this bilateral cooperation in a statement
to the APS made at the end of his meeting
with the French Minister of the
Economy, Finance and Industry, Mr Hervé
Gaymard. The meeting between the two
men enabled them to take stock of the bilateral
cooperation in terms of the energy
industry.
The meeting also covered the "next visit to
Algeria of Mr Gaymard, indicated at his side
the French Minister. Before this meeting,
Mr Khelil had met the French Minister delegated
to Industry, Mr Patrick Devedgian,
with whom he dealt with different issues linked
to the bilateral cooperation in the same
branch. Mr Devedgian will soon come to
Algeria, he indicated.
Furthermore, the Minister of Energy and
Mines, who was accompanied by executives
to commercial energy “which affects a
great amount of developing countries,
particularly the African continent”.
Increase pollution of the plant
He also deplored the “increasing pollution
of our planet” which “arouses legitimate
ecological concerns will regard to
the preservation of the living environment
which will be given as a legacy to the future
generations”. He called for a change of
the current public policies concerning the
emissions of carbon dioxide linked to
energy and which risk "exceeding in 2030
over 60% of their current level".
"This situation is one of a collective
responsibility implying urgent corrective
measures such as recalled in the last
Earth summit in Johannesburg on sustainable
development”, he pointed out. “But
it should be noted that, in the current
state of things, there is no immediate
alternative solution to satisfy, in the reasonable
economic conditions, the world’s
Energie & Mines
98
november 2005
come", he stated, insisting on the necessity
for a “coordination of efforts of all the
operators concerned" so that this availability
is "effective".
According to him, “the problem of financing
the large energy projects” which
require “long term depreciations and
mutually beneficial partnership formulas”,
are “the top of the list of conditions
necessary for the safety of supplies”. On
this point, he felt that “in spite of the proposals
of global actions made by OPEC
and efforts which it provides to respond
to the demand and stabilise the prices for
numerous years, the oil markets are still
subject to uncertainties and to great price
volatility. To some 400 students in the
EPM auditorium, Mr Khelil explained the
distortions of the market and the price
volatility “due to economic and structural
reasons”. For the structural causes, he
reported “a delay in the development of
fields due to a long period of underinvestment
which has led to a strong
deprived the global supply of the necessary
elasticity”, added Mr Khelil as a third
structural cause of the destabilisation of
the oil markets in 2004. He recalled that
"the low level of American stock, which is
beginning to be built up again, has accentuated
the rigidity of the global oil supply".
The “imbalance of the refining capacities
of the United States compared to
the growth in the consumption of
transport fuels responding to the new
standards is a factor which has played an
important role in this situation”, he specified.
The geopolitical uncertainties
With regard to the geopolitical uncertainties,
he particularly cited the case of "tensions
which are shaking the Near-East
region" which "owns the largest part of
the world's reserves and whose exports,
currently 42% of the world’s total, will
reach 70% in 2030, according to the forecasts
of the IEA”. He further insisted on

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“the massive and pernicious action of the
speculative funds which escape, apparently
all real control” and which “provoke
and maintain the most the price volatility".
The impact of the Hedge Funds'
investments on the oil prices “varies from
8 to 10 dollars a barrel, depending on the
economic situation”, felt M Khelil, referring
to “the numerous expert calculations”.
The Minister continued on the
fact that “the oil markets are currently
suffering from the excessive importance
which the financial sphere occupies compared
to the physical transactions”. For
him, “looking for quick profits” has lead
the Hedge Funds, which operate on other
raw materials’ markets, to invest on the
oil market capital which "has been multiplied
by 2.5 in the space of 4 years" and
which have increased from "400 billion
dollars in 2000 to 1,000 billion dollars in
2003".
From this, he deduced that “investment
requirements will be necessary to develop
additional capacities and improve the
existing production potential”. The level
of investment “of only the OPEC countries
is estimated at over 10 billion dollars
a year until 2015”, he indicated.
The new challenges
In this respect, he recalled that “Algeria is
ready to welcome all investors, in the
form of direct investments or partnership,
in all branches of energy”. The Minister
brought the attention of the students of
EPM, which he sponsors, to the new
challenges to be taken up including “an
initial series of constraints” relating to
political, economic, technological and
ecological type changes, at the planet
level, and the necessity of adaptation
which they impose technically, financially
and managerially between them.
In the presence of chairman of the French
Oil Institute (IFP), Mr Olivier Appert,
and of numerous teaching experts from
EPM, the Minister evoked “a second type
of difficulties which come from the rarity
of previous benchmarks which we can
monitor in the domain of energy, in particular,
and public policies, in general, to
face up to the economic globalisation and
of the Ecole française du pétrole
et des moteurs (EPM)
from his Ministry and from Sonatrach,
yesterday sponsored the class of 2005 of
the Ecole française du pétrole et des
moteurs (EPM).
The complementary training school for
engineers attached to the French Oil
Institute (IFP), the EPM, which in 2005 is
celebrating its fiftieth anniversary, propose
a large range of training cycles leading to
a national masters of a duration of 11 to
22 months.
These training programmes are structured
around domains of activity linked to the oil
industry: exploration engines, development
and exploitation of fields, gas-petrochemistry-refining,
energies and use of
hydrocarbons, economics and management.
This school did, furthermore,
launch in 2002 a spreading policy which
consists of organising, in target countries,
degree training courses.
A spreading cooperation has just started in
Algeria, with Sonatrach, in oil economics.
“The fundamentals of the global economy
and the geopolitical uncertainties are
becoming useful alibis to attenuate or to
mask the negative role of these speculative
funds on the volatility of the oil prices".
“With a share of over 41% of the world’s
primary energy consumption currently,
oil will continue to play a major role in
satisfying the demand for energy", continued
Mr Khelil. "This perspective extends
to natural gas which already covers a
quarter of the world's energy requirements",
he added. With regard to OPEC,
the Minister insisted that the organisation
“today contributes up to 40% of the world’s
consumption”. Its market share
should inevitably increase to reach 52
million barrels/day (mbd) in 2020, i.e.
about 50% of the world's production, he
specified. “To this must be added the
research efforts, particularly in North
Africa and in West Africa which suggest
promising outlooks in these two regions”,
he felt.
The perverse effects of the
liberalisation of the energy
markets
He specified that “the first condition
implies a growth in investments in the oil
upstream, whilst mobilising the resources
necessary for the financing of the structuring
projects aimed to transport the energy
to the consuming countries. “I particularly
think of the relations of the
European Union with the gas producing
countries”, he added. As to the liberalisation
of energy sectors, “this means,
according to him, reconciling the necessary
improvement of the economic efficiency
through competition with the
requirement of the safety of supplies”.
The liberalisation of the energy markets
“has furthermore perverse effects which
would be dangerous to ignore”, emphasised
Mr Khelil. “This means that the free
competition does not discharge the States
from their prerogatives in terms of energy
safety through their regulation and agencies
and the promulgation of the facilitations
necessary for incentive remuneration
to long term investments”. The
Minister accorded interest to the investments
file. “The development of new
sources is likely to be compromised
without a consequent contribution in
terms of capital and technology from the
industrialised countries to the producing
countries within the framework of
exchanges which respect the equilibrium
of interests of the different operators”, he
said.
to the process of generalised liberalised
which affects almost all the countries of
the world.”
“This second aspect particularly affects
the emerging countries, i.e. the most vulnerable
countries, confronted with the
process of economic globalisation which
they must both preserve from the perverse
effects and draw from the opportunities
it offers.” “These different points of
reference already give an idea of the
efforts to be made to cultivate qualities as
essential as the capacity of anticipation,
the ability to adapt, the reactivity faced
with the events or the operational intelligence
in the conducting of changes”, he
advised the students.
Energie & Mines
99
november 2005

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COFACE
The economic climate in Algeria
is favourable to investors
For Coface, the French credit insurer
which evaluates for its clients
the economic health of 45 million
companies in the world,
“the Algerian market is a
completely satisfactory risk
for French companies”, declared
its chairman Mr François David
to the APS.
On the fringes of an international conference “Country Risk
2005”, the chairman of Coface specified that the positive
revision, since 3 January, of the ratings for the Algerian market
result from the fact of a “global situation and general climate
which is constantly improving”.
Coface reveals in Algeria “sustained growth” and “particularly
focuses on the fact that the financial income has enabled
the Algerian authorities to pursue a support policy to the
activity sectors other than those linked to the hydrocarbons”.
“The economic climate is good in Algeria for the solvency of
companies”, added Coface. The “good orientation” of the
Algerian economy motivated the new rating form Algeria.
The short term rating given by Coface is established using a
series of indicators, combined into seven families of risk,
each of which is the subject of an individual rating and particularly
the political stability, the vulnerability of the economic
situation, the risk of foreign currency liquidity crisis and
the payment behaviour of the companies.
According to Mr David, Algeria’s rating may “improve even
more if the growth and the choices of economic policy
consolidate”. “Today, Algeria is under positive surveillance”,
he added. “We will go further with an improvement of the
Algerian banking system”, he added.
In terms of investments, he assured that Coface “is encouraging
everything which can be done in Algeria”. “For us, the
Algerian market is a completely satisfactory risk for French
companies", he said. Furthermore, in its guide, “Country
Risk 2005”, Coface notes that “the economic and financial
environment has benefited from an extremely favourable oil
climate enabling it to fully use the production capacities”.
This has enabled it to “pursue a budgetary policy to support
the activity of the non-oil sector”, continues the guide, stating
“sustained growth rates” and “debt which continues to
reduce”.
According to Coface, this “good orientation of the Algerian
economy should be pursued in 2005, given the extension of
the gas production capacities”. This environment “still
favours the situation of the companies”, notes the credit
insurance company which also reveals that, in terms of
conditions of access to the Algerian market, “the Algerian
regulations do not have any particular discrimination between
the national investments and the foreign investments”.
“The customs and tax advantages intended to encourage
investment are in fact the same for the nationals and the
foreigners”, emphasises Coface, concluding that “as a general
rule, product investment is welcome” in Algeria.
France - Algeria's
number one supplier
in 2004
France was Algeria’s number one supplier in 2004 by
representing 22.67 % of Algerian imports, for a total
amount of 4.12 billion American dollars.
Italy comes in second place with 1.55 billion
American dollars (8.53 %), followed by Germany
with 1.25 billion American dollars (6.90 %), the USA
with 1.11 billion American dollars (6.158 %), China
with 913 million American dollars (5.02 %), Spain
with 883 million American dollars (4.85%) and Japan
with 664 million American dollars (3.65 %). The rest
of Algeria’s imports come from Turkey with
602 million American dollars (3.31 %), Argentina
with 590 million American dollars (3.24 %), Belgium
with 495 million American dollars (2.72 %), Ukraine
with 442 million American dollars (2.43 %) and
Great Britain with 431 million American dollars
(2.37 %).
Energie & Mines
100
november 2005

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Algeria-France
120 French bosses meet Algerian
directors
The Algerian market :
bearer of large investment
and partnership
opportunities.
Discussions on the possibilities of partnership
between Algerian and French
economic operators were started upon
the initiative of the Heads of
Companies Forum (FCE) and the
French companies movement (Medef).
The French delegation, with 120 directors,
arrived on Monday night in
Algiers, led by the chairman of the
Algeria Committee of the international
branch of Medef, Mr Yves Thibault de
Silguy, to “secure business relations
and identify potential partners”, according
to Medef.
The theme “Algeria in 2005: projects
and partnerships for French companies”
was used for this new version of
this type of business meetings for the
third time by the two parties. The
French businessmen present at the
meeting, which is being held at the
hotel Sofitel, particularly represent the
banking and financial sectors, legal and
accountancy firms, building, public
works and construction, water and
environment, energy and mines' sectors,
services to companies, industrial
and engineering companies, transportation,
high-tech and NITC, aeronautics
and defence, tourism, food processing,
insurance and health sectors.
Evaluating the Algerian market, identifying
Algeria's large project and investment
opportunities, making known the
advantages and securing new business
for the French companies are the main
objectives of this delegation. These
companies, which are considered by
Medef as “the pioneers of a return in
force of the French companies in
Algeria” have also come with "the
objective of establishing contacts with
the Algerian decision makers”, according
to Medef. A total of 180 companies
have presence in Algeria, remember.
The Medef network federates over
700,000 companies which employ over
15 million people.
This is the number one network of
entrepreneurs in France with 85 professional
federations which group together
the companies from the same business
sector and 155 territorial representations
which group together the
companies at the local level.
Mr De Silguy
“The confidence of French
businessmen is established
with Algeria”
The French direct investments in Algeria are set to
increase “thanks to the confidence with is established”
(Algeria), confirmed in Algiers Mr Yves-Thibault de
Silguy, in statements to the APS.
Recognising that the French investments in Algeria “are
still low”, Mr de Silguy, also a manager at the company
Suez, felt that “what is most important at the moment
is the quality of the relations with Algeria”.
“Thanks to the confidence which is establishment with
this partnership, the French direct investments will
increase in power like a suction pump”, he said on the
fringes of a business meeting on the partnership possibilities
between the Algerian economic operators and
their Medef homologues, organised upon the initiative
of the Algerian Forum of directors (FCE).
For Mr Silguy, the reinforcement of the partnership
with the Algerian companies are becoming a “necessity”
since Algeria is currently positioned, he feels, as a “privileged
partner” of these companies.
“This strong presence of the Medef businessmen rightly
attests to this growing interest”, he upheld. Mr de
Silguy is leading a delegation of 120 businessmen representing
different sectors of activities such as banking
and finance, energy and mines, the public works, high
technology, aeronautics or even defence.
Energie & Mines
101
november 2005

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Hubert Colin de Verdière, French ambassador
“Decentralising Medef’s missions to
encourage the French investments in Algeria”
With 400 million dollars injected in
different sectors between 1998 and
2004, France would be the number
three foreign investor in Algeria. The
total volume of exchanges between the
two countries itself reached in 2004 7
billion euros. France, for different reasons
linked to history, its geographic
proximity, but also to the nature of its
equipment, as exported over 4 billion
euros last year in goods and services.
This data was provided yesterday, in
Oran, to the Oran Chamber of
Commerce and Industry on the occasion
of the visit made by the French
ambassador to Algeria, Mr Hubert
Colin de Verdière, for which this is not
the first meeting with the operators of
the West in “this economic lung of
Algeria”. Apart from the political
contingencies and achievements on the
field, of options expressed at the
highest summit of the State of the two
countries which economic missions
punctuate on the field, it should be
noted that there is a certain progress in
the trade between the two countries. In
fact, only considering the past year
compared to 2003, the exports from
the Hexagon to our country have
increased by 14%. A considerable volume
if you take account of the “ruthless”
competitive environment in which
international trade takes place.
But France has a great advance on its
competitors in Algeria with a sort of
Trojan horse (without any pejorative
historical insinuation) with an instrument
of choice, Medef which, according
to the statement made by the
ambassador himself yesterday in Oran,
will see its missions decentralised, in
order “to encourage the French investments
throughout the Algerian territory”.
Remember that the French ambassador
was also the host of the Mayor or
Oran. An opportunity which reminds
us that Oran is associated in a twin
town project with several French
towns, after those already made with
Bordeaux and Lyon. Note, finally, that
Mr Hubert Colin de Verdière announced
the start up of the works of the new
French consulate headquarters in Oran
before the summer of 2005.
BNP Paribas has doubled
its turnover in Algeria
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102
The Chairman & CEO of the French
bank BNP Paris, Mr Jacques Desponts,
confided to the APS that its branch in
Algeria, opened in 2002, has “doubled”
its turnover, but refused to disclose the
amount. “BNP Paribas-Algeria has far
exceeded our initial forecasts” added this
financier, on the fringes of the works of
the 3rd Algerian-French meeting of
directors, Mr Desponts, who described
the Algerian market as "extremely positive"
announced that his group was going
to attempt to increase the number of its
branches in Algeria from 5 currently to
30 by the end of the year. “Every month,
we are recruiting about twenty Algerians
to respond to an increasing demand for
services", he further confirmed. Asked to
give his impressions on today's meeting,
Mr Desponts was keen to highlight "the
change in attitude" which has taken place
in French entrepreneurs in a more compatible
sense with their desire to reinforce
their presence in Algeria and to do
good business there. “BNP Paribas has
november 2005
participated in three Algerian-French
meetings of directors, and this is the first
time that we note that the French companies
now have a more positive view of the
general situation in Algeria both at the
political and the economic level". There
would hence be “better data” in Algeria
which Mr Desponts attributes to “the reelection
of President Abdelaziz
Bouteflika, but also to the strong political
desire of both countries to go onwards
and upwards”. For Mr Desponts,
“Presidents Chirac and Bouteflika want
to give body to the North-South dialogue,
particularly with the soon-to-be
signature of the Franco-Algerian friendship
treaty”. With the signature of this
treaty, the Algerian-French relations will
be completely “exceptional and incomparable
with the other countries, with the
exception of Germany”, concluded the
Chairman & CEO of this group, the
number one in the euro zone.
Almost 200 French
companies currently
operate in Algeria
Constituting the most powerful
employers’ organisation in France,
if not the only one, Medef federates
some 70,000 companies employing
over 15 million people.

300 entrepreneurs at the meeting
of the 4 th
France-Maghreb Convention in Paris
Chakib Khelil :
“Algeria’s economic policy
is an irreversible choice”
PARTNERSHIP
■ Three key words: transparency, openness, competition and efficiency
■ 2005 undisputedly represents a decisive turning point for the
Algeria-French relations in favour of the friendship treaty.
Some 300 Maghreb and French entrepreneurs are participating at
the 4 th France-Maghreb convention which opened on for two days in Paris.
The Minister of Energy and Mines, Mr
Chakib Khelil, presented the perspectives
for 2005 of the economy of the
country which “has initiated with
determination a process of overall
reforms dictated by the necessary to
adapt to the requirements of the globalisation
process and to the profound
changes which affect the international
relations in their largest sense”.
The 2005 meeting of this annual
forum, organised at the Palais des
Congrès in Paris by the consulting
company Management Ressources
Humaines (MRH), focuses its works,
through 13 conferences, around the
stakes of Euro-Maghreb partnership,
increasing the value of French-
Maghreb human resources, “targeting
7 performing economic sectors in the
France-Maghreb area”, and creating
new partnership networks, “particularly
with the Franco-Maghreb communities.
Speeches on the “management” experiences
of companies, particularly
Algerian ones, were the focus of
Thursday morning. The mobile telephone
operator Djezzy presented its
activity in Algeria. The theme "Algeria
Post Office: a smooth operation" was
supported by its managing director
Mrs Houardia Ghania, who on
Thursday, on the occasion of this
forum, received the France-Maghreb
award. “Telecoms and call centres, the
Franco-Maghreb alliance”, “The financial
investments and financing of
SME”, and “France-Maghreb job markets:
employment methods", will be the
other themes of conferences scheduled
for this first day of the Franco-
Maghreb forum. The 2005 outlooks for
the economies of other Maghreb countries
are also on the programme of the
conferences. The director of the
European Investment Bank in Paris, the
secretary general of the World
Federation of SME, representatives of
the Employers’ Federations of
Maghreb, and numerous entrepreneurs
from both sides are participating in this
4th France-Maghreb Convention which
started yesterday with the themes "The
six stages of creating a centre of
contacts", "Agenda 2005 in Maghreb:
opportunities and partners”, “France-
Maghreb social protection and expatriation,
what's new", "Making changes
and training in companies", and
"Cultural diversity in French companies”.
On the fringes of the conferences,
7 exhibition areas concerning different
micro-economic activities and
the human resources are scheduled.
“The France-Maghreb Convention wishes
to be the means of better identifying
and benefiting from the new creating
synergies of large markets which
are significantly increasing”, notes its
organiser, the consulting company
Management Ressources Humaines.
The Minister of Energy and Mines, Mr
Chakib Khelil, reconfirmed on
Thursday in Paris that “the participation
of foreign capital in the development
Algeria is an irreversible choice”.
Mr Khelil, who presented the outlooks
for 2005 of the Algerian economy to
the 4th France-Maghreb Convention,
explained that this choice of economic
policy "will be continued with perseverance
to support the economic growth
and reabsorb the unemployment and
poverty".
In the light of profound changes in the
global economy, with as “key words:
transparency, openness, competition
and efficiency”, the Minister recalled
that “Algeria has started with determination
a process of global reforms dictated
by the necessity to adapt to the
requirements of the globalisation process
and to the profound changes
which affect the international relations
in their largest sense”. These reforms,
“stimulated" by the association agreement
with the European Union (EU),
the soon-to-be membership of Algeria
to the WTO, and the participation of
the country in various other regional
free trade areas, “constitute a major
priority of the government which will
continue to act in several complemen-
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103
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november 2005

☞
Energie & Mines
104
november 2005
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tary directions”, continued Mr Khelil,
evoking the reinforcement of the
"transparency" and the "visibility" in the
process of development, improvement
of the general investment environment,
the modernisation of the financial system
and the consolidation of "the
improvement of the economic role of
the State”. “The participation of
foreign capital in the development of
Algeria is an irreversible choice”, he
emphasised, linking the tangible progress
accomplished in the institutional
and economic spheres to “the behaviour
of the foreign investors encouraged
by the increasingly favourable business
climate in Algeria”. He cited the
IMF, the World Bank and the OECD
whose “analyses prove new realities in
Algeria”, and referred to “several rating
agencies in insurance and foreign trade
(which) have rectified favourably
“Algeria’s country risk by increase it
from level 4 to level 3” on a scale of 7
levels. In this dynamic of reforms
“towards a regulated market economy
(…) so that the private sector is the driving
force of growth”, the State will
obvious maintain all its prerogatives to
ensure the protection of the public interest
and to ensure its functions of
encouraging investment”, added the
Minister. Mr Khelil noted that “there is
no spontaneous generation in economics”,
and emphasised the fact that
“transition phases are always necessary
to go from one situation to another”.
He explained that the objective of the
global reforms “will obviously require a
lot of effort, particularly for a country
dependent on oil”. This transition period
“offers a window of exceptional
opportunities to all those who, in one
way or another, whether private or
institutional, want to be present
amongst us in Algeria in this vase
movement of national recovery", he
ensured the some 300 French and
Maghreb entrepreneurs at the 4th
France-Maghreb Convention.
With regard to the privatisation process,
for which "the years 2005 and
2006 will be capital", the Minister of
Energy and Mines indicated that it
affects "a total of 900 public companies”.
The market value of this privatisation
offering, at the end of 2004, “is estimated
at almost 800 billion dinars”. Mr
Khelil did however specify that this privatisation
offering does not concern "a
limited number of companies considered
as strategic, namely, Sonatrach,
Sonelgaz, the SNFT and the press and
communications Group".
“Since the launch of this operation,
over 600 shows of interest have been
counted in favour of over 300 public
companies to be privatised", indicated
Mr Khelil. He added that "almost half
of these shows of interest have been
expressed by Algerian investors, 37%
by foreign investors and 14% by salaried
workers”.
The Minister felt that these figures
"give a reassuring overview of the business
climate in Algeria", where, he indicated,
the French companies
Movement (Medef, employers’ organisation)
“will lead a delegation of directors
in the first two weeks of the month
of February”. “I hope that these new
meetings will offer the opportunity of
making the direct and partnership
investment flows coming from France
to Algeria more dynamic, so that they
will finally reach the expectation of our
two governments”, continued the
Minister. Mr Chakib Khelil had previously
emphasised that the year 2005
"undisputedly represents a decisive turning
point for the Algerian-French relations
in favour of the friendship treaty
which our two governments are ready
to conclude and whose major objective
concerns the reworking of our two
partnership relations in the framework
of a strategic total and sustainable
cooperation".
“This initiative goes in the sense of
establishing an exceptional partnership”,
he added, before retracing the
process of reworking French-Algerian
relations, particularly with the Algiers
Declaration (March 2003) adopted by
Presidents Abdelaziz Bouteflika and
Jacques Chirac who expressed "their
determination to put in place the
instruments necessary for the consolidation
of our relationships in all their
forms".
Exceptional partnership
and strategic partnership
This strategic partnership between
Algeria and France “furthermore represents
a determining catalyst to make
the central objective of the Barcelona
process a reality” (1995) whose “tenth
anniversary will offer us the opportunity
of considering together the ways and
means to be promoted for the relaunch
of this process in order to give it
the efficiency which it is still lacking”,
he added. The Minister of Energy and
Mines also “recalled (the) convergences
of opinions expressed, for example
within the United Nations on the war in
Iraq, on peace in the Middle East”, or
in relation to the French proposals to
Nepad (New Partnership for African
Development).
“Algeria, which is one of the initiators
of Nepad, alongside other African
countries, has not ceased reminding
the international community of the vast
investment and partnership niches
which this initiative to develop the
African continent offers”, emphasised
Mr Khelil. He cited the example of the
Nigeria-Algeria Europe gas pipeline
(Nigal), a "structuring project aimed to
be supplied (which) falls within a perspective
of sustainable development,
preservation of the environment and
energy safety of the Europe in particular".
The feasibility studies of this project
are in the final phase, he indicated.
The Minister of Energy and Mines also
recalled the Medgaz project which
“encouraged by the European
Commission” will directly link Algeria
to Spain under water. “A consortium of
7 companies, including Sonatrach for
Algeria, GDF and Total-Fina-Elf for
France, have carried out the feasibility
studies of this project” whose works
will be launched this year to be completed
in 2007, he added. “The economic
complementarities invite us to create
necessary synergies so that the respective
operators work together in the
development of joint operations, commensurate
with our resources, not only
in Algeria but in the Euro-
Mediterranean area, in Africa, the
Near-East or elsewhere”, he emphasised.
In this perspective, the Minister said
that he was convinced that “the France-
Maghreb Convention will fully occupy
the place it deserves amongst operational
works responsible for making this
expectation a reality”.

zoom
Total Group, Stock market idol, breaks the performance records
Thierry Desmarest, a happy
many, up against the sourness
of the losers
By
Salim Korsane
He manages a group which is
the star of French industry.
Ranked the world's fourth
largest oil group, Total has
enabled France to maintain its rating as a
world economic power, beyond what
could be imagined given its size.
The problem is that the large amount of
the group’s profits is causing jealousy in
France itself: “France, declares Thierry
Desmarest, the Chairman & CEO of the
group, is taking badly the level of profits
which enables its industrial champions to
maintain their ranking in the international
competition, even those these companies
are admired in the world”.
Ridiculing the performing companies and
their employees which show the economic
and industrial excellence, particularly
in exports, appears to be a “fashion” in
the eyes of Thierry Desmarest.
Now, the Total Group is becoming
suspect. Its results could only have one
origin: a favourable environment, which
would make the group sleep on a pure
economic rent. Any effort of conquest
and of development is challenged, and
those which Total is making would have
no merit.
This, finally, should lead Total to be
embarrassed about its successes whereas
there is all the same behind these results a
strategy of hard work.
“Fighting, winning and rejoicing” constitutes
all the same the fate of all those
who, like Thierry Desmarest, are keen to
conquer new frontiers.
S. K.
Energie & Mines
105
november 2005

PARTNERSHIP
Chakib Khelil in Milan
“Reinforcing the energy bridge
between the two continents”
Energie & Mines
106
november 2005
The Minister of Energy and Mines, Mr
Chakib Khelil indicated in Milan that
“we are at the crossroads between the
regionalisation and globalisation of the
natural gas markets, even though the
inter-regional trade percentage remains
low”.
Presiding over the conference on the
promotion of the Galsi gas pipeline,
which was opened in the Lombard
capital, and in which almost 150 partners
and foreign operators participated,
Mr Chakib Khelil emphasised the
importance of this project which falls
within the framework of the energy
strategy put in place by Algeria and
which responds to the changes in the
world’s energy market and the
European one in particular.
“Algeria has anticipated the future
requirements of Europe, by planning
the construction of two large gas pipelines,
directly linking it to Europe”,
emphasised the Minister, specifying
that a new development stage of the
Galsi project has been overcome with
the signature today of the natural gas
purchase and sale letters of intent with
the European partners.
The strong demand for gas will, in fact,
according to the International Energy
Agency (IEA) see a larger increase
compared to other sources of energy,
over the next three decades.
Mr Chakib Khelil reminded the participants
that, according to the IEA, by
2030, over half the international gas
trade will concern LNG compared to
30% currently. The Minister also recalled
that the long term markets, which
accompany the expansion of LNG,
often suffer from a lack of liquidity.
“The availability of LNG implies heavy
investments and long depreciation periods
which only the long term contracts
can compensate." He emphasised the
major risks of a transition, without discernment,
to a rational of short term
trade, evoking a risk of under-investment
in the infrastructure which is one
of the pillars of the security of supplying
as well as that of the volatility of
the prices which may incur pricing
shocks for the end consumer.
Mr Chakib Khelil further indicated that
the recent liberalisation of the gas sector
in Europe is, on this matter, full of
lessons to be learnt. First of all, it has
not, according to him, given rise to a
real decrease in prices for the end
consumer, the interconnection rate
remains very weak (7% compared to
30%) and there is a lack of appropriation
between the management of
transport resources and the management
of production means. He also talked
about the heterogeneity of the
regulation procedures on the European
market. “Some gas importing countries
which, traditionally, favour the security
of supply, are inclined to establish the
flexibility in principle of management
of the gas industry without any consultation
with the producers", emphasised
the Minister.
Mr Chakib Khelil recalled that the long
term contracts are an important element
of stability for the foreign suppliers
and enable the improvement of
the capacity of these suppliers to pursue
the development of large projects.
After recalling Algeria's important gas
infrastructures and the comparative
advantages procured by the proximity
of the supply sources and their reliability,
the Algerian Minister called for a
combination of efforts to reinforce the
energy bridge which Algeria is eager to
build between the two continents. “It is
now our responsibility to work together
to make this project reality, which will
reinforce the energy bridge between
Algeria and Europe and sustainably
contribute to Europe’s security of supplies”,
he concluded.
Algeria-Italy, Modernisation
of the Arzew refinery
Contract between
Naftec and Technip
A project management contract (PMC) for the
modernisation and the extension of the Arzew
refinery, of an amount of 14 million euros
approximately, was signed in Algiers between
the national refining company (Naftec) and the
Italian company Technip. The contract was
signed by the central director for development
at Naftec, Mr Djeloutt Abdelkaderm and the
executive director of the African region of
Technip's engineering centre, Mr Antonio Macri
Pellizzeri, in the presence of the Chairman and
CEO of Naftec, Mr Salah Cherouana.
The modernisation concerns the instrumentation,
as well as all the electrical systems,
whereas the extension aims to improve the
specifications of the petrol and diesel in order
to conform to the new European standards
of 2009. The contract, won by Technip on
14 February at the end of an appeal for tenders,
includes the modernisation feasibility study, the
design and basic engineering, the preparation
and the coordination of the appeal for tenders
for the engineering, the supply of equipment,
and the construction and definition of the refinery’s
extension. “The Italian company will support
us in the drawing up of briefs to launch the
appeal for tenders concerning the renovation of
the refinery and in the analysis of the technical
tenders, as it will supervise, according to the
choice of a PMC, the construction until the refinery
is handed over”, specified Mr Cherouana.
He indicated that an appeal for tenders for the
choice of a PMC intended to renovate the
Algiers refinery will be launched in the coming
weeks. An Indian company, UH, has been
selected to carry out the same operation in the
Skikda refinery.
The agreement between the two companies will
be signed in a fortnight, according to the senior
manager of Naftec who emphasised that with
the actions undertaken by the company “the
renovation has entered into its active phase”
with the particular objective of adapting the products
to the European standards by 2009, and
increasing by 20 % the production capacity
which is currently 22 million tonnes.
The other objectives which Naftec has fixed are
the certification of its refineries and training,
which must cover 80 % of its personnel.

In Milan (Italy), twelve European partners
signed letters of intent to benefit
the Algerian natural gas through the
Galsi gas pipeline which will connect
Algeria to Sardinia.
This request would exceed 10 billion
cubic metres, according to the figures
reported at the end of this ceremony
which was held on the fringes of the
Galsi promotion conference presided
over by the Minister of Energy and
Mines, Mr Chakib Khelil, in the presence,
particularly, of the Italian under-
Galsi gas pipeline project
12 partners sign letters
of intent
Secretary of State to Spain, Mr
Giovanni Dell’Elce, the governor of the
region of Sardinia, Mr Renato Soru,
and the Chairman and CEO of
Sonatrach, Mr Mohamed Meziane.
Algeria’s ambassador to Rome, Mr
Mokhtar Reguieg, as well as several
Italian managers from the energy and
environment sectors also took part in
this day for promoting the Galsi project.
The signatories of the letters of
intent are: the region of Sardinia, the
companies Edson/SPA, Enel,
PARTNERSHIP
Hera/SPA, Blugas, Eletrrogas,
Energia/SPA, GDF and Worlenergy
SA. “Very serious” and “very credible”
partners who have placed their trust in
Algeria and Sonatrach who have committed
themselves for the realisation of
this project which benefits the solicitude
of the President of the Republic, Mr
Abdelaziz Bouteflika, and the president
of the Italian Council, Mr Silvio
Berlusconi, emphasised Mr Chakib
Khelil.
The Italian Secretary of State for Energy
“The realisation of the Galsi
project is a source of pride
for Italy”
The Italian Secretary of State
for Energy, Mr Giovanni
Dell’Elce, considered that the
realisation of the Galsi project,
which will connect Algeria to
Sardinia, is a source of pride
for Italy.
In a statement to the APS on the fringes of the conference
on the promotion of the gas pipeline project, which
was held in Milan, Mr Dell’Elce considered that this
phenomenal project will enable an additional dimension
to be given to the excellent relations which bind Italy and
Algeria.
The Italian Secretary of State for Energy, who, alongside
the Minister of Energy and Mines, Mr Chakib Khelil,
presided over this conference to promote Galsi, emphasised
that “the realisation of this project will have
extraordinary consequences for a region such as
Sardinia which, in spite of its tourist benefits, is still an
economically remote country”.
Galsi will constitute a breath of fresh are for this region
which is suffering from many problems in terms of
growth and development. It will enable the problem of
size, which is the problem of unemployment from which
this region is suffering to be solved", considered the
manager of the energy sector, evoking the internal
consequences of this vast project.
In his speech, Mr Dell’Elce recalled the strong commitment
of the Italian government to accomplish this project
which will constitute a turning point in the world's
energy market. The Italian Secretary of State for Energy
recalled that this project will create a new scenario which
will force the energy companies to adapt to the opening
up of the Italian market to competition, and to offer new
opportunities to all the Mediterranean companies.
Recalling that gas is a clean energy and that the Italian
demand for it is perpetually increasing, Mr Dell’Elce
confirmed that his ministerial department is now committed
to make all Italian players aware of the importance of
this project, to remove the obstacles which are delaying its
fulfilment, to simplify the procedures and to guarantee the
return of investment of the Italian operators.
Energie & Mines
107
november 2005

PARTNERSHIP
Read in the newspaper Expansion
The Spanish government and employers' agency
include Algeria in the high potential markets
The Spanish government and the CEOE (Spanish confederation
of employer’s organisation) have included Algeria as
one of the high potential markets and are preparing a specific
plan to encourage the bilateral economic and trade relations,
reported the economic newspaper Expansion.
The daily newspaper recalls that the recent visit to Algiers of
the Spanish Minister of Industry, Jose Montilla, and the
Secretary of State for Trade, Pedro Mejilla, had the objectives
of encouraging the Medgaz gas pipeline project which
should directly connect Algeria to Spain with a view to ensuring
and diversifying Europe’s supply of energy and establishing
the bases of a new economic cooperation between the
two countries.
Through the increased presence of Spanish companies in
Spain, this will also mean rebalancing, through the investment
and export projects, the trade balance between Algiers
and Madrid. Spain currently imports almost 60% of its gas
requirements from Algeria.
With the aim of making these objectives a reality, states
Expansion, the government and the CEOE have included
Algeria on the select and restricted list of high potential markets
for the internationalisation of the Spanish company.
China, the United States, Russia, Japan, Brazil, Mexico,
India and Morocco are also on this list.
The Secretary of State for Trade is planning to draw up a
specific plan which comprises incentive measures for
Spanish companies to set up in Algeria and whose main
points will be shortly made public.
Expansion finally notes that the economic rehabilitation programme
in Algeria in the infrastructures, public transport,
services and housing sectors offer large opportunities to the
Spanish companies.
Algeria-Singapore
A representative office of Sonatrach
Petroleum Corporation in Singapore
Sonatrach Petroleum
Corporation (SPC), a subsidiary
of Sonatrach
International Holding
Corporation, is planning to
open up, in a very near future,
a representative office in
Singapore, in the heart of the
Asian oil market, we have
learnt from the head office.
Specialised in the hydrocarbons
shopping activities, the
SPA also has the objective of
enabling the head office to
conquer new markets and to
support Sonatrach's trade
activity. The decision to open
up a representative office in Singapore
obeys the objects laid out by Sonatrach
in its international development strategy.
The choice of Singapore is not accidental
since it means sustainably setting
up in a region with very strong
economic growth whose energy requirements
are increasingly growing, indicated
Mr Chawki Rahal, managing
director of SPC. “The Asian market is
not foreign for us, since we make 11%
of our turnover there”, said Mr Rahal.
It is therefore as a perfect connoisseur
of the targeted market that SPC, already
well established on the London market,
has decided to extend its activity to
the Asian market, he wished to point
out. The opening of the representative
office in Singapore, should
open up the path for
Sonatrach to enlarge its
trade activity to the Asian
market, but above all to
ensure better reactivity.
SPC, whose creation dates
back to 1989, hence
confirms its central role in
the achievement of
Sonatrach’s international
strategy, whose ambitions
are no longer limited to the
sole activity of selling hydrocarbons
products since the
creation of Sonatrach
International Holding
Corporation in 1999. SPA, which does
not benefit from any financial support
from the head office, upon its creation
became the main purveyor of resources
to support the group.
Energie & Mines
108
november 2005

PARTNERSHIP
Algeria-Spain, Soria 21 Forum
Algeria reiterates its commitment
in favour of sustainable development
The Minister of Energy and Mines, Mr
Chakib Khelil, reiterated in his speech
addressed to the participants of the world
Soria 21 Forum, which was held in Spain,
Algeria’s commitment to promote the
protection of the environment and sustainable
development. In a speech red on his
behalf by the Chairman and CEO of
Sonatrach, Mr Mohamed Meziane, Mr
Chakib Khelil emphasised that the ecological
concern was taken into account very
early on in the energy and mines sector in
Algeria where large investments on the
equity of companies have been made.
In this context, and relating to the fight
against pollution by hydrocarbons, the
Minister of Energy cited, as an example,
the progressive elimination of flared gases
in the oil fields which constitutes an initial
contribution to the effort of reducing
greenhouse gases.
He revealed that Algeria has played a pioneering
role in the international initiative
concerning the reduction of flared gases.
These gases which were 62% in 1980
only represented 7% at the end of 2004,
thanks to an investment of 225 million
dollars made during the period 2002-
2005.
To this same effect, he noted that Algeria
was the first country to initiate carbonic
gas (CO2) recovery projects and its reinjection
into the subsoil, hence contributing
to the reduction of gas emissions into
the atmosphere.
Mr Khelil also spoke of the efforts made
in Algeria both with regard to laws and
regulations to devote its commitment in
favour of the environment. In this respect,
he cited the electricity and public gas distribution
law, promulgated in February
2002, which takes account of the protection
of the environment and plans the
integration of renewable energies in the
country’s energy mix. The permanent sun
in the South of the country will be put to
profit and several solar energy projects
will be implemented.
These projects, emphasised Mr Khelil,
will enable us to "move back the depletion
deadline of our hydrocarbons' reserves
and hence make it possible to have a larger
quantity of gas for our clients, the
European ones particularly, who currently
consume 95% of our gas exports”.
Through exporting gas, increasingly used
in electric generation and deemed to have
no damage for the environment, “Algeria
is contributing outside its borders to the
world effort to reduce greenhouse gases
and attenuate pollution in our partners’
countries whilst ensure the security of
supplies”, said Mr Khelil.
With regard to sustainable development,
Mr Khelil evoked three structuring projects
of a geostrategic size, which are
being drawn up. First of all, the construction
of two new gas pipelines with direct
connection between Spain and Italy in
addition to the two already existing gas
pipelines.
This concerns the Medgaz underwater
gas pipeline which will be accompanied
by a cable for the exporting of electricity
with a capacity of 2000MW. “The works
of this new gas pipeline, which show the
quality of Algerian-Spanish relations, will
start this year. Its completion is planned
for the end of 2007” indicated the
Minister of Energy, adding that letters of
intent made by Spanish, French and
British clients to purchase natural gas
already represent 8 billion cubic metres/year.
The second project concerns the construction
of a new gas pipeline, connecting
Algeria to Sardinia to serve the north
Italian market.
Mr Khelil emphasised the constructive
spirit with which Algeria is getting down
to the job of its integration in the Euro-
Mediterranean process of Barcelona,
whose 10th anniversary will be celebrated
this year. “As testify, he said, its accomplishments
and its energy projects (gas
and electricity) designed to supply the
European Union countries and the number
of agreements concluded with its
European partners, particularly with
Spain”. “In return, our company expects
more direct investments (capital, technology
and know-how) from European
companies and a more honest opening up
of the European market to our energy
products”, he continued.
The third strategic project is the construction
of a Trans-Saharan gas pipeline
of a length of 4,400km and a capacity of
25 billion cubic metres/year. This gas
pipeline (Nigal), which will connect
Nigeria’s gas fields to the Algerian coast
by connecting up to the Algerian network,
will, explained Mr Khelil, enable Nigeria’s
gas production to flow onto the European
markets. “This project falls in line with
the spirit of Nepad’s structuring projects
aiming to bring the African continent our
of its current situation”, he specified,
underlining that this project will be a
“major project” in the fight against deforestation
in Africa, thanks to the substitution
of gas to the heating woods with the
populations of the countries crossed by
the gas pipeline.
The Soria 21 Forum is held this year (31
January - 1 February) under the theme
"Energy, climate changes and sustainable
development".
Energie & Mines
109
november 2005

PARTNERSHIP
The Spanish Minister of Foreign Affairs
“United and soldered strategic
relations”
Energie & Mines
110
The Spanish Minister of
Foreign Affairs “United and
soldered strategic relations”
The Spanish Minister of
Foreign Affairs, Mr Miguel
Moratinos, confirmed that
Algeria and Spain “are bound
by united and soldered strategic
relations”.
In a statement coming out of the
audience which the President of the
Republic, Mr Abdelaziz Bouteflika
accorded him, the head of Spanish
diplomacy confirmed that "in the last
eight months (NDLR: since the coming
to power of Luis Zapatero’s government),
the bilateral relations, the
contacts and the relationships are developing
very intensely, whether in the
economic, commercial, energy or cultural
domain.
Mr Moratino also assured that his
country would make this alliance between
Algeria and Spain “a fundamental
element of stability, peace and prosperity
for the future in the Western
Mediterranean”. We also have “this
commitment to Europe. Algeria must
be a favoured partner which must
benefit from all the progress which has
been made within the framework of the
good neighbour policy of the EU”. The
head of Spanish diplomacy also said
that he had talked with the Head of
State about “the new proposal of the
President of the Spanish government,
concerning the civilisation alliance for
which Algeria has always shown a great
deal of interest at a time when the West
and the Arabic-Muslim world need to
establish dialogue, contacts and have
mutual understanding”.
“Desire of the two countries
to build a structured
relationship”
The Spanish Minister of Foreign
Affairs, Mr Miguel Angel Moratinos,
yesterday emphasised the joint
november 2005
Spanish prime minister,
José-Luis Zapatero
Algerian-Spanish wish to “build together
a structured, strategic and fundamental
relationship”.
In an interview given the Channel III of
the national radio, Mr Moratinos
declared that “the relations are exceptional,
extraordinary and excellent and
that we must continue on this desire
with a view to building together a
structured, strategic and fundamental
relationship”.
“The year 2005 is looking very positive
with a lot of hopes”, added the head of
Spanish diplomacy, recalling his previous
visit to Algeria. Asked about the
Algerian-Spanish economic cooperation,
Mr Moratinos indicated that “the
year 2005 is a priority in the national
energy plan”. He furthermore announced
the visit, on 11 January, of the
Spanish Minister of Industry, Tourism
and Trade, to Algeria. With regard to
Spanish investments in Algeria, Mr
Moratinos confirmed that “they are
continuing to do better and better”. “I
think that this is a very important year”,
he said, noting that “at the end of 2004
a Spanish oil company, Repsol, succeeding
in having a very important exploration
zone”. Mr Moratinos also indicated
that his country “would like to
revitalised Spanish investment which
affects all fields of cooperation for
Algeria and Spain”. In terms of
Algerian-Spanish cooperation in fighting
terrorism, Mr Moratinos said that
"it is very good", expressing the availability
of his country to collaborate in
this domain. “Spain is also a country
which has unfortunately suffered, like
Algeria, from the scourge of terrorism
and we must work hand in hand”,
emphasised Mr Moratinos, recalling
that at the time of his first visit to
Algiers, he had already spoke about
with the Minister of State, Minister of
Foreign Affairs, Mr Abdelaziz
Belkhadem, the possibility of creating a
bilateral commission with the aim of
exchanging information. In this
context, Mr Moratinos felt that "the
only thing to be done, is to reinforce
and work in international centres, whether
in the United Nations, the
Mediterranean Forum or within the
framework of the Barcelona process".
To a question on the conflict of
Western Sahara, Mr Moratinos emphasised
that “Spain and Algeria have the
capacity of influence to help both parties
to the conflict, Morocco and the
Polisario Frton, to make progress
towards settling the conflict, in accordance
with international legality.

PARTNERSHIP
Gassi Touil-Rhourde Ennous gas project
Repsol wins the contract
The contract for carrying out an integrated
gas project at Gassi Touil-
Rhourde-Ennous (located 100km
south of Hassi Messaoud) and whose
investment cost is estimated between
3 and 3.5 billion dollars, was signed in
Algiers between Sonatrach and the
Spanish group Repsol Natural Gas.
The contract was signed by the
Chairman and CEO of Sonatrach,
Mr Mohamed Meziane, and the
Chairmen and CEO of Natural Gas,
Mr Salvador Gabarao, and of Repsol,
Mr Antoine Brufau, in the presence of
the Minister of Energy and Mines,
Mr Chakib Khelil and the Spanish
ambassador. This project, which covers
the exploration, development, liquefaction
and selling activities, concerns the
drilling of 52 development wells, the
recovery of 16 existing wells and the
building of surface facilities for treating
(extraction of condensate and LPG) 22
million cubic metres per day of crude
gas. It also concerns the construction
of new capacities for the transportation
of 6.5 billion cubic metres a year of gas
and the construction of a new liquefaction
factory with a capacity of 4 million
tonnes a year. This production sharingtype
contract has a duration of 30 years
with a development period of 54
months.
The project must be realised in 48
months and the start of production is
planned for September 2009. Mr
Meziane, in his speech, congratulated
this “mega” project which plans a very
important cooperation programme.
This programme includes exploration,
development works, the construction
of treatment facilities as well as the
construction of a factory in Arzew and
the construction of the gas pipeline.
For him, the project gives “a new
dimension to our partnership” since it
brings it to very high levels of investment
and diversifies it by integrating
several strategic segments of the gas
chain. “The quality of the cooperation
relations which have bound our companies
for a long time, as well as the
expertise which we will share are an
additional gauge of the success of our
new association", said Mr Meziane who
added that the extent of the investments
and the works which is planned
will create "an economic and social
dynamic which will obviously profit the
regions of the South but also other
regions of the country which it will
cross”.
The Chairman and CEO of Repsol, for
his part, emphasised that “it is an hour
to carry out this project which was
enormously held in the study of this
project”, expressing his company’s
desire to pick up with Sonatrach the
challenge of managing a project of this
dimension.
As for Mr Salvador, he expressed his
“satisfaction as to this important project
in which Natural Gas is involved
for the first time in this type of project”.
The Spanish ambassador, for his part,
revealed the importance of this project
which, “in addition to its economic
character, conceals an undeniable political
character as it establishes a real
partnership”.
Mr Chakib Khelil, for his part, insisted
on the importance of “this project
which will reinforce the relations between
Algeria and Spain”.
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november 2005

PARTNERSHIP
Algeria-Portugal
Official visit of the Portuguese Prime
Minister to Algeria
The President of the Republic, Mr
Abdelaziz Bouteflika, had a head-tohead
meeting with the Portuguese
Prime Minister, Mr Pedro Santana
Lopes. These meetings were then
extended to the members of the delegations
of both countries.
Algeria and Portugal signed a treaty of
friendship, cooperation and good
neighbours, in favour of the official
visit which the Portuguese Prime
Minister is currently making to Algiers.
The document was signed by the
President of the Republic,
Mr Abdelaziz Bouteflika, and the
Portuguese Prime Minister, in the presence
of the Head of the Government,
Mr Ahmed Ouyahia, and the Minister
of State, Minister of Foreign Affairs,
Mr Abdelaziz Belkadem, and his
Portuguese counterpart, Mr Antonia
Monteiro. The treaty particularly plans
an annual summit between the Algerian
and Portuguese Heads of State and
high level consultations between the
Ministers of Foreign Affairs of both
countries. The document furthermore
outlines a framework of total cooperation
in the economic, political, military,
cultural and scientific domains. Last
September, both countries had signed a
agreement on the promotion and reciprocal
protection of investments at the
time of Mr Ouyahia's visit to Lisbon.
Algeria had already signed a treatment
of friendship, cooperation and good
neighbours with Spanish and Italy.
Portuguese businessmen in Algiers
“Determined to make up
for lost time”
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112
The Ministry of Fishing and Halieutic
Resources, Mr Smaïl Mimoun, in
Algiers called for Portuguese businessmen
to invest in the fishing sector, particularly
shipbuilding, the manufacturing
industry, the canning and aquaculture
industries.
When the seminar of Algerian and
Portuguese businessman opened in
Algiers, the Minister indicated that this
meeting falls within the framework of
the study of opportunities for partnership
between Algeria and foreign companies.
He added that his sector offers
large investment opportunities, particularly
in the domains of shipbuilding,
the manufacturing industry and the
canning and aquaculture industries.
He specified that Portugal has a great
deal of experience in this field, calling
upon Portuguese businessmen to invest
in this sector to ensure its rehabilitation
and to make it a competitive sector,
november 2005
given that Algeria is keen to conclude
an association agreement with the
European Union (EU) and is preparing
for its membership to the WTO.
The Minister further specified that the
fishing sector, which has seen the
accomplishment of 565 investment
projects for an amount of 23.6 billion
dinars (315 million dollars) for the period
from 2001 to 2004, needs large
investments for the coming years.
Mr Mimoun indicated that this two day
meeting will be sanctioned by the
signature of the memorandum of
understanding and agreements relating
to shipbuilding, the manufacturing
industry and aquaculture.
The Portuguese ambassador to Algiers,
for his part, specified that this meeting
is capable of rebuilding the cooperation
between Algeria and Portugal, adding
that “we are determined to make up for
lost time, to profit from the investment
opportunities offered by the Algerian
economic sector”. After emphasising
that Algeria is Portugal’s 25 th economic
partner, the Portuguese ambassador
called for promoting this position
more, opening up a direct air route between
Lisbon and Algeria and studying
the possibility of transferring portuguese
companies to Algeria.
The works of the seminar continued in
closed working sessions. Today, the
participants will visit the port of Algiers
and to the Public shipbuilding company
located in Bousmaïl (Tipaza). This
meeting was organised by the Arabic-
Portuguese Chamber of Commerce and
Industry and the Algerian Chamber for
fishing and aquaculture coming under
the Ministry of Fishing.

PARTNERSHIP
Algeria-Great Britain
The businessmen’s council is born
The visit of the
English businessmen’s
delegation to Algeria
led to the creation of
a business council,
further to the proposal
of the British party.
This council, whose head office will be
in Algiers, will have as an interface in
England the Middle East Association,
which groups together over 7,000
English companies. The creation of this
council is considered by the director of
trade relations of the MEA, Michael
Thomas, as a very important stage, estimating
that this council will get bigger.
In a press conference held yesterday at
the end of the meeting with the Algerian
businessmen, the speaker said that, for
him, “not only are Algeria’s doors open,
but even its windows are.
From now on, we will no longer say that
Algeria is France's game preserves.” It
admitted that, until now, the British
interests were concentrated on the
countries of the Gulf and the Middle
East, before confirming that “it is time
to get interested in North Africa”.
For his part, the president of the English
delegation, Lady Olga Maitland, returned
to the interview accorded by the
Head of the Government. In this meeting,
both parties talked about the possibilities
of cooperation between both
countries, particularly in the banking
sector were the British might make a
contribution of their know-how and,
why not, open up a subsidiary of one of
their banks in Algeria.
Other sectors, such as the motorways,
building, water, the environment, drugs
and education were evoked as being
domains where the British could invest.
The idea of training Algerian trainers in
English language in British universities
was welcomed. For Lady Olga Maitland,
“the Algerian market is very important
for us”. The meeting with Mr Ahmed
Ouyahia enabled both parties to talk
about bilateral cooperation in all its
forms. Hence the Head of the
Government is invited this year to run a
conference in London on the investment
opportunities in Algeria.
The meeting with the Head of the
Executive also enabled them to talk
about the security situation and bilateral
cooperation in this matter, but also the
issues linked to combating money laundering,
putting in place techniques
which guarantee the tracking of money,
and also the issues linked to the cooperation
in terms of judicial extradition.
The English delegation reiterated its
country’s thanks for the support given
by Algeria in the fight against terrorism.
Which particularly enabled it to foil an
attach of ricin gas in London and Great
Britain, which will soon take over the
presidency of the EU and will also host
the G8 summit in August, in Scotland,
intends to put all its weight into moving
its project for Africa forward.
The presence of the President of the
Republic at the G8 summit will certainly
give an additional opportunity for
warming and deepening Algerian-
British relations. The English declaration
said that is was read to give Algeria
the benefit of the experience of privatisations
in England. A painful experience
but one which was crowned with success.
It recalled the criticisms made of
Mrs Margaret Thatcher at the time this
vast programme was launched and felt
that the latter enabled Britain to create
jobs and reinforce the privatised companies,
in the same was as British Airways
and British Telecom.
The members of the delegation provided
as proof the world’s lowest unemployment
rate recorded in Great Britain
(3%). Even if they do not hide the fact
that there were failures, such as the privatisation
of the railways, for them, the
privatisation process is long and expensive,
but it is essential.
Support from Great
Britain for Algeria’s
accession to the WTO
The Minister of Energy and Mines, Mr Chakib
Khelil received Mrs Elisabeth Symons, deputy
minister at the Foreign and Commonwealth
Office and deputy head of the Majority of the
lords, indicated a statement from the Ministry
of Energy. The meetings between the two parties
dealt with the status of the bilateral cooperation,
particularly the partnership between
the national hydrocarbons company
Sonatrach and the British companies in terms
of exploration and production of hydrocarbons.
During this meeting, the two parties also
exchanged information and points of view on
the energy market. Mr Khelil took this opportunity
to present a report on the political and
economic situation in Algeria, as well as the
investment opportunities in the Algerian market,
particularly in the hydrocarbons’ and electricity
sector, conclude the statement.
Mr Nourredine Boukrouh, Minister of
Trade, also received Mrs Elisabeth Symons.
Both parties initially made a big overview of
the international situation and the issues of
mutual interest.
The meetings also dealt with the economic
and trade relations between the two countries
and the ways and means of their densification.
In this context, it emphasised the important
role which the economic operators of both
countries in reinforcing bilateral economic
and trade relations.
Furthermore, the decisions looked very soon
implementation of the association agreement
between the European Union and Algeria and
the cooperation outlooks in this framework.
Finally, the Minister gave Mrs Symons a progress
report on the accession process of our
country to the World Trade Organisation. On
this matter, Mrs Symons assured the availability
of her country to provide all the support
and assistance to Algeria for finalising this
process.
Energie & Mines
113
november 2005

PARTNERSHIP
Algeria-Germany
An office for coordinating economic
relations in Algiers
A ceremony for establishing the coordinator
of Algerian-German economic
relations took place at the hotel El
Aurassi, in the presence of the chairman
of the Forum of directors, the
German ambassador to Algeria, the
representatives of the federal Germany
Ministry of the Economy and
Employment and the Centre for international
migration and development.
On this occasion, the Algerian and
Germany businessmen recalled the
quality of the relations between the two
countries and the necessity to promote
trade flows and industrial partnership,
hence dealing with the cooperation between
Algeria and Germany inasmuch
as the respective capacities of the economies
of the two countries.
This is what Mr Omar Ramdane,
Chairman of the Forum of directors
stated, who recalled the role of the
coordinator in question to hoist the
bilateral relations, provide mutual knowledge
of the domestic and Germany
market, and the promotion of projects
in the domains of trade and investments.
It will hence support the fact that a
fruitful and beneficial long term cooperation
is inevitably passed by deeper
and more diversified relations between
the Algerian and German companies.
The chairman of the Forum of directors
did not fail to endorse his support for
the organisation which he represents to
the representative of the German businessmen
whose mission is to coordinate
the economic and trade relations.
In the same way of thinking, the
German ambassador to Algeria, Mr
Wolf Kischlat, specified that Algeria has
enormous potential which does however
remain hardly exploited due to the
ignorance of his compatriots. He
confirmed that the latter are increasingly
becoming aware of the fact of the
improvement of the security situation
and the political and economic reforms,
of the importance of the Algerian market
in the Maghreb region.
Algeria’s membership to the WTO, he
continued, and its signature of the
association agreement with the
European Union require considerable
effort and sacrifices. The Algerian-
German partnership may contribute to
the upgrading of Algerian companies.
According to him, the inauguration of
this coordination office will enable
direct contract between the businessmen
of both countries, called upon to
do proximity and prospecting work.
The German ambassador to Algeria
indicated that these compatriots are
ready to invest in Algeria, excluding
hydrocarbons. He further said that
several partnership projects have seen
the light of day further to agreements
concluded with Algerian companies,
like Snvi, Sntf and Enad.
The representative of the German
Minister of the Economy and
Employment, Mr Christof Wenger,
during his speech, talked about the
intensification of the trade relations
between the two countries and particularly
the “positive dynamism” in Algeria
and the transformation of this coordination
office into a delegation of the
Germany economy or into a German
Chamber of Commerce and Industry in
Algeria to support the development of
the bilateral economic relations.
In his speech, Mr Kishlat was keen to
point out the improvement in relations
between the two countries at the economic
level, adding that the creation
with the Association of German
Industry and the Algerian Chamber of
Commerce and Industry in 1997, the
Economic bilateral Forum has today
extended to the SME/SMME, explaining
the approach of the German
Ministry of the Economy and
Employment, he remarked that his
ministerial department is subsidising
the participation of German companies
at the Algiers Trade Fair.
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114
november 2005

PARTNERSHIP
German businessmen in Algiers
“Algeria is a very important market
for the investors”
To put back a cooperation
which does not
date on the rails, a
delegation of German
businessmen, 35
exactly, came to
Algeria.
This joint initiative of the Algerian
Chamber of Commerce and Industry,
the Chamber of Commerce of Oran
and Afrika Verein, the Association of
German-African companies was characterised
by a first meeting and entrepreneurs
of the two countries at the
Hilton hotel in Algiers.
Various sectors, such as the construction,
infrastructures, transportation,
logistics, hydrocarbons, energy, training,
finance, food processing and
pharmacy sectors were therefore present
yesterday at this meeting, presided
over by the Germany ambassador to
Algeria, Dr Wolf Kischat.
In this context, the diplomat highlighted
the necessity to develop relations
which are already “well set up”, starting
with the principle that Algeria has
undeniable potentials, which make this
country “an essential crossroads”. It is
useful to recall in this perspective that
no less than 70% of the Algerian industrial
fabric is of Germanic origin. For
Mr Kadri Saâdane, the director of
international relations for Caci, the
year 2005 “is the year of Germany par
excellence”, referring to the fact that it
has planned a whole series of meetings
and events between the two countries.
“The agenda records a very tense activity
in this field, and we have several
economic and trade events to organise”.
Rightly so, after the visit made
recently by our Minister of SME, Mr
Mustapha Benbada, the famous coordinator
of the Algerian-German economic
relations was put in place, and
several exchanges between businessmen
of the two countries are planned,
particularly the Algerian-Germany
business forum – which will be its 9th
forum this year.
2004 will also see a series of participations
of the delegations of both countries
in different trade fairs and exhibitions,
Mr Kadri also told us, who specified
that the chambers of commerce
of both countries are now going to stay
in permanent contact.
To go back to Afrika Verein, this organisation,
which is therefore responsible
for promoting exchanges between the
African countries and Germany, generally
works in collaboration with the
Federal Ministry of the Economy and
Trade.
A collaboration which enables this
association to have the financial support
necessary for organising events
such as the one held yesterday in the
Hilton hotel. “In fact, we have a special
fund for the promotion of exports
which thus helps the investors to promote
the extra-muros exchanges of
Germany”, specified Mr Wilfried
A fund which, unfortunately, no longer
exists for Algeria, since we were told
that this is no longer given money, as of
this year, which will significantly reduce
the participation of the Algerian
entrepreneurs and businessmen
abroad.
With regard to the possibilities of partnership
or the signature of cooperation
agreements, it is certainly not this meeting
which will support them - as this is
only an initial stage, according to its
designers, in order to explore the possibilities
of the Algerian market, the
business context which prevails within
the local economy, “it is only later on
that we will see how to go further”, as
Mr Kadri explained to us who pointed
out, furthermore, that it is rare for this
type of first contact to directly lead to
the signing of an agreement.
“One thing is sure, the Germans, as
traditional partners of Algeria, know
this country well, and now that things
are picking up again, they will come
back in force, and we are seeing this
today, particularly through the availability
of hundreds of their banks to finance
the investments undertaken in our
country.”
As a reminder, today there are about
sixty Germany companies already present
in Algeria, such as Henkel, BMW,
Siemens, Mercedes, etc. in various sectors,
and which are recording enormous
success. With regard to the volume
of trade flows, it has exceeded the
2 billion dollars in 2004, the majority of
our imports are focusing on goods and
services, whereas our exports concern
the hydrocarbons and the ferrous waste
and debris.
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115
november 2005

PARTNERSHIP
Algeria – Belgium, the contract has been won
by the company Honeywell
The Arzew refinery is being upgraded
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116
■ With a total value of
48,322 million euros,
the contract was won
by the Belgian company
Honeywell.
■ Over 148 contracts
have been signed in
the space of three
years by Naftec, the
subsidiary of
Sonatrach, worth a
total amount of 308
million American dollars.
■ Chakib Khelil:
Algeria must increase
its refining capacities
to reach 50% of its
crude oil production.
The instrumentation modernisation
project of the Algerian refineries took
shape with the first signature to renovate
the Arzew refinery.
The contract, worth 48.322 million
dollars (the equivalent of 4.575 billion
dinars), was won by the Belgian company
Honeywell. With five other companies,
Honeywell submitted a tender
to become the partner of Naftec, the
owner company of the Algerian refineries,
itself a subsidiary of the Sonatrach
Group. Hence, the contract signing
ceremony, which took place yesterday
in the Mecure hotel in Algiers, was presided
over by the Minister of Energy
and Mines, Mr Chakib Khelil, as well as
by the Belgian ambassador to Algeria,
Mr Philippe Golyn, Mr Salah
Cherouana, Chairman and CEO of
Naftect and Mr Winters, vice-president
of Honeywell who signed the agreement
which will enable the Arzew refinery
to go from the current instrumentation
of a pneumatic system to a digital
system which is “more accurate and
more reliable” as said the Chairman
november 2005
and CEO of Naftec which specified in
this context that this project, which
required the prior drawing up of a definition
study of guidelines for modernising
all the installations, also includes
the installation of a DGS (Distributed
Control System) in order to ensure the
centralised running of the installations
with a digital control system, replacing
the current pneumatic instrumentation.
Mr Cherouana stated that a second
phase is planned with advanced control
and the optimisation of the installations
to ensure real time operating compared
to the quantities of loads of products,
by optimising the operating parameters
and the production costs. This phase
will be followed by the installation of
related systems (ESD, fire and gas,
information and communication
exchange system (MES)).
Furthermore, our speaker pointed out
another very important installation
which concerns the construction of a
new centralised Blast Resistant control
room which is the nec plus ultra in
terms of security in the refineries currently
in the world. This upgrading,
therefore, is part of the perspectives for
continuing the company's vast programme.
“In December 2004, we are going to
sign contracts with consultant engineers
(PMC) to support us in the
implementation of other large EPC
projects for the Skikda and Algiers refineries”,
hence announced the
Chairman and CEO of Naftec, who
also emphasised that the renovation
programme for all other refineries,
including Hassi Messaoud, will be
completed in 2008, and the project to
adapt installations for producing petrol
and diesel to the European standards in
2009.
Mr Cherouana went further in his
explanations, confirming that all these
works and all these technological innovations
have the objective of “making
the operating of the installations more
reliable with optimal investment and
operating costs, to guarantee better
safety of the personnel and the installations,
to have reliable and accurate
means of control and steering the
installations. And, finally, to enable
permanent maintenance of the equipment”.
For his part, Mr Chakib Khelil indicated
that this contract is the fruit of a
process "which has required a lot of
effort". Effort which will now enable
“optimisation of the project which must
also lead to the reduction of costs and
improvement of the safety of our installations
and our personnel. Likewise, it
will have an impact on the viability of
the refinery in the long term". With
regard to the objectives assigned to this
vast upgrading operation, which will,
as the Minister further reminded us,
affect all Algerian refineries, Mr Chakib
Khelil said that they concern the
increase in the capacities of our countries,
thereby "refining 50% of our
crude oil production capacities by
2008-2009.
As for the representative of the Belgian
company, the holder of the contract, he
did not hide his satisfaction as to this
partnership and went further saying
that Honeywell intended to open a
representative office in Algeria and a
subsidiary very soon. Mr Carter also
confirmed that his company intended
to recruit Algerian engineers and train
them in using the technology acquired
by Honeywell. “We intend to transfer
all knowledge and technology necessary
with the system and the installations,
with the system which we are going to
supply to Algeria.”
We will finally point out that this first
extensive contract is part of the process
to renovate the refineries, which is an
important upgrading programme for all
units producing fuels, aromatic lubricants
and asphalts.

PARTNERSHIP
Algeria-Finland
Agreement on the promotion
and reciprocal protection of investments
An agreement on the promotion and
reciprocal protection of investments
between Algeria and Finland was
signed in Algiers by the Minister of
Trade, Mr Nourredine Boukrouh, and
the Finish Minister of Foreign Trade
and Development, Mrs Paul
Lehtomaki. “This agreement commits
each of the countries to ensure equal
treatment in investment projects and to
reciprocally benefit from the same
conditions applied for the local investors",
specified Mrs Lehtomaki, adding
that there is also an important element
in this agreement, namely the possibility
offered to investors from both countries
to transfer their funds." The Finish
Minister stated the desire to see this
agreement constitute “a good framework
for rebuilding the bilateral economic
cooperation, and encourage the
companies from both countries to
invest more”. “There is a great number
of Finish companies established in
Algeria which are interested by the
partnership with the Algerian operators,
particularly in terms of transferring
technology and increasing the level
of growth and know-how”, according
to Mrs Lehtomaki.
Mr Boukrouh, for his part, confirmed
that Finland is an "important economic
power" in the European Union with
GDP of 180 billion dollars for a population
of less than 6 million inhabitants.
“Such an agreement will enable the
economic and trade relations to be
developed with Finland”, he concluded.
According to Mr Djaâboub
“The partnership between the two countries
must affect the performing industries”
Mrs Paula Lehtomaki emphasised the
exemplary complementarity between
the public and private sectors.
The partnership between Algeria and Finland “must be
extended to other performing industrial sectors in Algeria”,
emphasised the Ministry of Industry, Mr El Hachemi
Djaâboub, in an audience granted to the Finish Minister of
Foreign Trade and Cooperation, Mrs Paula Lehtomaki in
Algiers. The partnership already started between the two
countries in the domain of paper and packaging "must become
an example for other actions in the performing industrial
sectors in Algeria, such as chemistry, pharmaceuticals, electronics,
building materials, mechanics and steel industries”,
indicated a statement from the Ministry of Industry. Mr
Djaâboub reconfirmed that Algeria "is going to continue its
policy with a view to making useful partnerships within the
context of the Euro-Mediterranean free trade area”, according
to the same source.
“This policy which will become a reality just after the ratification
of the association agreement with the European Union
will enable foreign operators to be granted guarantees and
advantages stipulated by the laws including customs duty
exemptions and tax allowances", emphasised the Minister.
Mr Djaâboub also recalled that “the privatisation programme
offers the foreign partners other opportunities, according to
the different acquisition formulas, taking a stake in the capital
of the companies or direct investment into the new industrial
projects”, indicated the Minister.
The Finish minister, for her part, emphasised “the particular
attention” which the operators in her country are paying to
Algeria. The partnership in the paper and packaging sector
and the "strong" presence in the domain of mobile telephony
are an example of this, she said.
Algeria’s host also specified that the agreement signed
Thursday on the promotion and mutual protection of investments
between Algeria and Finland “will be the ideal and useful
framework for the densification of the bilateral cooperation”,
we read in the statement. She recalled, further, the
interest which her country has in research and development,
particularly in the products with “high technological
content”, specifying that her government currently devotes
3.5% of GDP to this domain. She further emphasised the
“exemplary” complementarity between the private and public
sectors, the statement concluded.
Energie & Mines
117
november 2005

PARTNERSHIP
Algeria-Ukraine
Signature of a cooperation agreement
between the businessmen
A cooperation agreement
between the
Forum of directors
(FCE) and the Ukraine
Union of industrialists
and entrepreneurs,
dealing with the start
of a diversified cooperation
between the
private operators of
the two countries has
been signed in
Algiers.
Energie & Mines
118
Thanks to this agreement, signed on
the fringes of the first Algerian-
Ukrainian business Form, the Algerian
entrepreneurs and their Ukrainian
counterparts will exchange their experiences
in the domains of new technology,
packing, agriculture, metallurgy,
shipbuilding, air transport and arms,
declared to the APS Mr Volodymyr
Keba, the director the international
relations department of this Ukrainian
employers’ organisation.
“From this year on, we intend to start
creating joint ventures between the
operators of the two countries operating
particularly in the chemistry, agriculture,
metallurgy and industrial
equipment sectors”, he added.
Created in 1991 and today grouping
together 38,000 companies, the
Ukrainian Union of industrialists and
entrepreneurs is increasingly focusing
on exporting, according to Mr Keba.
“This is our aim because we are living
in a country where exports represent
62% of GDP which, alone, records
record growth of 8% a year”, he added.
This agreement is the “first milestone
in a new approach with now reserves
an essential role for the company in
terms of implementing economic partnership
policies” Mr Omar Ramdane,
chairman of the FCE indicated.
november 2005
Encouraging the Ukrainian businessmen
to invest in Algeria, Mr Ramdane
called up the Algerian exporters to
contribute to changing the current
structure of trade flows between the
two countries, largely in favour of
Ukraine.
Whilst Algerian exports to this country
of the former Eastern block are limited,
in the five last years, to two deliveries of
fuel, benzene, of a value less than 100
million dollars, this country’s important
are however experiencing an
upwards trend.
Between 2000 and 2004, these
imports, dominated by the industrial
products, increased from 138.5 million
dollars to 438.7 million dollars, indicated
Mr Ramdane.
The industrial projects such as the flat
laminated products, concrete reinforcing
bars and machine wire represent
80% of Algeria’s purchases coming
from this country whereas the agriculture
and food products, including
cereals, oils and powdered milk constitute
the rest, he further specified.
Approached by the APS, the president
of the National Association of Algerian
exporters (Anexal), Mr Idriss Yalaoui,
for his part, indicated that the Algerian
exporters intended to profit from the
event of this agreement to increase
their exports to Ukraine.
“Ukraine, which is a large export of
wine products, currently relies on
Portugal to satisfy its requirements for
corks for bottling wines.
We therefore plan to use our cork production
capacities to try to conquer this
market", he declared.
“Our exports also plan to export building
materials such as insulation
boards and ground slabs to Ukraine,
which massively imports these products",
he further indicated.

PARTNERSHIP
After the State visit of President Bouteflika to Japan
Tokyo is betting on Algiers
The Nippon capital
considers Algeria as
one of its partners in
African and in the
Arab world.
The President of the Republic, Mr
Abdelaziz Bouteflika completed an official
working visit of four days to Japan,
during which he had meetings with the
highest Japanese economic and political
authorities on the ways and means
of reinforcing bilateral relations.
In his different meetings in the capital
Tokyo and in the city of Kobe, the
Head of State pleaded for a short term
re-establishment of the multiform
cooperation between the two countries
which share a great number of
concerns and have enormous potentials
and complementarities capable of place
their trade relations on solid bases.
The Head of State, who particularly
had a meeting with Emperor Akihito,
the Prime Minister Junichiro Koizumi,
the Minister of Foreign Affairs,
Nobutoka Machuinro, and the main
managers of the business world, supported
and defended the idea that the
Nippon business world must now
immerse itself in the image of the new
Algeria, overcoming the apprehensions
inherited from the black decade and
committing itself in the new offers of
partnership, investments and cooperation.
This first visit by an Algerian Head of
State since independence, described in
places as “historic”, already, according
to both parties, borne its first fruits by
enabling the senior authorities to break
the wall of silence, to reconfirm their
desire to remove all the barriers which
are today harming the establishment of
business relations without political
interference. It seemed urgent and
necessary to now put in place the framework
of this new entente.
Hence, an initial master agreement in
the domain of technical cooperation, in
all business sectors, was signed between
the two Ministers of Foreign
Affairs - and agreement which, according
to the two heads of diplomacy,
calls for the conclusion of other sectoral
agreements to justly give its marks
to the Algerian-Japanese cooperation.
Another noteworthy event of this visit
was the ceremony marking the delivery
by the Kawasaki shipyard, in the city of
Kobe, to the Sonatrach Group, of the
LPG carrier Rhourd Nouss, the fourth
of its kind, built by the Japanese shipyards
on behalf of the national oil
company. This visit obviously aimed to
promote and rebuild economic and
commercial exchanges but also to overcome
the distorted image of Algeria
such as perceived by the Japanese
investors in relation to the difficult
memories of the years of terrorism,
aggravated by the famous travel working,
described as a “flagrant injustice”
by the Head of State.
Whilst today the Japanese investors are
rediscovering the path of modern
Algeria, whilst awaiting for new proposals
of partnership, association and risk
taking in development projects in
numerous performing niches, it is
however still too soon to come to a
decision on the commitment of this
large industrial country which may provide
its know-how, its technology and
its expertise to Algeria which has the
ambition of getting out of the underdevelopment
and quickly integrating
into the world market.
For three years now, numerous technical,
economic, cultural, commercial
and financial missions came to Algeria,
particularly those of the large banks
and industrial companies, whereas the
first projects are identified and launched
in varied domains such as fishing,
training, hydraulics, constructions,
agriculture, energy and hydrocarbons,
and whilst solidarity actions (after the
Boumerdès earthquake) and cooperation
projects are being realised. Reestablishing
the bilateral cooperation,
making the experiences gained in all
sectors better known, particularly in
the political, diplomatic, security
domains and economic reforms, removing
all types of obstacles and putting
the Algerian-Japanese cooperation
back on the rails, such as the excellent
historic political relations, were and
are, in the opinion of numerous political
observers, one of the major objectives
of the presidential trip. These same
observers do not fail to note that the
business relations have been constantly
changing of these last few years, as
shown by the volume of investments
granted by the large banks and
Japanese oil companies in the sole sector
of hydrocarbons with an amount of
around 7 billion dollars out of a total of
almost 10 billion.
Today, Tokyo considers Algeria as one
of its favoured partners in Africa and in
the Arab world. It supports its initiatives
at the regional scale (Nepad, Arab
League, etc.) and at the international
scale (United Nations, etc.). It is a
future industrial and economic partner
of Japan because it owns large natural
resources and offers great opportunities
of cooperation in various sectors,
such as transportation, port renovation,
the environment, agriculture and
fishing and the new technologies.
Energie & Mines
119
november 2005

PARTNERSHIP
Algeria-Japan
La Japan International Corporation
Agency de retour en Algérie
The Japan International Cooperation Agency returns to Algeria
Developing more the cooperation relations between Japan and Algeria,
reinforcing its presence in our country – such is the objective of the
Japanese International Cooperation Agency which organised a seminar
for this purpose, in the hotel El Djazaïr in Algiers.
Energie & Mines
120
This organisation, created on 1 August
1974, is an independent institution,
after having been a public one; it has a
development aid programme financed
by the government of Japan, by virtue
of the APD, and intervenes in the
implementation of about 50% of the
technical cooperation, and of 70% of
the Japanese non-reimbursable financial
cooperation of public aid to development.
However, the main mission of
JICA is to increase the value of "human
resources, reinforce national capacities
and improve the socio-economic
conditions in order to favour sustainable
and autonomous development of
the PED", as Mr Koiké Orient of JICA
explained to us in Tokyo, present yesterday
at the hotel El Djazaïr, who was
keen to specify that the ambition of the
Nippon organisation is indeed to reinforce
the socio-economic relations between
its country and Algeria. “Algeria,
with which Japan has had very close
relations for decades.”
And with regard to these relations,
JICA plans to multiply the relations to
initiate a new cooperation between our
two countries. A cooperation highlighted
by the signature of an important
master agreement on technical cooperation
during the official visit to Japan
of the President of the Republic, Mr
Abdelaziz Bouteflika, in the month of
December last year.
It is useful to recall that the Japan
International Cooperation agency has
been present in Algeria since the start
of the 1980s, before freezing its activities
during the last decade, marked by
terrorism. And it was the Boumerdès
earthquake, in May 2003, which gave it
the opportunity to return, by providing,
in the name of friendship between the
november 2005
two countries, over 90% of the experts,
specialised in first aid and seismologists.
The JICA, which is also one of the best
agencies in the world in terms of technology
transfers, intends to provide its
experience in Algeria through a whole
series of measures, as stated by Mr
Yahate Akihito, representative of JICA
in Algiers. Measures which particularly
concern the exchanges of experts between
the two countries, as well as the
availability of this organisation to ensure
technical training, the supply of
equipment, the drawing up of technical
cooperation projects and development
studies: “The priorities have to be defined,
with regard to the aid which we
can give.”
In this context, Mr Akihito recalled the
cooperation agreement signed last
week between the JICA and the
Ministry of Housing and which
concerns the micro-zoning of the
Wilaya of Algiers, to enable it to be prepared
in case of a natural catastrophe,
“this is an eighteen month project – we
are going to send about twenty experts
in training in Japan in the month of
March. A delegated formed by executives
from the Ministry of Housing, the
CGS and CRAGG”. It should be said
that this country is the first in the world
to gain experience and technology in
the domain of preventing natural catastrophes,
through then thousands of
disastrous phenomena it has had to
deal with. “I am telling you that tsunami
is a Japanese world, to tell you that
we understand very well”, said Mr
Akihito with a smile.
Furthermore, we will lead that, on this
day, there are three essential bases of
cooperation between the two countries
which should start. This, of course,
concerns earthquakes, but also the
environment and higher education.
Finally, we should point out that Japan,
whose experience is well known, is a
country which still benefits from aid
provided by the World Bank for the
construction of its economy in the
1950s, and which has been able to sign
up to the Columbo plan since the
middle of this same decade, which enabled
it to put in place a process of aid
to developing countries, first of all
beginning with Asia before going to the
other countries including Eastern and
Central Europe as well as Africa.
JICA in short
The Japanese International Cooperation
Agency (JICA) is an administrative institution
founded in August 1974. After
being a governmental agency for almost
three decades, JICA was a subject of a
reform in October 2003, the date on
which it became independent. With a
budget of 158.2 billion yen, i.e. 1.263
billion American dollars, for the financial
year 2004, this agency sets itself the
task of contributing to the economic
and social progress of developing countries
and supporting Japanese cooperation
at the international scale. In this
context, we will learnt hat through this
type of organisation, Japan, in 1992,
was the main donor in 25 countries
throughout the world and that it is today
the number one donor in the world, in
terms of PDA (public development aid).
To this day, 75 associations have been
created and are financed by JICA
through the world. Their main role is to
maintain the bonds of friendship between
their country and Japan. JICA’s
website is: www.jica.go.jp

PARTNERSHIP
Medmax II second methane carrier project
Signature of five acquisition contracts
between Sonatrach-Hyproc and Japanese
partners
Five contracts relating to the acquisition project of the Medmax II second methane
carrier with a capacity of 75,500m3, were signed in Algiers between
Sonatrach-Hyproc and the Japanese partners MOL and Itochu.
This is a protocol to
create a joint venture
created by
Sonatrach, Hyproc
SC, Mitsui OSK
Lines (MOL) and
Itochu, and the
company Skikda
LNG Transport
Corporation
(SLTC), and the
long term freight
contract of the
Medmax II between
Sonatrach and
SLTC. The third
contract relates to
the financing by the Dutch bank ING BANK of the vessel,
whose total cost is 139 million dollars. ING Bank will finance
75% of the project, i.e. an amount of 114 million dollars.
The fourth contract relates to financing sponsoring whereas
the fifth one is rider no. 5 to the construction contract. The
contracts were signed by the Chairman and CEO of Hyproc
SCN, representatives of Sonatrach and the Chairmen and
CEO of Itochu, MOL and Universal Ship Building
Corporation, as well as the representative of ING Bank. The
signing ceremony took place in the presence of the Minister
of Energy and Mines, Mr Chakib Khelil, the Japanese ambassador
to Algiers and the Chairman and CEO of Sonatrach,
Mr Mohamed Meziane.
According to Mr Zenassni, the achievement of this project is
“unquestionably the fruit of a perceptive strategy and policy
of partnership which the energy and mines sector has
instilled into the Sonatrach group and the maritime transportation
of hydrocarbons, for years”. This strategy, added Mr
Zenassni, has enabled them to hand over the methane carrier
Lala Fatma N’soumer, with a capacity of 145,000m3, and
the methane carrier Berge with a capacity of 138,000m3, and
to launch the third project concerning the building of two
Methane carriers, Med Max. The Medmax is in the engineering
and approval of plans stage. The acquisition of a
fourth methane carried with a capacity of 165,000m3 is
planned by 2008-2009.
“It is this strategy which has enabled the group to increase,
within the framework of a partnership formula, its capacity
for maritime
transportation by
433,000m3 corresponding
to 40%
of the total capacity
of the Group”, specified
the Chairman
and CEO of
Hyproc, who
emphasised that
with the Medmax
II, which will be
delivered in 2009,
the capacity which
was 675,000m3
with 6 vessels
owned will increase
to 1,080,000m3 with 10 vessels.
The capacity will reach 1,173,000m3 of LNG the construction
of a methane carrier of 165,000m3. For Mr Zenassni,
the Medmax II “will replace our methane carrier Hassi
R’mel, with a capacity of 400,000m3, 34 years old today and
having a status of pioneer in the maritime transportation of
LNG". “With 1,265 voyages, the vessel, which was used as a
school-vessel hence enabled the training of a large number of
our officers currently in service in the company, will continue
to ensure the company's obligations until the expiry date of
its charter which expires in September 2007", emphasised
the Chairman and CEO.
For his part, Mr Meziane, who described the projects with
the Itochu-MOL consortium as a “great adventure”, emphasised
that Sonatrach is pursuing the path of its modernisation
and is planning to plan "an increasingly larger role
abroad”. Other than its role as producer and supplier of
hydrocarbons, Sonatrach has accentuated its downstream
deployment policy by taking stake holdings in industrial units
and reinforcing its means of transport to reach the end client,
added Mr Meziane. Emphasising that the partnership with
Itochu-MOL is "fully satisfactory and suggests a promising
future”, Mr Meziane called upon Hyproc to double its efforts
and to fully seize the opportunities offered for the training of
its personnel, in accordance with the most modern standards.
“We are placing a great deal of importance on training
the navigating and technical personnel”, he said.
Energie & Mines
121
november 2005

PARTNERSHIP
Algeria-India
The renovation contract for the Skika
refinery is won by an Indian company
The Indian company UIL won, in
Algiers, the contract to put together a
“programme to renovate and adapt the
installations” of the Skikda refinery, in
the East of Algeria, for an amount of
1.410 billion dinars at the end of the
public commercial tender opening session.
The Italian company Technip had proposed
an amount of 1.546 billion
dinars, whereas the tender from the
Dutch company Fluor Daniel was
rejected for not respecting the brief.
The Skikda refinery - the most important
one in Algeria - produces 15
million tonnes of refined oil products a
year with a capacity of 15 million tonnes.
Producing liquefied propane gas
(LPG), fuels and asphalts, it contributes
42% to the domestic market supply.
As for the project to renovate and adapt
the installation of the Arzew refinery
(Oran), which contributes 29% to the
domestic market supply, this was won
by the Italian company Technip, for an
amount of 1.306 billion dinars. The
Arzew refinery, commissioned in 1973,
has a production capacity of 2.5 million
tonnes, processing crude oil. Two other
tenderers, the Dutch company Fluor
Daniel and the British company Stole
Websten, were in the race for this same
contract. The British company proposed
an amount of 3,490 billion dinars,
whereas Fluor Daniel was rejected for
not respecting the brief.
Algeria-Libya
Sonatrach and the Libyan company NOC
sign the exploration contract
Energie & Mines
122
november 2005
An exploration and production contract
on the block of Ghadamès, in Libya, won
by Sonatrach last January, was signed in
Tripoli by Sonatrach International
Production and Exploration Corporation
(Sipex) and the national Libyan oil company
NOC, indicated a statement from
Sonatrach.
With an investment cost of 13 billion dollars,
this contract is the first of its kind
realised by the national hydrocarbons
company abroad. It was signed by the
Chairman and CEO of Sonatrach, Mr
Mohamed Meziane, and the Chairman
and CEO of NOC, Mr Si Ahmed El
Badri. With a surface area of 4,374m2 is
located in a favourable oil environment as
it is surrounded by several discoveries;
block 65 has recoverable resources estimated
provisionally
at about a hundred
million barrels.
It is located about
300km from the
oil basin of
Berkine, in
Algeria. The block
was awarded to
Sonatrach on 24
January following
an international
appeal for tenders
launched by Libya
for the exploration
of 15 blocks. There was Oxy-Liwa, Ina-
Edison and GDF-Addax-Centrurion.
The minimum works’ commitments
encompass the drilling of two exploration
wells and the acquisition of 1,000km of
seismic over a period of 5 years.

PARTNERSHIP
ALGERIA-SAUDI ARABIA
The Saudis present an ambitious
programme of financial investments
The Chairman and CEO of the Saudi
Group Sedar intends to invest in an
important property programme which
includes tours and leisure activities.
The first one, located in Algiers, more
precisely in Chéraga, is designed for the
renting of offices to national and international
commercial companies, specified
the Group during a conference at
the El Moudjahid Forum. It will be designed
for the renting of luxury offices,
with all the amenities (145 offices with
a surface area varying from 100 to
5,000 m 2 , 72 business lounges with an
average surface area of 11,000 m 2 , 110
studies, 420 shops, a supermarket on 3
levels and 100 representation spaces).
The cost of rental per metre squared will
vary between 40,000 and 120,000 dollars/year
and the company is ready to
ensure other services such as maintenance,
security, etc.
The Saudis, who in 1994 started trading
with Algeria in several domains (cereals,
plastics, etc.), opted as of 1998 to create
a company of Algerian law registered
on the Trade Register for the realisation
of projects in the domain of infrastructures
essential for rebuilding international
investment.
Hence, niches such as tourism, business
hotels, with the imposing programme of
business tours are favoured due to the
flagrant shortage which the country is
accused of, concerned by the resorption
of the housing crisis, said Dr Mahmoud
Zayed. Another tourist complex with a
package of 300 million dollars will be
launched in Zemmouri, in the Wilaya of
Boumerdès. As for the housing sector,
this “could attract the favours” of the
Saudis who emphasise the encouragement
of the Algerian authorities for any
investment project which they propose,
however regretting that the Sedar promoters
did not until now benefit from
any sale of land from the State, contenting
itself with being provided from private
individuals, since 1999. That said,
the last meeting of the joint Algerian-
Saudi commission could constitute a
new era for the Saudi investors which
have already put on the market “hundreds
of millions of dollars” and which
could exceed this figure according to the
investment programme adopted, further
explained the Chairman and CEO of
Sedar.
With regard to the intention of launching
tourist projects in the South, he
explained that it is just a possibility at the
moment, announced during the
International Saharan tourism trade
fair, “due to the potentials hidden in the
region”. The Arab investors do not
apparently have the same ambitions as
the international Group Accord which
has just signed an agreement to build
about thirty hotels in Algeria. We recognise
that this is down to the fact that
the investment climate has been better in
Algeria for almost five years, and there is
no problem, whether with the banks or
with the administrative authorities.
Oil prospecting
Working towards the creation of Algerian-Saudi
work-over joint venture
Negotiations are at a very advanced stage between Enafor
and the El Bassem Group. “The national work-over company,
Enafor, is in very advanced negotiations with the
Saudi Group El Bassem to create a drilling subsidiary in
Saudi Arabia”, declared the agency AAI M Ali Acila, the
Chairman and CEO of this company. “We are very interested
and we are targeting the Middle East market, particularly
the Saudi market which, for Algeria, is a market
with high potential since it is the number one oil reserve in
the world”, said the senior executive of Enafor. The new
subsidiary will be responsible for carrying out the workover
operations in Saudi Arabia and will enable Enafor to
prospect this market and seize all the opportunities present
there.
Other countries have requested the services of Enafor,
such as Libya, Sudan, Iran and the Sultanate of Oman.
“Enafor is in permanent contact with these countries”,
specified the senior executive of Enafor.
Given the very large demand, Enafor reinforced its fleet of
machines by buying 8 new work-over machines whose
cost is around 150 million dollars. Out of the 8 machines,
4 are being delivered and the rest will be received by the
end of the year.
In the Sultanate of Oman, Enafor recently won a workover
contract for an amount of 50 million dollars in an oil
field which is located in Sahel-Rawel. Enafor was selected
by the Oman oil company further to an appeal for tenders
in which about ten companies took part. It is awaiting the
approval of the Ministry of Energy and Mines and the
Sultanate of Oman. It should be remembered that, for the
financial year 2004, the national work-over company
made turnover of 12.3 million dinars, up by 13% compared
to what was made in 2003.
Energie & Mines
123
november 2005

Energie & Mines
124
november 2005
PARTNERSHIP
Algeria-Turkey
Chakib Khelil invites the Turkish businessmen
to invest in the phosphates sector
The Minister of
Energy and Mines,
Mr Chakib Khelil,
in Istanbul, invited
the Turkish
investors to invest
in the Algerian
projects in terms
of phosphate
valorisation.
Speaking during a meeting with
the President of the Republic, Mr
Abdelaziz Bouteflika, with the
Turkish businessmen, Mr Khelil
pointed out that Algeria is looking
for partners to develop phosphoric
acid and sulphuric acid factories.
The Minister called upon the private
Turkish companies specialised in
this domain to participate in these
projects, specifying that Algeria has
reserves of 2 billion tonnes of
phosphorous. “The production of
phosphate is very minimal compared
to the potentials which we
have”, he specified in this matter,
adding that Algeria hopes to compete
with its neighbouring countries
which are greatly ahead in this
domain.
Mr Khelil also recalled Algeria's
appeal for tenders in the domain of
hydrocarbons, concerning the
construction of several refining and
petrochemistry factories, the
Turkish companies to participate in
these projects. Furthermore, the
Minister encouraged the Turkish
companies specialised in marble
work, brick work and cement to
participate “a lot more actively and
in particular those specialised in
running quarries”.
In this respect he invited the
Turkish businessmen to take a look
at the appeals for tenders which its
Ministry publishes every quarter on
its website and also in the specialised
bulletin of the Energy and
Mines’ sector. On the other hand,
the Minister emphasised that
Algeria is interested in investments
in Turkey, particularly in the regasification
terminals the storage
of LNG and distribution of natural
gas, and is looking for partners in
this country.
“We also hope to extend this list
and develop with Turkish countries
our projects in other countries in
the world, using the synergies and
our experience", he added. At the
start of his speech, Mr Khelil gave
precisions on the situation of the
energy sector in Algeria, specifying
that “our country continues to
make progress in oil product and
gas exports”.
“Our ambition is to increase our oil
product which already increased
from 1999 to 2004 from 800,000
to 1,400,000 barrels/day, i.e. an
increase of 600,000 barrels/day”,
he recalled. He added that Algeria
plans to further increase by
500,000 barrels/day this production
in the next five years, but it
also has the ambition of increasing,
in the same period, its gas exports
by 62 billion cubic metres to
85 billion, i.e. an increase of 30%.
In this respect, Mr Khelil asked for
"the support of the Turkish authorities
to facilitate the exports of
Algerian gas beyond what is currently
contracted between the two
countries".
Algeria exports to Turkey 4 billion
cubic metres/year of LNG, in the
terms of a contract which covers a
period of 20 years, signed in 1995.
Algerian-Turkish
businessmen forum
The Algerian-Turkish relations seem to be significantly
progressing since the official visit of the President of
the Turkish Republic to Algeria and that of the Head
of State, Mr Abdelaziz Bouteflika, who recently went
to Turkey. And particularly with regard to the plans for
economic exchanges and partnership.
This is what the Minister of SME and Crafts,
Mr Mustapha Benbada, declared at the Hilton hotel in
Algiers, at the opening of the works of the Algerian-
Turkish businessmen forum organised jointly by the
Ministry of SME and Crafts and the Turkish
Federation of Marmara Business Life (Marifed). Mr
Benbada emphasised in this sense the strategic interest
of reinforcing the cooperation between the two
countries, with regard, he specified, to the common
political desire expressed by the two Heads of State in
Algiers and Ankara. In substance, he insisted on the
programme of economic reforms initiated by Algeria,
particularly in the field of freedoms of initiative accorded
to investors and the promotion of private investments.
Furthermore, he did not fail to highlight the
new series of reforms undertaken recently in the
domain of the protection of investments.
With regard to economic growth, this is around 6.8%
in 2003 and 5.2% in 2004, according to the Minister
who focussed on the development programme which,
over the next five years, plans a budget of 50 billion
dollars as a financial investment volume. The co-president
of the Algerian-Turkish business council, Mr
Belhadj Mokhtar, spoke beforehand to emphasise the
impact of the economic reforms in the sense of the
economic rehabilitation and social cohesion, insisting
on the conditions favourable to partnership and to
foreign direct investments (FDI). He further indicated
that the Turkish businessman are present in the

PARTNERSHIP
“The Turkish
companies are
increasingly
discovering the
interest of investing
in Algeria”
Algerian market, but that these trade relations should
be transformed more into an industrial partnership. As
to the financial volume of the trade flows, it is around
2 billion dollars in 2004. The Turkish ambassador to
Algiers, present at the forum, emphasised the interest
for the Turkish and Algerian businessmen to consolidate
the Algerian-Turkish relations through establishing
a partnership of mutual interest. He also indicated
that 89 Turkish companies are currently in Algeria,
as well as a Turkish community evaluated as 3,000
persons. According to the ambassador, the volume of
investments has increased from 50 to 160 million dollars.
It is planned, he added, to consolidate this new dynamic
of cooperation by the instauration of an airline
with two flights a week, to respond, he said, to the
requirements of the businessmen. “The coming of the
President of the Republic, Mr Abdelaziz Bouteflika, to
Turkey constitutes for us a historic event" he further
declared, and, said Mr Benbada “marked by fraternity
and cooperation”.
He emphasised in this context that the Turkish
Ministers of the Interior and Foreign Affairs will soon
come to Algeria. An official visit by the Turkish Prime
Minister is also planned. For Algeria, the Ministers of
SME and Crafts, Housing, Health and Justice will very
shortly go to Turkey, he indicated.
The delegation of the Turkish businessmen was made
up of 64 operators, mainly active in the domains of
equipment, agriculture, fishing, textiles, plastic, iron
and steel, aluminium and aviation.
Round tables have been organised with their Algerian
counterparts in the perspective of exchanges and
implementation of partnership relations.
Sonatrach and Thani
Investments (EAU) sign a
memorandum
of cooperation
The national hydrocarbons’
company,
Sonatrach, and the
Emirate company Thani
investments signed,
in Algiers, an energy
“memorandum of
understanding and
cooperation”, both in
the upstream and
downstream of the oil
and gas production
in Algeria and abroad.
This memorandum, which defines
the principles and the domains of
cooperation between the two companies,
was signed by the Chairman
and CEO of Sonatrach, Mr
Mohamed Meziane, and the
Chairman and CEO of the Emirate
company, Mr Abdellah Saeed Al-
Thani. This agreement, according
to Mr Meziane, shows the desire of
the two companies to “jointly develop
a beneficial mutual cooperation
in the domains of exploration, the
development and the exploitation of
hydrocarbons in Algeria and in
other countries”. The memorandum
also highlights the desire of the
two parties to develop activities in
the gas and oil downstream, i.e.
transportation, selling and transforming
these two sources of fossil
energy.
“We have agreed to study and
exploit all the possibilities of cooperation
which will present themselves
in terms of exploration, production,
selling and transport of hydrocarbons
in Algeria and abroad”, added
Mr Meziane who emphasised that
Sonatrach hopes to achieve a rate
of 30% of its activities outside
Algeria by 2015.
Saying he was confident as to the
achievement of large projects between
the two companies, Mr
Meziane revealed that this document
constitute a "solid" base to
achieve the objectives set down in
common in the shortest timeframe.
For his part, Mr Al-Thani said he
was satisfied with the signature of
this first memorandum with a
public oil company.
“We are very serious and very practical,
and we plan to achieve this
cooperation in concrete projects as
soon as possible”, added the chairman
of the Emirate Group, which
already operates in several African
countries such as Sudan, Senegal
or Tunisia in the domain of exploration.
In this respect, he indicated
that a team from Sonatrach will visit
Dubai before the end of the current
month with a view to drawing up an
action programme.
The El-Thani Group submitted a
tender for the 6th appeal for tenders
issued by Sonatrach, relating
to the exploration of 10 hydrocarbons’
blocks. The opening of the
commercial tenders must be done
next March. The Emirate Group,
which has invested 500 million dollars
these last five years into exploration
in several countries, particularly
African ones, also operates in
the services, maritime transportation,
hydrocarbons, tourism and
hotel sectors. In this respect, he
confirmed that the investment
opportunities into tourism were
“interesting”, emphasising that it
planned to invest in the sector in
Algeria.
Energie & Mines
125
november 2005

PARTNERSHIP
According to the National Intelligence Council (NIC)
“Europe’s preference for natural gas
will lead it to reinforce its links with Algeria”
In one of its latest deliveries, the review
Pétrole et Gaz arabes uses a long term
prospective study carried out by the
American intelligence community and
more specifically by one of the departments
of the National Intelligence
Council (NIC), containing interesting
considerations on energy.
“Closely linked to the political scenarios
on which the intelligence departments
of the world’s number one
power are working”, the analyses
contained in this study tend to show,
according to the review PGA, that the
sustained growth in world energy and
oil demand by 2020 “will have substantial
consequences on the geopolitical
relations and the examples of China
and India are particularly significant”.
“By the year 2020, indicated PGA, the
energy consumption of these two
countries should increase by about
150% and 100% to ensure the maintenance
of a constant economic growth
rate" and this demand "will be a major
factor which will contribute to defining
their foreign and defence policies". It
follows that the competition for the
resources and the risks of tension on
the supplies will be “key factors of
uncertainty”, according to the review
which adds that the United States will
be, "due to their high independence on
imported oil”, “more vulnerable than in
the past”. The same applies for China
which estimates that this situation
“increase its vulnerability to the United
States”.
As for Europe, the NIC study used by
PGA says that its increased preference
for natural gas “will lead to reinforcing
its links with these large suppliers” of
Algeria and Russia. To conclude its
analysis, PGA feels that the maintenance
of high oil prices in a tense climate
“could encourage the countries of the
Middle East to delay the necessary economic
reforms".
Read in the review Market News
The Mediterranean market has
absorbed 87% of Algerian gas
exports
The Mediterranean market has
absorbed 87% of total Algerian gas
exports, which reached 60.3 billion
cubic metres in 2004, reveals the
latest edition of the review Market
News of the national hydrocarbons'
company Sonatrach.
This quantity, of which 59% was
sent through the gas pipelines and
the rest by methane carriers, was
sent to 14 clients of 10 countries,
according to the same source. The
LPG exports, for their part, reached
a volume of 7.3 million tones, also
mostly intended for the
Mediterranean market, specified further
the review. In terms of transportation,
the Enrico-Mattei gas pipeline,
connecting Algeria to Italy via
Tunisia, has transported 70% of this
quantity and that of the Pedro-
Durant-Farel GME, connecting
Algeria to Spain via Morocco, 30%.
These quantities are destined for
Italy (68%), Spain (22%), Portugal
(7%), Tunisia (2%), Portugal (7%),
Tunisia (2%) and Slovenia (1%). For
the liquefied natural gas (LNG), of
which 10% of sales are made on the
spot market and the rest by long
term contracts, France was Algeria’s
top client with 32%, followed by
Spain (23%), Belgium (16%),
Turkey (12%), United States (5%)
and Greece (2%).
The exports of liquefied petroleum
gas (LPG), including 4.2 million
tonnes of propane and 3.1 million
tonnes of butane, are destined for
the Mediterranean market (80%),
United States (14%), Latin America
(3%), Asia (2%) and Northern
Europe (5%).
Energie & Mines
126
november 2005

PARTNERSHIP
First Euro-Mediterranean Summit
Algeria on top of the Meda region
in terms of investment flows
The twelve countries
of the South and East
bank of the
Mediterranean (Meda
zone) called for “an
intensification of the
economic Euro-
Mediterranean integration”
at the time of the
Euro-Mediterranean
Investment Summit in
Marseille. They launched
this appeal with
a view to creating a
free trade area by
2010.
The Euro-Mediterranean market will then
represent “an enormous potential for economic
exchanges” in an area of some
40 countries and 800 million consumers,
emphasised the French Minister for
Industry, upon the opening of the works.
Algeria is on top of the Meda region in
terms of investment flows, emphasised the
network, adding that over half the 23 oil
and gas projects recorded in 2004 in the
region concern Algeria.
In addition to the energy sector, “Algeria
has successfully attracted large investors
in very diverse domains, specifies the network,
citing its different sectors including
those of the hotel industry, pharmaceuticals,
banking and food processing.
Algeria is ranked number one in terms of
projects in front of countries such as
Morocco and Turkey”.
Whilst this evolution is remarkable, it is
however deemed necessary to consolidate
it and ensure the perpetuation of instruments
which have enabled it to become a
reality, emphasised the different speakers.
The focus was put on the importance of
highlighting the potentials of this region
which has considerable opportunities in
terms of investment.
It is also a question of reflecting on new
pistes and promoting others, badly used,
with a view to re-establishing the
Barcelona process whose 10th anniversary
will be celebrated this year (1995-
2005).
“The market opportunities of this area are
potentially strong which has favoured
relations with the European Union, which
is its main partner, with 48.7% of exports
and 70% with the Maghreb countries” he
indicated.
The positive evolutions recorded in
Algeria, which represents as many factors
for promoting both national and foreign
investment, was emphasised by
Mr Mourad Medelci, advisor to the
President of the Republic. As an indication,
it pointed out that “the amount of
foreign investment made between 2000
and 2004 amounts to over 10 billion dollars”,
not without evoking the development
gaps which not only exist in the
Euro-Mediterranean area, but also inside
a lot of countries of the North and South
of the Mediterranean.
For Mr Medelci, this means “contributing
to the re-establishment of the process, not
in political foundations which are totally
acceptable and suitable, but with regard to
the instrumentation and implementation”.
He also noted good news for 2005, where
"the investment rate seems to be evolving
favourably for the Meda area”.
“But whilst we are overall judges over the
last ten years, we may also consider the
approach satisfactory in its principle, we
may furthermore also ask ourselves about
it real efficiency insofar as, before the
Barcelona process, the relations between
the North bank and South Bank of the
Mediterranean were not negligible”, he
stated.
Oil work-overs
Enafor wins a control of
50 million dollars in Oman
The national work-over company
Enafor has recently won a contract
for work-overs for an amount of 50
million dollars in an oil field located in
Sahel Rawel, in the Sultanate of Oman,
indicated yesterday in Algiers the
Chairman and CEO of this subsidiary
of the Sonatrach Group, Mr Ali Acila.
This five year contract was won at
the end of an appeal for tenders launched,
three months ago, by the Omani
authorities and to which ten other international
companies, American mostly,
submitted tenders, Mr Acila told the
press on the fringes of a conference on
Sonatrach’s 2005 results.
Enafor, which hopes to internationalise
its activities, is currently in negotiation
with Saudi Arabia, a country which
owns the largest oil reserves in the
world.
This public company, which hence
obtains its first contract abroad,
in 2004, made turnover of 12.2 billion
dinars, up by 13% compared to 2003
and an operating result of 2.2 billion
dinars, according to Mr Acila.
The Minister of Energy and Mines,
Mr Chakib Khelil, during this meeting,
encouraged Sonatrach’s subsidiaries to
be more competitive and more efficient
and to “not count on subsidising
from Sonatrach”.
“The subsidiaries must become competitive
and efficiency by wining contracts
not only in Algeria, but also abroad”, he
emphasised.
Energie & Mines
127
november 2005

PARTNERSHIP
2nd North African and Mediterranean oil and geology conference
and exhibition
Mr Khelil : “Sonatrach’s increasing
use of new technologies is essential”
The constant growing
use of new technologies
in oil exploration will
enable Algeria to improve
the recovery rate of
the existing fields and
increase the number of
new discovers, indicated
the Minister of Energy
and Mines, Mr Chakib
Khelil.
Energie & Mines
128
“It is thanks to the new technologies that
we have been able to make important discoveries,
13 of which for 2004 alone”,
almost a world record, specified the
Minister upon the opening of the second
North African and Mediterranean oil and
geology exhibition and conference.
This conference in which over 500 participants
took part, including scientists,
geologists and representatives of the
world’s large companies will enable
“ideas and the latest technologies to be
exchanged on the subject, in order to
improve the recovery of existing reserves
and to discover other ones”, specified the
Minister. For his part, the Chairman and
CEO of Sonatrach, Mr Mohamed
Meziane, emphasised the important of
this scientific and technical event which
constitutes a “place for communication
par excellence on our industries”.
After noting that Algeria, one of the world’s
leading gas exporters, “finds itself in a
good competitive position”, he emphasised
that Sonatrach was not going to be
“confined to the sole role of supplier but
will endeavour to become a complete
player intervening at the international
level on all the segments of the hydrocarbons
chain, from upstream to downstream”.
Sonatrach has already begun along this
route, as shown by its recent participations
in exploitation tenders in Libya
november 2005
where it was able to win blocks despite
strong international competition. Thanks
to its performances in exploration,
Sonatrach, recalls Mr Meziane, 13 discoveries
on its own and in partnership,
highlighting over 234 millions of oil equivalent
tonnes (OET) of reserve, of which
46% of gas. These performances also
show the increasing interest of the oil
companies for exploration in Algeria, said
Mr Meziane, explaining that this interest
is mainly motivate by the potentials which
the Algerian mining estate offers, as well
as by the stability of the country and the
existence of strictness and transparency
which are beginning to be essential.
“The accumulated discoveries have reached
a level of reserves which enable
planning of the implementation of a
regional synergy by the global development
of all these sedimentary basins of
the Algerian mining domain, particularly
those of the West for a long time considered
“as risks”, he continued.
These performances, reveals the
Chairman and CEO are recorded not
only with regard to discoveries but also
the level of results of the geological studies
which increase the value of the mature
basins.
“This is the fruit of the use and the exploration
control using integrating data
which has enabled a certain number of
geological phenomena to be explained,
which are linked to the oil symptom of the
sedimentary basin”, he said.
Mr Meziane cites the example of the
giant oil field of Hassi Messaoud whose
geological data is now better perceived
and enables better knowledge of all the
surrounding region.
Hassi Messaoud, which will remain “still
and for a long time a giant field considered
as one of the largest in the world”, is
the subject, according to him, of a development
plan in order to bring its production
to at least 600,000 barrels a day
(b/d) by 2010, compared to some
400,000b/d currently. Other, just as
important programmes, fall within the
framework of "our approach on the Illizi
and Berkine basin", he added. For the
head of Sonatrach, the future exploration
will require better mastery of the new
techniques and technologies and of new
ever-changing concepts, hence “the
necessity to always have a prospective
vision and trained personnel ready to
excel at each stage”, he emphasised.

PARTNERSHIP
1 st International gas and electricity Trade Fair in Hassi Messaoud
Business opportunities for the
Algerian and foreign companies
One hundred and twenty-nine companies are participating in this trade
far, the majority of which, i.e. over 70, are French, 13 others foreign,
and over thirty nationals. The countries represented apart from France
are Spain, Belgium, Great Britain, Italy, Germany and the Principality
of Monaco.
Three thousand square metres were
necessary to welcome these participants
with regard to the new galleries
on the city-centre boulevard of Hassi
Messaoud. In fact, to respond to the
large demand of the participants, the
organisers indicated that there had to
install three marquees.
This trade fair will enable the specialised
foreign companies to present the
technical skills, negotiate pre-contracts
with the national companies and take
stock of the advantages and the opportunities
of investments on the oil fields.
The choice of the region of Hassi
Messaoud for holding this economic
event was not furthermore accidental.
Its it linked to the main energy resources
hidden in the subsoil of the region
where multiple oil fields are being operated,
particularly in the peripherals of
Gassi Touil, El Borma, Hassi Berkine,
Rhoud El Baguel, Masdar and
Berkaoui.
The majority of products exhibited
represent work-over equipment and
material, refining compression and
material, the gas by-products, the fuel
stations, the transport and distribution
equipment for gas, equipment relating
to the prevention and the security of
everything concerning the prefabricated
buildings and the bases of live. This
economic event is the first of its kind in
the region. Scheduled from 24 to 28
February, this first trade fair, named
Sihgaz 2005, coincides with the celebration
of the history decision to nationalise
hydrocarbons.
At the start of organising this trade fair,
a trinomial partnership composed of
Foirex (trade fair and exhibition organisation
company) specialised since
1997 in organising economic events:
trade fairs and themed trade shows, the
CFCIA (French Chamber of
Commerce and Industry in Algeria)
and the Arab oil research centre.
Foreign participation :
the French out in force
Out in force in this trade show, 76
French companies intend to make the
most of this economic event. Some of
the companies taking part are already
present in Algeria, others are there to
find business opportunities, such as
Brunet International which operates in
21 countries.
This company proposes skills specialised
in the oil industry. Its services
cover all the phases of an oil project –
from exploration to construction and
maintenance. Another French come
came to look for business opportunities,
IPSI, specialised in supply equipment
for the oil and gas sector. The
participation of Gep French Oil and
Gas Industries should also be noted -
an association of 160 companies involved
in the realisation of all oil and gas
chain projects. This group is responsible
for promoting the French technology
of the oil-gas sectors to large international
operators.
Poland is also interested in the hydrocarbons’
market in Algeria – at least
three companies participated in this
first version of the international hydrocarbons’
and gas trade show. The latter
are specialised in drilling and exploration,
but also in seismic prospecting.
Germany, Belgium, Great Britain and
Spain are also represented there, even
if the number of companies is less than
from France.
The national companies
at the heart of the event
About forty national companies are
taking part in this meeting. In addition
to Sonelgaz, the presence of Enafor
should be noted – this company which
is located in Hassi Messaoud and has
2,730 drilled wells on its assets. It carries
out drilling operations for the purposes
of reconnaissance and exploitation
of hydrocarbons and groundwater
fields as well as maintenance operations
for the oil and gas producing
wells. Another Algerian participation to
be cited is that of Naftogaz - a national
company specialised in the development
and application of oil and gas
techniques but also ENTP of Hassi
Messaoud which has been supporting
the exploration and exploitation of
hydrocarbons in the region for 38
years.
In parallel to this trade whose, specific
days are scheduled for 26 and 27
February within the Naftogaz complex.
Several debate themes have been selected,
including the LNG market, the oil
and gas market, the development outlook
for hydrocarbons, the impact of
the national gas industry on the WTO
and the delicate issue of the environment
in the gas regions.
Energie & Mines
129
november 2005

PARTNERSHIP
III meeting of Algerian-Iranian businessmen
Tehran interested
in the Algerian market
Energie & Mines
130
The 3rd investment meeting
between the Algeria
and Iranian businessmen
was marked, in the Sofitel
hotel in Algiers, by the
signature of a cooperation
agreement between the
Algerian Chamber of
Commerce and Industry
(CACI) and the Iranian
Chamber of Commerce and
Industry and Ores. This
meeting enabled the different
businessmen, both
Algerian and Iranian,
to succinctly present
their different fields
of intervention.
november 2005
In the presence of the Islamic Republic of
Iran’s ambassador to Algeria, the representatives
of both chambers, in this case
Mr Abdellah Bensalah, vice president of
Caci, and Mr Ali Khamouchi, chairman
of the Iranian chamber, highlighted the
necessity for cooperation between the
two countries which, according to them
“have some many potentials hidden in
each country as well as the level of excellence
of political cooperation”, encouraged
by Presidents Bouteflika and
Khatami. Hence, for Mr Abdellah
Bensalah, the changes which the country
has been experiencing over these last few
years as well as the political opening up,
confirmed during the April 2004 elections,
have mean that Algeria has become
a country which is arousing a certain
craze. To perfect this change and its opening
up to the international market,
Algeria signed, two years ago, an association
agreement with the European Union
and soon hopes to finalised its membership
to the WTO.
“Examples of privatisation of certain sectors
of the economy have given complete
satisfaction”, he emphasised, making
reference to the steel industry complex of
El Hadjar and to the domain of telecommunications.
As for outside the country,
Mr Bensalah confirmed that "Algerian
debt has been reduced to 35% and (that)
the financial basis which the country currently
has guarantees imports for two
years". Dealing with the chapter of inflation,
Mr Bensalah notified the people present
that this, for these last few years, has
reduced to an equivalent of 2% a year,
thus enabling the economic growth to see
an upwards spiral and which, in 2004,
reached a unique figure in the economic
annals of the country, which is 6.8%.
“These results are the fruit of the combined
efforts of public and private operators,
but are particularly due to the economic
rehabilitation programme initiated
by the President of the Republic”.
With regard to the Algerian market, the
speaker emphasised that this is composed
of “32 million consumers”.
“Furthermore, he said, the domestic
investment requirements are immense.”
On this subject, Mr Bensalah reported
over 1,000km of motorway which have
to be built, over 50 irrigation dams and
sea water desalination stations, a million
housing to be built, the renovation of the
railway network, educational structures
for 1,000 new studies to be built and an
industrial fabric to renovate.
For his part, the chairman of the Iranian
businessmen's delegation, Mr Ali
Khamouchi, emphasised that the last five
year plan has enabled the country to
make economic growth of 5% with,
which is key, the creation of over 760,000
direct jobs. These efforts have, according
to the Iranian representative, particularly
enabled the country to bring inflation
down to less than 11%, whereas it was
25% only two years ago. With regard to
foreign debt, according to Mr
Khamouchi, this has been reduced from
32 billion dollars to 8 billion, “hence placing
this country among the least indebted
countries on the planet”.
In his speech, the Iranian ambassador,
Mr Mohamed Reza Moali Zada, recalled
that, since the visit by President
Bouteflika to Iran, “30 agreements and
memorandums of agreement have been
signed. Five exhibitions of Iranian products
have been organised in Algeria and
we hope very soon to see Algerian exhibitors
in Iran”. For his part, Mr Malek
Serrai, international expert and director
of Algeria International Consult, deplored
the lack of communication on the part of
the organisers as well as the lack of agencies
and other institutions at this meeting
which promote investment.

ENERGY MARKETS
According Pétrostratégie
The large consumer countries are the main
beneficiaries of the increase in oil prices
The consumer States are still the main
beneficiaries of the increase in crude oil
prices, according to the first estimates
published in the latest issue by the specialised
review Pétrostratégie
The publication which refers to evaluations
established by OPEC’s departments,
was part of the question of knowing
whether the upsurge in prices in
2004 had fundamentally change the
sharing of oil income between the producer
States, the consumer States and
the companies.
To respond to this question,
Pétrostratégie contacted OPEC’s
Research Department whose figures
“cannot be questioned”. Hence, in
2004, the Member States of the
European Union (EU) received 57% of
the final price of oil compared to 33%
in 1981, a “peak” year for oil prices,
whereas the producer States, for their
part, only received 36% of this final
price compared to 48% in 1981, i.e. 23
years before.
The same phenomenon was revealed in
Japan, where the Tokyo government
saw its share increase by 16 points to
36% in total whereas the producer
States declined by 17 points on this
market to 34% of oil income.
In the United States, the producer
States made the best results even
through their percentage of the total
price of oil has declined in 23 years,
going from 64% to 51%.
Calculated in absolute values, the imbalance
between producer States and
consumers is just as significant: between
1999 and 2003, the States of the
seven richest countries in the world
received, on an annual average, 273
billion net income from oil, i.e. 20%
above the crude oil income made by the
OPEC countries.
According to Cera Week 2005
A relative relaxation of
oil prices expected in 2005
Awaited with interest by the professionals,
the annual forecasts of the
Cera Week Congress announce a
relative relaxation of oil prices for the
year 2005, thanks, on the one hand,
to a strong increase in production,
and to a deceleration of demand.
Recently met in Houston, the Cera
Week Congress brings together the
world energy elite. In a context
where oil is increasingly difficult to
find, the oil upstream players who
are having difficulty increasing their
production must, according to the
participants, by 2010, make 16
million barrels/day additional capacity
to satisfy a global demand which
on this date will exceed the symbolic
level of 100 million b/d. This challenge
should be covered bit by bit in
equal shares by the OPEC countries
(+8.9mbd) and the non-OPEC
countries (7.6mbd) with an increasingly
strong contribution from the
offshore fields of Brazil, the Gulf of
Mexico and the Gulf of Guinea. This
is why we are anticipating a stagnation
of oil prices in 2005.
With regard to the record surges
observed in 2005, the congress feels
that, in the end, they have only affected
the world economy slightly. On
the other hand, these prices have
enabled the companies, and mostly
the major ones, to store up record
profits, with the total liquid assets of
these companies reaching some 29
billion dollars, i.e. 90% more than
the previous year.
To the question of knowing to what
use these over-liquidities will be put,
the independent companies reproach
the major ones for showing excessive
timidity in investing in exploration,
"the only real creation of values".
With regard to the refining activities,
the congress reveals that the
American tool is working under pressure,
with no refinery being able to
greatly influence prices in 2004.
The refining capacities
incriminated in the price
increase
The latest monthly report from the
International Energy Agency (IEA) establishes
that the global consumption of oil increased
on average by 660,000 barrels/day between
1999 and 2002 to explode to 2.3 million
barrels a day in 2004. In the same time, the
increase in refining capacities was four times
less, i.e. 700,000bd.
OPEC has made the shortage of refining
capacities partially responsible for the surge
in prices. Whilst the observed evolutions are
lasting, the refining capacities will be satisfied
by the end of the year. Less profitable
than investing in the upstream, downstream
investment, particularly the refining, does not
interest the major players, in spite of the profits
they are storing up. But the under-investment
does in fact affect all the segments of
the world’s oil industry. And this tension is
likely to last, as the large companies remain
expectant in spite of the high level of prices.
How, to face up to the growth in demand for
oil products, the entire world’s oil industry
must invest over 400 billion dollars in refining
by 2030.
Energie & Mines
131
novembre 2005

ENERGY ENERGY MARKETS
The increasing importance of hydrocarbons in deep water among
the new discovered giant fields
Offshore zone, the lion’s share
The Panorama 2005 conference, which
has just been held in Paris, enabled the
increasing importance of marine
hydrocarbons to be highlighted in the
discovery of new oil and gas deposits.
Over the period 1999-2003, the discoveries
of new hydrocarbons’ fields
have, in total, represented additional
reserves of almost 11,000Gm3(1) of
natural gas and 62Gb(2) of oil and
condensates. As for the offshore zones,
these have concentrated two thirds of
these new hydrocarbons' reserves, deep
offshore half, according to a document
presented by the IFP (French oil institute).
In some regions such as Africa
(Sub-Saharan), South America and
North America, the deep offshore
constitutes even more than two thirds,
even more than three quarters of the
economically exploitable volumes discovered
over the period 1999-2003.
Hence three discoveries in deep offshore
made in Nigeria total 1.59 billion
barrels of oil (giant fields) and 5 others
made in Brazil total reserves of 3.1
billion barrels on also giant fields.
The new discoveries also remain greatly
concentrated offshore with regard to
natural gas. Over the period 1999-
2003, the marine regions represented
60% of natural oil discoveries, with
deep offshore constituting two thirds.
In some regions, such as North
America, almost all the discoveries
were even made in deep water.
In the coming years, the offshore
should therefore concentrate an increasing
share of the investments devoted
to the development of production capacities.
Even if they do not suffice in themselves
for the renewal of reserves, the discoveries
of new fields continue to
represent, still today, quite considerable
volumes of oil and natural gas, even
though the regions of the world where
the potential the largest new updates
still remain totally enclosed or difficult
to access by international investors.
The importance of technology should
finally be pointed out, when we noted
that the offshore, and particularly the
deep offshore, concentrates the majority
of these new deposits and that an
increasing number of these discoveries
could have only be made thanks to
increasingly sophisticated seismic
methods and tools.
(1) Gm 3 : Billion cubic metres
(2) Gb : Billion barrels
According to a study by the French Oil Institute
“The world’s oil demand could present
a lesser price sensitivity”
In a memo signed Olivier Rech which has just been made
public, the French Oil Institute particularly asks itself if the
increase in oil prices over the last 18 months and the breaking
through of the symbolic threshold of $50/barrel present
a structural nature.
The current price system, high in current dollars but “still
less than about 30% in constant dollars to the one at the
start of the 1980s” results, according to this study, from a
demand growth rate “higher than we have observed for 20
years”. This phenomenon would, according to the IFR, be
attributable to the considerable growth in the share of the
emerging economies in the global demand. As, whilst the
global demand was for a long time dominated by the industrial
or even post-industrial countries “with a not insignificant
price elasticity”, the majority of emerging economies,
such as China, “characterised by a lot weaker price elasticity,
are tending to rapidly increase". Hence, the Chinese economy
seems "apparently insensitive to the increase in oil
prices". In this economy, “the creation of added value,
mainly favoured by the low production costs - labour and
capital - relegates to the background the energy costs
alone", observes this study which feels that "the global oil
demand could, in the future, present less price sensitivity".
On the other hand, the loss of impetus of product, seen for
the first time in the non OPEC producer countries, “would
reinforce OPEC’s regulating power”.
Energie & Mines
132
november 2005

ENERGY MARKETS
Oil and gas
59 to 66 % of the world’s energy
consumption in 2030
Oil and gas could
represent 59 to 66 %
of the world's primary
energy consumption
in 2030, points out the
Oil Information
Bulletin (BIP) which
refers to the studies
of the IEA and the
European
Commission.
The IEA estimates that the investments
needed to satisfy the planet's energy
requirements are 16.000 billion dollars
between 2001 and 2030, 3.145 billion
of which the gas sector and 2.839 in
the oil sector. The realisation of these
investments depends, according to the
agency, on several factors. This particularly
means risks linked to the price
of crude, fiscal and political conditions,
and the technical issues such as the
geological risks.
The security of supply is another determining
factor alongside the dependency
on crude from the Middle East
which must provide 45% of global production
of crude in 2030. In 2000, the
region provided 30% of the crude
consumed in the world.
To face up to this dependency, the
governments could increase the weighting
of other energy sources in order to
guarantee the security of supply. The
other element working in favour of this
alternative is the strong increase in
greenhouse gas emissions which could
limit the use of fossil energy.
Finally, according to the same study,
“the planet's energy requirements
should significantly increase over the
next few decades as economic progress
and demographic growth dictate.
According to the forecasts, the requirements
vary from 11 to 18 billion oil
equivalent tonnes (oet) by 2030 and
from 12 to 30 billion oet by 2050”.
Energie & Mines
133
november 2005

ENERGY ENERGY MARKETS
Namely
The determining factors of
the price of crude
Energie & Mines
134
Monday, 25 October
2004, Nymex
Exchange in New York.
The price of WTI crude
oil for December delivery
surges to reach
the historic record of
US$55.67 a barrel – a
level never reached
since 1988. What are
the factors which
determine this price
and its evolution over
time Is it only an
issue of supply and
demand
november 2005
In fact, the price of crude is the
result of three factors :
1. the market “fundamentals”,
i.e. the supply/demand equilibrium
and its evolution over time;
2. the activity of the hedge funds,
which do not have any direct relation
with the oil activity, but buy and sell oil
on the paper market;
3. the psychology of the market
players.
The market fundamentals have a preponderant
influence on the price, whereas
the speculation and the psychology
of the players have a more selective
influence.
The market “fundamentals”
Demand
Oil cannot be used in its crude form. It
must be refined before being used. Its
value is the sum of the values of the
different refined products obtained:
LPG, naphtha, petrol, kerosene, diesel,
fuel oil. This is the notion of GPW
(Gross Product Worth).
Demand for crude oil comes therefore
from the refiners, it is dependent on
the demand for refined products
expressed by the end consumers:
industrial sector, transport sector,
households. The quantity and the quality
of the demand for refined products
is dependent upon the choice of the
refiners in terms of refining technology
and capacities (the more sophisticated
the technology, the higher the
yield, the better treated the heavy and
sulphurated oils).
The market does not only observe the
absolute level of demand, but also its
growth rate. In 2004, the global
demand for crude oil reached 83
million barrels/day, 25% of which
come from the USA. It is expected that
global demand increases by 1.8 million
barrels/day in 2005, due to the strong
global economic growth and the explosion
of Chinese demand (and Indian
demand, to a lesser extent).
The demand for oil products (fuels,
heating oil, diesel) is dependent upon
the economic growth in the large
consumption areas. It is also influenced
by seasonal factors :
• April is the start of the “driving season”
in the USA, where 215 million
drivers start to user their vehicles more
frequently to make the most of the
return of Spring, therefore increasing
their petrol consumption.
• A hard winter in the Northern hemisphere
means larger heating requirements,
therefore an increase in fuel
consumption.
• The “hurricane” season from June to
September on the American East coast
constrains the off-shore refineries of
the Atlantic coast and the Gulf of
Mexico to frequently shut down their
operations, hence reducing the demand
for crude by increasing the upwards
pressure on the refined products.
• The refineries’ maintenance period,
variable depending on the country,
also entails a decrease in the demand
for crude oil.
Supply
To the demand for crude oil expressed
by the refiners responds a supply
coming from the producer countries.
This supply is diverse in qualities
(there are light and heavy, non-sticky
and non-fluid). They come from several
producing regions: Middle East,
North Sea, Russia, Mexico,
Mediterranean, West Africa and
recently the Caspian Sea.
The crude supply is not seasonal, but
continues throughout the year.
In 2004, the global supply was 83
million barrels/day, 54 million of
which comes from non-OPEC countries
(Russia, Norway, Mexico, former
Soviet Republics). The OPEC countries
only produce 35% of the global
supply, i.e. 29 million barrels/day,

ENERGY MARKETS
10.5 million of which from Saudi
Arabia alone. Algeria is ranked 9th in
the OPEC producer countries, with 1.3
million barrels/day at the end of 2004.
The level of supply, quality of supply in
each exported country, additional production
capacities of the OPEC and
non-OPEC countries are parameters
closely watched by the market.
Speculation
on the financial markets
The hedge funds handle billions of dollars
of contributions from American
pensioners and speculate on the financial
markets.
These funds, also called “non commercial”,
look for the best opportunities of
short term investment. They will therefore
invest in stocks of companies listed
on the Stock Exchange, in American
Treasury bonds, or on the futures commodities
market, depending on their
profit expectations. Whereas they do
not have any activity in the oil industry,
their financial power enables them to
influence the prices of crude oil, by
taking positions on these markets. The
funds permanently hedge between the
stock markets, bond markets and commodities
markets.
The opportunist behaviour accentuates
the volatility of prices. If the price of oil
has an upwards trend, the hedge funds
will massively buy paper contracts,
hence contributing to the increase in
the price of oil. If, on the other hand,
the price of oil has a downwards trend,
the funds will massively sell their
contracts, accelerating the price decline.
The analysts agree on saying that
the activity of the hedge funds accentuates
the trends of the market more
than it provokes them.
The psychology
of the market players
Nervousness, market panic due to an
exceptional even: depressed or tense
market: these terms are often used to
describe the psychological state of the
oil market players. The psychology of
the players determines their behaviour
as buyers or sellers. In calm periods,
the buyers are quiet and only buy or sell
according to their needs. In an agitated
or uncertain period, massive buying or
selling behaviours emerge: for example,
when the market is depressed, and the
prices are low, some sellers panic and
look to liquidate their physical production
or their financial position, accentuating
the decline in prices; when the
market fears a shortage, the consumers
tend to buy more to stock more in
order to protect themselves against
supplies potentially running out.
Conclusion
The price of crude is the complex combination
of three determining factors:
fundamentals, speculation activities
and psychology; each having a variable
importance depending on the market
conditions.
In a period of stable demand and sufficient
supply of crude, the markets are
calm and the speculation possibilities
are limited: the price is essentially
based on the market fundamentals.
In a period of strong growth in demand
and tight supply, the buyer fear a
breakdown in the supply/demand equilibrium
and worry about their future
supplies. The speculation opportunities
multiply : the price of crude no longer
depends solely on fundamentals; it is
linked to the activity of the speculators
and to the psychology of the market
players.
The historic peak of 25 October 2004 is
a good illustration of this scenario: the
US$55.67 reached that day does not
only reflect the market fundamentals.
The extra premium estimated between
10 and 15 dollar/barrel, according to
the experts, indicated the high level of
speculation and the fear of supplies
running out. The price linked to the
“fundamentals” was only about
US$40-45/barrel. Just like all market
players, Sonatrach attentively monitors
the evolution of the prices of crude and
oil products. As a producer, it looks for
firm and stable prices for its products,
on a market subject to increasing volatility.
This is why Sonatrach launched a
Risk Management Project which will
particularly have the objectives of reducing
the volatility of the impact of prices
on the hydrocarbons' exports and to
contribute to optimising the income
generated by the sales on the international
market.
L. K.
Back Office Projet
Risk Management Sonatrach
In Market News
Energie & Mines
135
november 2005

ENERGY ENERGY MARKETS
China must control
its energy consumption
China’s entry to the World Trade Organisation (WTO), in November 2001,
was accompanied by an opening up of the country to foreign investment
and to a start of economic liberalisation. In the energy sector, China
has hence opened itself up to competence the downstream sector (sale
of oil products) has just done this for the imports of crude oil and
refined products whose consumption is shooting upwards.
Overall, the Chinese economy
is working on full
power. After a growth of
8.8% in 2002, China’s
GDP increased by 9.1% in 2002, a level
which is becoming problematic for it.
Even more so given that, in the first
quarter of 2004, the growth of the
Chinese GDP was 9.8% compared to
the same period in 2003 - a trend
which numerous experts deemed to be
unbearable, estimating that, in the year
2004, the growth will be 8.1%.
Confronted with a large growth of its
oil demand since 2003, China must
consequently commit itself to controlling
the gas and oil consumption in
order to maintain long term sustainable
development. This is the sense of a statement
made by the Chinese Prime
Minister, Mr Web Jiabao. “We have to
accord greater importance to economic
and reasonable consumption of oil and
gas products so as to guarantee a stable
and long lasting supply as well as efficient
exploitation of oil and gas resources",
he explained during a conference
cited by the official agency Xinhua.
“The oil and gas resources are of a
strategic importance for the overall
modernisation of China, the construction
and the national security”, emphasised
the Head of the Chinese government
during this conference organised
by Peking on the theme of the sustainable
development of China’s oil and gas
resources.
A two figure growth
in the demand for oil
Mr Wen Jiabao warned that, with
China's rapid economic development,
the difference between oil and gas supply
and demand was widening. China’s
oil demand increased by 11.4% in 2004
compared to 2003, which makes it the
larger oil importer after the United
States. The price of oil and its by-products
increased by 11.8% on average
last year in China.
In the first seven months of 2004, the
crude imports increased to almost 40%
compared to last year at a time when
the economy grew by 9.6% in the first
half of the year. The Ministry of Trade
estimates that the crude imports will
exceed 100 million tonnes in 2004. The
increase in the price of oil will deprive
China of 0.8 points of growth, insofar
as this large energy consumer must pay
more for its imports, the official economists
agree. The American Energy
Information Administration (EIA)
expects that China’s demand will reach
12.8 million barrels/ day (mb/d) in
2025, compared to 5.56mb/d in 2003.
Out of these 12.8mb/d, almost three
quarters, i.e. 9.4mb/d, will have to be
imported.
“We should reinforce oil prospecting
and exploitation but, more importantly,
we need to control the consumption of
these fossil energies and develop substitution
energies”, further emphasised
the Chinese Prime Minister. All the
industries must draw up detailed objectives
for this purpose, he stated.
According to Mr Wen Jiabo, China
needs to have stable and economic
means of oil and gas supply as well as
oil securisation systems, both internally
and internationally. The difficulties of
the Russian group Yukos pose a problem
for China which, this year, will
import 6.5 million tonnes of oil by railway
(See BIP of 31.8).
The Chinese leader called for the progressive
building up of oil reserves to
protect the country against shortages.
He indicated that China must set itself
the priority of developing oil exchanges
and oil cooperation projects with other
countries. According to the agency
Xinhua, which cites sources close to the
Council of State for development and
research, the Chinese government
plans to build up strategic reserves
equivalent to 35 days of crude imports
by 2005.
Re-opining of the futures
market to certain oil products
It is in this context that the Shanghai
oil futures market resumed its activities
on Wednesday 25 August. This is the
first of the Chinese markets to re-open,
after nine years of prohibition by the
authorities. This market, restricted to
the Chinese for the time being, enable
the negotiation of futures contracts on
petrol, diesel, kerosene and fuel oil.
“The transactions are larger than
expected”, commented Mr Wen Li,
from the brokers Shenzhen Jinrui
Energie & Mines
136
november 2005

ENERGY MARKETS
Futures. This market, which might be
opened to foreigners in the near future,
is also part of the commitments
made by China at the time of its membership
to the World Trade
Organisation (WTO) in 2001. In
1995, China had closed its Shanghai,
Nankin and Peking futures markets,
further to a series of scandals. The
authorities have not announced projects
to re-open in Nankin and Peking.
In parallel to this re-opening, China
has authorised 17 companies to
import crude and refined oil, whereas
until now only the CNPC and Sinopec
groups were authorised to do so.
Information reported by the Peking
daily newspaper, Jingha Shibao.
Car fuels in the hot seat
China has also announced that it had
increased the prices of petrol, diesel
and kerosene from 6 to 12% in reaction
to the strong increase in the prices
of oil on the international markets.
According to industrial sources, the
price of petrol increased by 240 yuans
(29 dollars) to 4,325 yuans per tonne,
whereas the price of diesel increased
by 220 yuans to 3,830 yuans. The
price of kerosene increased by 400
yuans to 3,710 yuans. This is the
second increase in the price of fuels in
China since the start of the year. In
March, the National Development and
Reforms Commission (NDRC) had
increased the sale price of petrol by
300 yuans per tonne. In May, it had
revised the price of diesel upwards by
280 yuans per tonne. The environment
is also a problem for China. Hence,
since 1 July, China put in place standards
for car pollutant emissions equivalent
to the standard Euro II. A plan
provides for the installation in Peking
of the Euro III standards in 2005 and
their extension throughout the country
by 2008.
To make the transition to these Euro
III, it is no longer enough to work on
the engine itself, but the quality of the
fuel must also be improved. This will
imply modifications of the refining
tool.
In BIP
Oil
Proven oil reserves (as of 1/1/04)
Oil production (in 2003)
Oil consumption (in 2003)
Net oil imports (in 2003)
Crude oil refining capacity (as of 1/1/4)
China’s energy overview
Natural gas
Proven natural gas reserves (as of 1/1/04)
Natural gas production (in 2002)
Natural gas consumption (in 2002)
Coal
Recoverable coal reserves (as of 1/1/04)
Coal production (in 2002)
Coal consumption (in 2002)
Electricity
Electricity production capacity (as of 1/1/02)
• 253 GW thermal
• 83 GW hydraulic
• 2 GW nuclear
Electricity production (in 2002)
• 1 240 TWh thermal
• 308 TWh hydraulic
• 23 TWh nuclear
Gbls : billions of barrels
Tcf : trillions of cubic feet
GW : billions of watts
Mb/d : millions of barrels per day
Gt : billions of tonnes
TWh : terawatt-hour
18,3 Gbls
3,54 mb/j
5,56 mb/j
2,2 mb/j
4,5 mb/j
53,3 Tcf
1,15 Tcf
1,15 Tcf
126,3 Gt
1,52 Gt
1,42 Gt
338 GW
1.575 TWh
Source : EIA – juillet 2004
Over 50 % of the chinese
oil demand will be covered
by imports in 2010
Over half China’s oil demand, which will grow significantly by 2010, will
be covered by this date by imports, indicated the State’s press. The
Chinese crude demand should reach 350 to 380 million tonnes by
2010, writes the Oriental Morning Post, quoting Gao Shixian, director of
the Energy Research Institute.
According to Mr Gao, China will have to import 180 to 200 million tonnes
in five years, i.e. over 50%, if it wants to provide energy for the
companies whose activity made the GDP increase by 9.5% last year.
China is already the largest oil consumer country after the United
States. Its consumption could reach 320 million tonnes this year, i.e.
12% of over 288 tonnes used last year.
In 2004, the crude imports increased by 34.8% to 12 million
tonnes, according to the official figures. The imports were 91 million
tonnes in 2003, up by 31.29% on 2002. The country, which has already
been a net oil importer for 10 years, is looking to diversify its supply
sources abroad.
Energie & Mines
137
november 2005

ENERGY ENERGY MARKETS
32 nd International Energy Conference
“An emerging global
gas market”
By
Mustapha Benkhemou
First of all, let me remind you
some fundamentals of the
natural gas scene.
• The natural gas share in the
energy mix is continuously increasing.
• Gas reserves are better distributed
than oil.
• The potential of Algeria mining territory
is important but right now not
really evaluated.
We are just beginning to explore center
and western Sahara which are more
natural gas oriented than oil. The new
hydrocarbons law offers serious incentives
to explore these regions. It is a fact
the major IOCs are more interested in
Algeria mining territory since we
improved our legal and regulatory framework.
You must also note that the Algerian
NOC is aiming to enlarge its reserves
outside the country, as it is already
done in Peru within the Camisea humid
gas field.
• An other important remark : All over
the world, and especially in South
Europe, power generation is, and will
continue to be, the main driver of the
increasing demand for natural gas.
• We can also consider that spot transactions
are necessary to improve the
adequacy of supply and demand, but
we must note a stagnation of this kind
of trade at less than 10% of the total, in
Europe for instance.
• Last but not least, the decrease of
LNG chain costs is impacting the
whole gas industry.
The results of the decreasing
LNG costs are, mainly :
• The share of LNG transactions in the
world gas trade, which is steadily growing.
Energie & Mines
138
november 2005
• Consequently, the border price of
imported gas in the main consuming
markets is more and more determined
by the acquisition cost of remote LNG.
We can also assess than, as the LNG
chain is capital intensive, potential suppliers
cannot invest without 02 conditions
:
• First, the security of a stable market
(this is why in Europe, the second version
of the Gas Directive agrees the
Long Term ToP contracts in view to
reinforce the security of supply).
• Second, at least, a cost plus margin
approach for the pricing of LNG is a
minimum eventhough it could be
necessary to maintain some indexation
on oil products to avoid great distorsions
within the interfuel competition.
Then, when we combine all these
considerations, we can set up as a viable
assumption the progressive emergence
of a global gas market.
Here is a graph showing clearly that
gas demand is growing more than al
the other sources of energy.
Moreover, we can expect today an
additional factor for boosting the natural
gas demand, I mean the probably
strong development of Gas To Liquids
in substitution to some more polluting
oil products. Probably in the next decades
(2020-2030). This would induce
an increasing share of natural gas
within the transportation sector, which
is nowadays widely dominated by oil
products.
This chart shows the flows of LNG as
they where in 2003. You can see also a
panel of potential routes for new LNG
arrangements. Obviously, this trend
allows each actor to diversify its spectrum
of partnerships.
• Every supplier will be in position to
target all the consuming markets, and
• Every large consuming market will
aim to secure its gas supply by purchasing
both close and remote gas.
In such a context, what about
Algerian gas
You all probably know that Algeria was
among the first actors within the gas
industry. Algeria has developed a deep
experience in LNG as well as in international
gaslines.
As you can see on this map, from 1986
to 2004 most of the discoveries have
been registered in the Eastern
Sahara……because exploration focused
on this area.
Now, let’s have a glance to the Algerian
export infrastructures :
• 02 important gaslines totalling 48
BCM/year capacity
• 02 ongoing projects totalling 20
BCM/year capacity
• 03 LNG plants totalling 25
BCM/year capacity
• LNG projects- Gassi Touil 4MT (1st
phase), Skikda 4MT, other projects
under study.
New LNG plants could be built, depending
on the capability of the consuming
markets to secure the profitability of
the investments. Integrated projects
(like Gassi Touil one) and partnerships
should be the key factors of success of
such a strategy.
Right now, all the options are opened
for the marketing of the additional
LNG volumes. US market and Asia
seem attractive, but the European market
could absorb more Algerian LNG,

ENERGY MARKETS
especially Great Britain. At this stage,
we must note that a regular development
of the gas exchanges request
heavy investments in some kind of
spare capacities of production and
export. Nowadays, this financial burden
is carried out by the suppliers
(mainly the NOCs).
A similar behaviour should be requested
from the consumer markets in
order to make the gas flows easier. US
market, for example is suffering from
the lack of regas infrastructures.
The US market
So, let’s have a glance towards the US
gas market. During the 90’s , the US
market was well supplied by both the
domestic production and the imports
from Canada. But a short term oriented
strategy, always and everywhere induced
by a total confidence in the capability
of the market forces to achieve a
perfect equilibrium Supply vs Demand,
resulted in :
• a lack of supply
• the highest level of prices worldwide,
accentuated by a tremendous volatility
linked to the spot and /or very short
term transactions.
We can expect that the investments
planned in regas facilities will improve
this situation and the prices be stabilized
around 4$/MMBTU, like in
Europe and Asia.
For the algerian gas, the US market
eventhough attractive must be considered
with great caution. The profitless
experience of the 80’s imposes to develop
a partnership based strategy combining
horizontal & vertical partnerships.
The European market
The european market is characterised
by a strong and regular increasing
Demand, mainly driven by power generation.
If some countries of South Europe (like
Spain) must diversify their sources of
Supply, with respect to the European
Gas Directive, this policy constraint
may give an opportunity for algerian
gas to replace part of the russian supplies
in Eastern Europe.
More, the depletion of the britain gas
reserves in the North Sea offers a
potential new market for the national
Oil and Gas Company, SONATRACH,
preferably in partnership with other
companies involved in the Algerian
upstream.
The asian market
As you can see, Asia will register the
strongest growth of natural gas
consumption and China, then India,
will become very large importing countries
up to 2020-2025.
In these conditions, Algeria could be
interested to supply this area.
Obviously, in order to achieve a good
profitability of these new arrangements,
swaps should be considered
with partners like Qatar and/or Iran…
wich are very interested in the markets
of the Atlantic Basin.
An emerging global gas
market
I have short listed some factors favourable
to a global LNG market to emerge.
These non exhaustive points are
resuming the items leading to a globalisation
of natural gas trade.
I have also listed some constraints.
The first one relating to the regas facilities
is going to be solved. Partnership
is an absolute necessity for all the
actors to secure the investments along
the gas chain.
The second point is less easy. In
Europe, for example, the liberalisation
of the markets is somewhat limited by
some regulatory barriers. European gas
operators are encouraged to develop
their activities in the upstream of the
Supplying countries… But the national
oil company cannot have access to the
European end users. Naturally, all
these concerns are under discussion.
Whatever happens, Algerian natural
gas can compete in every consuming
area and is enhancing its capabilities all
along the LNG chain.
M. B.
Director of Prospecting
and Strategy
Energie & Mines
139
november 2005

ANALYSIS
The competences approach
What system, what tools
In a heterogeneous economic situation, combining sectors in crisis,
other in stagnation, others in evolution, but characterised by an increasingly
strong competition, the companies want to be competitive and
ensure social peace. To do this, the companies must detect, evaluate
and develop the competences of the individuals and teams at
all levels to enable them to use as best as possible the processes
and procedures confronted with varied situations and in an
ever-changing environment.
Energie & Mines
140
This therefore means having
recourse to forecasting management
of jobs and competences
which designate a series of
methods and practices enabling human
resources to be adapted to the needs of
the companies.
The personnel, the jobs, the competences
are therefore the subject of a prospective
vision which provides a general
framework in which the decisions in
terms of recruitment, training, work
organisation, etc. are made.
The forecasting management of jobs
and skills, commonly called GPEC, aims
to increase, by anticipation, the capacity
of companies to control the permanent
conformity between their needs and
their human resources from a quantitative
and qualitative point of view.
It is made up of a series of methodological
concepts, but also analysis tools
without which it could not be implemented.
These tools contribute the
improvement of the quality of dealing
with the human resources function at
the company level. The management of
competences is one of the parts of forecasting
management of jobs and competences.
It covers all the activities
which target the identification, the
acquisition, the development and the
use of the competences necessary to
achieve the company’s objectives.
Furthermore, the competences’ management
tools which are used as a
november 2005
By
Schahrazed Boutira
benchmark for managers and directors
of the HR function enable :
• the responsibilities as well as the
competences required by a job to be
accurately determined.
• The human resource and its level of
competence to be known.
• The development needs of the human
resource to be more rationally identified.
• Development plans adapted to the
identified needs to be drawn up.
Today, it should be noted that, in the
large companies, we no longer only talk
about training, but increasing about the
development and professionalisation of
the human resource.
This professionalisation is focussed on
the acquisition of a portfolio of competences
which will enable the individual,
throughout their career, to develop
their employability and be capable of
taking on new functions. This in fact
falls within the framework of a prospective
approach and of making the
human resource capable of carrying
out jobs which are perpetually changing
due to the technical and technological
progress in the employment
world.
No longer remaining solely in the
conceptual register, the competences'
management approach, which consists
of five states, as well as the tools which
are generally implemented, are presented
below :
Drawing up of job
and competences’ references
The job and competences’ profile is the
basis tool for managing the competences.
It is used for persons who must be the
subject of specific competences’ development
actions with regard to the evolution
of the jobs which they occupy or
for their preparation for jobs requiring
a specific preparation process. The
works for drawing up the job and competences’
profiles should, consequently,
as a priority be focussed on the jobs
which are known to be sensitive, strategic
and those which have an impact on
the economic results of a company.
The job and competences’ profile differs
from the job description or the
function description.
The latter is a document which organises
and ranks the jobs when roles are
created or changed within the framework
of procedures relating to restructuring
and updating of organisation
charts. The function description must
be systematised to all positions which
appear in the positions’ nomenclature.
The job and competences’ profile has
the following objectives :
• to accurately identify a work process
into areas of responsibilities and skills,
• to serve as a benchmark when assessing
the employees by measuring the
differences between the skills required
for a position and those which the
employee has,
• to serve as a benchmark for drawing
up human resource development programmes.

ANALYSIS
Skills evaluation or skills
report
Medef defines a skill as “a combination
of knowledge, know-how, experiences
and behaviours exercising in a specific
context. It then reports its implementation
in a professional situation from
which it is valid”.
Because of this, it is in the company
that it may be listed, evaluated and validated
by reference to the required competences.
Furthermore, we must say
that the skill is different from the qualification
which relates to academic knowledge,
generally sanctioned by diplomas.
The skills report or skills evaluation
is a process consisting or measuring,
in an individual a knowledge,
know-how or behaviour.
The distinction must be made between
the skills evaluation, the output evaluation
and the potential evaluation. These
are three evaluation methods which
target different objectives and which
require the implementation of different
approaches.
The skills evaluation relies on the skills
benchmark and uses a measurement scale
which enables the individual to be rated
according to their level of competence.
The objectives of this evaluation are:
• to find out and rate the level of competence
of the HR,
• to identify the differences between
the skills available and those required
by the job,
• to commit to actions which attempt
to acquire the skills required by the
organisation.
Drawing up development
plans
A skills development plan is a set of
actions planned and implemented to
give the individual the skills they are
lacking. The development plans target
the following objectives :
For the company or the organisation :
to have a ready and competent personnel,
• to succeed in reorganisation actions,
• to organise the mobility and the
career development of the employees.
For the employee :
• to fully master the tasks linked to
their position,
• to acquire new knowledge with a
view to accessing other jobs and developing
their employability.
The skills’ development plans may have
several forms:
• A development system in the action
such as going on a training course,
incident simulation exercises, interim
responsibility, making documentation
available, etc.
• Training actions whose nature, duration
and method depend on the importance
and the nature of the differences
to be re-absorbed and the means of
development offered by the internal
and/or external environment.
To be effective, the development plans
must be limited over time, readjusted
each time depending on the situations
which come up, drawn up and implemented
with the parties concerned.
Implementation of the skills’
development plans
This means carrying out training
actions and putting the employees into
the situation provided for in the development
plan. The development plans
can be drawn up using various means,
including :
• The means of the unit itself
• The company’s training structures
• The external training structures
Evaluation
of the development plans
The development plans implemented
must be regularly and strictly monitored,
enabling :
• a progress report to be made on the
actions initiated,
• corrective measures to be introduced,
• these improvements to be integrated
into the later actions.
Conclusion
The effective implementation of a skills
management approach requires the
concerted involvement of all the parties
concerned :
• the human resources manager, who
is considered as the guarantor of the
respect of the methodological
approach, remains the leader of the
process;
• the specialists of the activity or of the
function who must integrate in this
approach all the developments and the
projected evolutions of the company’s
core businesses, those which are its driving
force;
• the line managers who must take
account of the exercise donations,
based on real work situations.
• the employees themselves, because in
all they are the first people concerned
by this approach and once again aim to
develop their professionalism.
Finally, an organisation creates value
when it manages to mobilise the skills
of the individuals which comprise it.
The capacity of any organisation to
identify the strategic competences, to
mobilise them quickly, to recognise
them and to favour the development in
all the employees, constitutes the basis
of the new competitive strategies.
S. B.
Advisor to the Ministry
of Energy and Mines
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HUMAN HUMAN INVESTMENT
THE CORPORATE UNIVERSITY
A strategic tool
Energie & Mines
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november 2005
By
Abdelaziz Nacer
This article is devoted
to the Corporate
University (CU) and
more generally to knowledge
management.
It highlights the stakes
of a real individual and
collective intelligence
management in the
company whose objective
is to make it a
place for exchanging
practices, enriching
skills, concentrating
values, but also
a means of federating
a business sector
around its values. The
idea resides in the fact
that in an economy
based knowledge and
understanding, education
has become a
real driving force of
performance for the
companies.
PTo quickly respond to the
changes which characterise
the economic world today,
the company must be agile
and drawn on itself to expand. It must
anticipate and understand the world,
the nations and the populations. It
must help its employees to permanently
learn and shake up the certainties as,
today, it is knowledge which increase
the value of the capital and that "learning
to learn" is the essential skill
above all others.
The company must therefore optimise
knowledge by sharing experiences and
resolutely committing to a process to
manage knowledge as, nowadays, collective
intelligence rhymes with value
creation. Furthermore, to face up to
international competition, tomorrow's
company will have to be an intelligent
company, governed by the economy of
knowledge and wisdom.
It will therefore have to ever more
mobilise the grey matter, encourage
the diversity of individual initiatives
which will constitute the sole response
to all forms of unforeseen situations. It
will base its success on the personal
development of each of its members as
it will have banked on human capital
as a driving force for its future success.
This assumes a profound change in
the organisation and in behaviour.
Tomorrow’s company is therefore,
necessarily, a learning company. In
fact, the transformation process going
on in companies will exceed the organisation
stage to go towards a stage
where they did not have skills, by creating
a community of knowledge and
“best practices”.
With the objective of opening up ways
for new reflection and stop copying in
order to, to the contrary, come up with
tailor-made solutions.
Given that the educational offering no
longer corresponds to the requirements
of the 21st century and that the
large differentiation tomorrow will be
based on the development of the
human capital, the companies are
increasingly numerous in creating
their “internal university”.
Whether the objective is one of increasing
the skills of individuals, transforming
the company into a learning
organisation or developing and spreading
a common culture, the Corporate
University seems to be a powerful strategic
force. Some American economists
confirm that it contributes to
growth; brings the executives closer
together, limits the turn-over and
favours reactivity.
Origin of the Corporate
University concept
The phenomenon of the Corporate
University came from the United
States in 1955, with General Motors
and then in 1961 with MacDonald, a
country where secondary education is
mediocre and higher education is
expensive.
The American companies decided to
create their “internal university” to
carry out the training which is specific
to them, rather than to send their
employees to external universities.
In fact, the concept of Corporate
University, which took shape in the
USA at the time of the emergence of
the SME/SMME and which affected
different types of companies before
interesting the large industrial groups,
was only effectively applied in the
1980s.
In France, the first appeared in 1980,
created indeed by the American company
Apple. According to the calculations
of the Corporate University
Xchange, the number of Corporate
Universities has gone from 400 in
1985 to 2,000 in 2003.
Currently, there are about a hundred
in Europe, five hundred in Asia and
Oceania and the rest in America. 40%
of the 500 largest American companies

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cited by the review Fortune have their
own Corporate Universities. Today,
there is a very large partnership between
these Corporate Universities and
renowned universities, in all the
domains which interest industry, technology,
marketing and finance.
This need for an “internal university”
was induced by a competitive environment
where the notions of competitiveness
and reactivity were imposed as
constraints to development requiring
new skills which the traditional universities
could not provide. The approach
therefore had the objective of completing
the education given by the university,
with in-company learning, with
targeted aims of specialisation and
expertise.
What is a Corporate
University
Initially, why this word “university”
which, indeed, has pushed the academics
to revolt against the use of this
term by the economy, describing it
even as a semantic hold up. In fact, the
definition of the word university covers
the notion of community, relationships,
universal aspect, opening up to others,
to difference and to the world.
Nowadays, everyone is looking to
enrich the other’s thoughts, to bring
the world to him, to create a link and
need to have the feeling of belonging to
a community, hence the coherence of
the world “university”.
To understand what a Corporate
University is, the first step is to disassociate
it from the image of a conventional
university, the first thing which
comes to mind when we hear this term.
A Corporate University is not a group
of professors or a campus, as Barley
[2] says, but rather the component of
an organisation which associates learning
to its mission, integrates it within
its management and business practices,
giving it its entire working force.
As McMorrow [3] suggests, the
Corporate University may also be
understood as an evolution of the
conventional way in which the
employees are trained, consisting of a
basic learning philosophy, with vocational
training being considered as vital
to the strategic growth of the company.
Semantic wealth in terms of denomination
of the Corporate Universities
According to Wheeler [4], the
Corporate University is a strategically
focussed body to integrate the personal
development into the output of teams,
including in the relations with the
clients and the suppliers; carrying out
research; facilitating the spreading of
knowledge and commanding the effort
of creating a superior leadership team.
For Jeanne Meister [5], a specialist in
the domain of Corporate Universities
and who is also at the helm of a services-advisory
institution called
“Corporate University Xchange” for
the implementation of Corporate
University in industry, the “Corporate
University is a strategic cover enabling
all employees, including the client and
the supplier, to have access to knowledge
and know-how, to the sprea-
☞
The company, which is initially a community
of men and women which must
be opened up to the world and therefore
to the universal (origin of the word
university), and which, to ensure its
perpetuation, has taken a strategic
responsibility, providing itself with an
efficient learning and training tool by
the action for its employees and its
managers and which is no other than
the Corporate University. According to
Annick Renaud-Coulon [1], the
Corporate University is the missing link
in the educational chain.
The term “university” confers to the
concept of Corporate University a
grandeur and an importance which
prevent us from confusing it with simple
training in routine procedures or
other means of communicating with
the public.
Identification of the vocation
of the Corporate Universities
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☞
Energie & Mines
144
ding of the company’s culture, to the
taking account both of the organisation
and the company’s environment with a
view to improving the company's turnover”.
According to Annick Renaud-Coulon
[1], an expert in the domain and president
of the European corporate universities,
the “Corporate University is an
area of applied learning and economics”,
to support overall performance
and a place of application even of
transversalities where the strategies will
become operational.
To summarise, the Corporate
University is therefore an institution
inside a company which gives instruction
and training in line with its business
strategy. It operates as an accumulator
of the training needs of all the
employees and all the value chain.
In this perspective, the fact that this
method of in-company instruction and
training is called "Corporate
University" indicates the need to show
that it is directly linked to the company's
business, without necessarily being
a business centre.
Some of the largest Corporate
Universities in the world include:
PDVSA, ENI, Conoco University,
Petronas, Petrobras, Chevron, Disney
University, General Motors University,
Motorola University, Intel University,
Dell University, Université Brahma,
Gessi-Lever, Accor and Amil.
There is a difference in the understanding
of the Corporate University
undoubtedly because of the terminology
of “University” used which is quite
equivocal as several company managers
only conceive this terminology in the
academic context with a degree connotation.
This explains why there are
several names for it.
To the semantic wealth serving to describe
this concept, Training Centre,
Academy, School, Network, Institute
and University, etc. is added the objective
assigned to the Corporate
University (figure 1). According to
Annick Renaud-Coulon [1], even if the
managers do not want to restrict the
ambitions of the Corporate Universities
to training, 92% do however have this
november 2005
vocation. Also, 88% are supposed to
optimise the value chain. Furthermore,
76% of them have the mission of adapting
the competences to the business strategies.
But only 55% serve to manage the
persons and their careers (figure 2).
Why create a Corporate
University when the company
has to outsource its related
services
But, why therefore create a Corporate
University when a lot of companies are
refocusing on their “core competences”
and outsource a lot of the related
services The response initially comes
from the fact that, nowadays, the workforce
aligning the learner with the strategy
of the organisation has become a
core function of a lot of prosperous
organisations around the world and,
because of this, the company has the
obligation to renounce practices which
have made it successful to create and
develop those which will ensure its perpetuation.
Furthermore, it is universally accepted
that the Corporate Universities will
satisfy a specific need in research
requirements fulfilling the workplace
not widespread by the traditional educational
establishments.
The company has, in a certain way,
been forced to set up a Corporate
University in order to offer its
employees a tailor-made education, as
the traditional university can no longer
respond to its specific and strategic
needs at the same time.
The Corporate University
models
The current Corporate University experiments
in the world enable us to use
three large outlines which, each of them,
emerge under the influence of the production,
marketing relations and the
nature of the role of the educational system.
1- The European model : whose majority
of Corporate Universities are located
in France, and which is aimed at the
elite and the leadership, relying on the
duality which exists between the public
universities and the business schools.
This is a means of training made available
to senior managers. In Europe,
the Corporate University covers either
the development of knowledge, or the
company’s culture but not everything.
It benefits from a privileged location:
modern building, castle and sometimes
it is virtual. The senior managers are
not involved in the training and use of
external consultation exceeds 50% of
all coordinators or trainers.
Furthermore, the programmes are a lot
more focussed on the management and
elitism than on the company’s core
business. The participation in the
Corporate University is still dedicated
to the elite or to the top management.
2- The American model : this model is
undoubtedly larger due to the very
strong relationship which exists between
the educational system and the
companies but also due to the fact of
the notion of merit which is very current
in American society. The American
Corporate University model covers the
issues linked to knowledge, know-how,
knowledge management and to the
corporate culture.
As for the location, in the USA, the
Corporate University is either virtual,
or physically installed in the form of a
campus in a part of the company.
Another characteristic of the American
model resides in the fact that a large
majority of the company’s executives is
directly involved in the dissemination of
the training programmes to give it their
experience. As for the participants - all
employees are concerned and even the
clients and the suppliers.
3- The Asian model : this is very similar
to the American model, except it is
above all focussed on marketing and
management.
The main objectives of the
Corporate University
The main objectives sought after by the
organisations which set up a Corporate
University are :
• managing the changes which are
necessary in the company’s strategies,
policies and practices,
• guiding and training the corporation
according to its mission and its guidelines,
• establishing a place of sharing the
know-how of the top managers,
• providing new solutions to complex
and transversal problems,
• implementing vocational training for

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all the employees and the entire value
chain,
• reinforcing and perpetuating the corporate
culture in all the employees.
The expected results
By setting up a Corporate University, the
companies expect the following results :
• bringing the training in line with the
strategic business goals,
• increasing the productivity of their
employees,
• keeping their employees in permanent
touch with the latest technologies,
• decreasing the development time for
setting up new training solutions,
• having the training run as a branch of
business,
• giving the employees a general view of
the market so that they know who the
competitors, the suppliers and the clients
are.
The action principles of
setting up and developing
the Corporate University
The action principles for setting up the
Corporate University
No only does the Corporate University
represent another training organisation
method, but it also reinforces the institutional
vision of the company by
valuing the permanent training of its
employees, and closely associates it to
the business sectors. The adoption of a
model of this type may catalyse the
company’s knowledge management
process.
However, this does not mean that the
Corporate University is an infallible
model to increase the company’s business
through training.
Alone, it does not represent a guarantee
of success, as all the requirements needed
for its set up must be fulfilled, so as
to preserve the original ideal which prevailed
in the strategic planning and to
guarantee the continuity of the process.
This is why, in order to avoid introducing
fruitless changes, various professionals
have pounced on the subject
and recommend the stages to follow to
appropriately set up a Corporate
University.
These professionals, who are: Ferris
[6], Niekerk [7], Barley [2], Meister
[8], Renaud-Coulon [1], Farah [9],
seem to recognise that the fundamental
stages for setting up a Corporate
University are based on the actions
principles – the main ones being :
• having the unconditional support of
the top management,
• establishing a strategic committee for
setting up the Corporate University,
• identifying the essential competences
to be developed,
• making a report on knowledge and
identifying the needs associated to the
essential skills,
• defining the objectives and the scope
of the teaching technologies and programmes,
• involving all the directors and all the
employees,
• having a highly qualified team,
• selecting the external partners who
will be involved in the training,
• evaluating the advantages of training
for the productivity and output in the
company’s activities,
• constantly revaluating the objectives
of the Corporate University, to keep it
linked to the company’s business and
activities and to the culture,
• making an ostensive disclosure of it
both internally and externally.
The development
of the Corporate University
The rationale of developing a
Corporate University is done through
three main phases : operational, tactical
and strategic.
Operational phase
This is the first stage in the rationale of
developing the Corporate University in
which the training activities, usually
compartmented, are based around a
coordination entity. The sought after
objective is the satisfaction of the operational
needs and the investment into
the quality of the training. The relation
of the training programmes with the
strategy is indirect and reactive.
Tactical phase
This is the phase in which the company’s
strategy determines the priorities in
terms of training programmes. The
objective is to ensure the coordination
and consistency between the strategic
objectives of the corporate and the training.
The link between the programmes
and the strategy is direct and reactive.
Strategic phase
Once the link between the strategy and
the training courses has been established,
which justifies the complete name
of the Corporate University, it is the
involvement of the Top Management of
the company and of the Corporate
University is a search focussed on producing
new knowledge which enable
the competitive advantage to be consolidation
and often the markets to be
revolutionised with an impact on the
strategy and even its redefinition.
At this stage, the link is direct and proactive
and the Corporate University
functions as a knowledge production
factor.
The factors of the
multiplication of the
Corporate Universities
The first factor of the accelerated
growth of the number of Corporate
Universities would be time for the obsolescence
of knowledge, which decreases
every day, due to the enormous
technological progress made in a very
short amount of time, which forces the
continual learning of persons.
Especially when it is deemed that the
knowledge of an engineer is out of date
at the end of three years, that that of an
IT expert after two years, and that a
technological generation has a life cycle
of six months. When we know that
human knowledge doubles every seven
years, and, that in 2040, it will double
every 72 days.
The stake for the company is no longer
to have the best workforce, but the
sharpest "work brains".
The second factor resides in the desire
of various companies to be perceived as
the best employee in their industrial
sector and as the company which has
the best technology and the best practices.
There are many employees who
expect their company to give them a
qualification and guarantee their professional
entry onto the job market.
Consequently, the companies use their
investment for training employees as a
competitive advantage in the recruitment
and maintenance of the best and
most brilliant employees.
As an additional advantage, note the
use of the Corporate University as a
marketing instrument to inform and/or
train suppliers and clients about the
☞
products.
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☞
Energie & Mines
146
The Corporate University
training programmes
According to Meister [10], the
Corporate Universities are normally
organised in large size companies or
those which have many buildings and
which wish to enlarge and/or standardise
corporate training programmes.
The programmes developed are :
• training on work routines and procedures,
which are frequently repeated,
• behavioural training,
• dissemination of the company's quality
policies and products,
• technological development,
• management development.
We can satisfy the first two categories
without a great deal of difficulty
through bodies inside or outside the
company, using various tools such as
computer-based training, simulators,
books, the traditional lessons, etc. If
they only depended on this type of training,
rather than investing in a
Corporate University or in HRM structures,
the companies would certainly
have to make use of entities or universities
which would take on the responsibility
of doing it or would recruit people
according to the desired profile.
These sectors are not the main motive
which are pushing the companies to
opt for the creation of their own internal
universities, using them to obtain
the desired results in their business. It
is clearly the last three categories which
are pushing them in this direction,
which are just as important as one another
but prioritised according to the
company' sector, its own culture and its
economic needs.
Generally, the companies in the sectors
with technology-intensive activities,
with a huge requirement for technological
innovation and whose business
makes fabulous profits are those whose
knowledge requirements cover all these
categories. Some of the business sectors
include the oil industry, IT sector,
telecommunications and electronics.
The characteristic of the
persons involved in the
Corporate University
Every coordinator or person involved at
the Corporate University level must :
• know the company’s strategic focus,
november 2005
with regard to the products, the services,
the clients, the suppliers, the competitors
and the environment,
• be training specialists,
• know how to apply the concept of
vocational training and impregnate this
in the organisation,
• know how to find partners from
other executives inside and outside the
organisation.
The Corporate University
budget and financing
The budget
First of all, it is useful to point out that,
from an economic point of view, the knowledge
company assumes an extremely
large market, even according to the most
conservative analysts [9] :
• from 555 million dollars in 1998 to
11.4 billion in 2003 according to
International Data Corporation,
• over 90 billion dollars in 2005, according
to Web Education Market.
The importance of the stake represented
by continuous training and education
in the company explains the
amount of the budgets which the large
groups devote to their internal universities.
Motorola University: 200 million
dollars budget representing 3% of the
payroll, Axa University : 20 million
euros’ annual budget, Académie Accor
: 15 million euros, Suez University :
12 million euros, ST University :
8.5 million euros [1].
The average annual budget allocated by
the oil companies in the world for their
development and training centres is
8 million euros.
The financing
The most successful experiments in
terms of financing treat the Corporate
University as a cost centre, which is
consistent with a real faith in the results
of the training in the long term for the
company, contrary to a profit centre
vision which is focussed on the short
term.
The concern of companies to reduce
their costs, in general, has led some of
them to carry out studies, aiming to
determine how long it will take the
investment in a Corporate University to
become profitable. To achieve this
quest, systems have been created which
evaluate this temp from entering data
on the project and converting them into
current values, from the projects’ costs,
identification of the intangible benefits
and the effectiveness of the project.
The work entitled “Return on investment
in Training and Performance
Improvement Programs” by J. Phillips
(Gulf Publishing 1997) gives to the
subject a dimension and a depth which
enable the reality to be better approached.
Densford [11] quotes that Motorola
has confirmed that, in the 1980s, the
profitability from its management
training, quality and sales was about
30 dollars for each dollar invested.
The Corporate University
in the oil companies
In the case of the oil companies in general,
the presence of the Corporate
University is still weak, restricted to
PDVSA, ENI, Chevron, Petronas,
Petrobras and to Conoco. Although the
other companies have advanced training
centres, they have not given them the
name Corporate University. However,
the HRM models of Statoil and Shell are
particularly close to the Corporate
University model.
As a general rule, although they do not
yet bear the title, Statoil and Shell operate
as Corporate Universities. We can say
that there is practically no difference between
the HRM of these companies and
that of PDVSA, called Corporate
University.
This is due to the fact that these companies,
to belong to the oil sector, intensively
use technology, requiring a high degree
of innovation, imposed by the challenges
of the exploitation and production conditions
of oil and the necessary changes in
the quality of the by-products imposed by
the consumers, by the competition and by
the environmental needs.
Their turnover is very high, which, in
order to survive, forces them to invest
large sums of money into HRM, seeking
competitiveness and technological independence.
All have concluded agreements with universities
to carry out joint research and
training programmes - a few of them
being foundations which provide masters
and doctorate courses. Although the
French Oil Institute is a not-for-profit

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entity, it operates exactly like Corporate
University.
Which Corporate University
model for the energy and
mines' sector
It is clear that, given the various
approaches in terms of functions which
the Corporate University may fulfil as
well as the different models, an optimal
model has not yet been defined, hence
the necessity for the energy and mines’
sector to define its own model, its priorities,
its objectives and its focuses.
It seems opportune to also question the
outline which the Corporate University
of the energy sector must follow. It is
possible to say, in the light of what was
described above, that the Corporate
University of the energy sector would,
in principle, be a combination of the
American and European models with
regard to the professional success and
merit approach and also due to the
improvement of the managers’ skills.
We can say that there is no unique solution
for the qualification of persons in a
given organisation. Whether through a
Corporate University or through the
corporate HRM, which seems really
fundamental to the obtaining of results
is the institutional alignment of the
qualification process with the company’s
strategies and aims. This is why
the Corporate University model may
provide advantages to the energy and
mines' sector from an institutional
approach, provided it is visible for all
the employees.
It is completely logical and normal then
to question the issue relating to the
missions, the objectives, the focuses
and the organisation which the energy
and mines' sector my attribute to its
Corporate University.
Missions, objectives, focuses
and organisation of the
Corporate University of the
sector
In what follows, and without any claim or
any payment furthermore, we propose,
by way of a contribution to the reflection
in progress, an outline which could constitute
the architecture of the Corporate
University of the energy sector.
Missions
• To be a key tool to take up the challenges
and support the changes.
• To be the catalyst for the change and
continuous improvement in support of
the business objectives of the energy
sector.
Objectives
• To give the energy and mines’ sector
top quality research-training tool to
support the change dynamics and the
transformation of the industrial companies
in the sector into learning companies,
able to ensure the emergence of
qualified human resources, adapted to
the new needs and capable of guaranteeing
the durability of the Groups of
the energy sector.
• To seek to share experiences, develop
synergies as well as the optimisation of
means of training to respond to the
retraining and upgrading needs of executives
and technicians working in the
energy and mines’ sector.
• To provide training to all employees
in the sector (which includes around
160,000 employees) and to the entire
value chain, hence preparing them to
be the best in the industry.
• To serve as a catalyse for the changes
and the continual improvement to enable
the companies in the energy sector
to occupy a better place in the future;
to add value to the marketing and to
the distribution of products.
Focuses
• To put the activities of the companies
in the energy sector within a framework
of knowledge management rationale.
• To increase the value of the jobs of
the companies in the sector by involving
the top managers, to upgrade the
level of knowledge and know-how of
the human resource and share with the
latter the experience gained in the companies..
• To optimise the use of all the sector’s
training capacities, their incorporation
within the construction of the
Corporate University and their involvement
in the operational concerns of the
energy sector.
• The consolidation of retraining and
upgrading programmes, to update knowledge
and adapt to the changes caused
by the market economy, using,
amongst others, e-learning and video
conferencing though a network system.
• The necessary specialisation on the
basic and even transverse activities,
through assistance to university graduates,
must be ensured as well as
vocational training in the different jobs
specific to energy and mining, whilst
providing the different services (studies,
analyses and expert assessments)
and research-development in order to
efficiently contribute to the treatment
of the sector’s real concerns.
• The development of skills and expertise
by organising specific training
courses in the domains of procurement,
accountancy and financial audit,
finance and taxation, management,
strategic marketing, insurance, law,
knowledge on the evolution of the oil,
gas and electricity markets, quality
assurance, health, safety and the environment,
industrial prevention security,
power engineering and civil engineering
maintenance.
• The research and development of
partnerships with world renowned
institutions to enable continuous
exchanges of knowledge and knowhow
as well as to upgrade our training
structures to move towards overseas
and to arouse the attention of foreign
partners with a presence in Algeria to
use the products of our training structures
in order to satisfy their training
needs.
– The organisation of an annual international
conference devoted to training
to take stock not only of the achievements
in terms of training of each
branch of activity, the results obtained
and the lessons to be learnt from it, but
also to enable members to meet up to
share and capitalise on their best practices
and develop new reflections.
– The capitalisation of the intellectual
memory of the Energy sector and its
conservation must be organised at the
IAP-CU Group level in order to capitalise
on the experiences gained through
the achievements of the Sonatrach
Group, Sonelgaz and companies of the
sector.
• Upgrading the sector's training structures
in terms of logistics and means, in
order to have infrastructures appropriate
to the training conditions and
better architectural quality for the new
constructions.
– The establishment of new partnerships
with world renowned specialised
☞
Energie & Mines
147
november 2005

HUMAN HUMAN INVESTMENT
☞
Energie & Mines
148
training institutions or bodies whose
aims are to prepare masters in various
domains and to capitalise on the level
of the Group’s structures must be pursued
on bases of diversification to enable
our training institutions to extend
the programmes with new specialities
and to adapt the knowledge and knowhow
in the basic jobs of our Energy
sector.
It should be specified that the aforementioned
focuses were set out by the
Ministry of Energy and Mines on
27/1/2004.
Organisation
• The IAP-CU group is organised into
an entity comprised of a general management
and its divisions (operational
units), a board of directors and a scientific
council. The parties to the Group
decide in a general meeting on the
terms of the policy and strategic training
bases resulting from the development
objectives of each company in the
sector.
• In terms of activities, the Group is
organised into a Corporate University.
Each training tool which forms the
Corporate University (Naftogaz, CPE,
Sonelgaz training schools, El Abed
Mining school, Boumerdès engineering
school and the Applied technical centres
of Skikda and Arzew) each have a
director, a team of specialists operating
on a self-sufficient university model
under the label IAP-CU.
• The decentralisation enables each of
the training tools to be autonomous at
the operational management level, enabling
it to establish direct contact with
the clients, consult them to improve the
yield, and the questions relating to
organisation learning. It plans and
develops training projects and serves as
an overall base of competences and
best practices.
The directors of the operational structures
meet in a management committee
and in an annual conference to exchange
their experiences.
The keys of success of the
Corporate University of the
IAP-CU sector
It should be pointed out that the fact of
planning to invest in a “Corporate
University” rationale is, in itself, a
development strategy.
november 2005
This rational, for successful implementation,
requires an overall consistency
and the mobilisation of the knowledge
capitalised in the key-jobs of our business
sector.
The success of such a process will be
explained below.
Apart from the sole quality of its services
which remain a key factor of success
of any personnel development programme,
the main criterion of success
for the Corporate University is the degree
of involvement of the top management.
As for a lot of activities, which
particularly have a medium and long
term impact on the profitability or on
turnover, the Corporate University may
seem a superficial and useless luxury,
or even be considered as a fad or the
“president's dancer” to use the expression
of Annick Renaud-Coulon [1]. It
is essential to have the pledge of the top
management, and to use their competences
in the training.
In this respect, furthermore, an example
is useless. The first events of the
Corporate University, particularly if it
focusses on the sharing and exchange
of knowledge, must involve the
Chairmen and CEO of the IAP-CU
Group who will validate and give credibility
to the experience.
The participation in the Corporate
University must appear in the collective
unconsciousness of the entire energy
sector as the recognition of a promising
future for all employees.
Its approval by the top management
will be even more evident given that the
Corporate University will not constitute
a selective, one-off operation and
will be linked to the strategic plan as an
additional means to achieve the sector’s
objectives. It must thus be integrated
into the company's general knowledge
management plan. Any session of the
Corporate University should capitalise
on a bank of knowledge, for example
by using the “best practices” existing in
the different activities of the sector.
And, in its turn, feed this knowledge
bank: the main conclusions of the
works and studies of the Corporate
University must be integrated into this
“knowledge management” base, and be
made available to the collaborators
through an intranet type network.
To be acceptance for the duration
within the energy sector, the Corporate
University must not, when choosing its
subjects, move away from the economic
concerns of the sector which created
it and finances it. It must be with
new and original educational means,
the motivator of ideas, the laboratory
for new experiments, but still with a
strong link with the concerns of the
sector.
The objectives of the Corporate
University must be closely connected to
the strategic objectives of the energy
sector. Finally, we must insist on the
interest of opening up the Corporate
University to the outside environment,
as the stake of the Energy sector is not
longer simply technological, but also
concerns exchanges and communication.
As Levine [12] recalls, the Corporate
University must be an integral part of
all corporate success strategies and it
operates as one of the main components
for the perpetuation of this success.
The training is not therefore
immune to the new management philosophies
and, today, it must be visible
for the internal and external public as
the company’s philosophy.
The Corporate University is one of
these forms and, if it is successfully
organised, it may represent an important
stage in the evolution of training in
the companies of the energy sector.
Conclusion
The companies which do not bring
their action in line with vocational training
are putting their competitiveness
at risk. The constant changes in
context, whether technological, political
or economic, show the need for
uninterrupted learning. The qualification
is one of the strategic pillars which
guarantees the permanent success of a
company.
The main goal of in-company training
is to prepare the employees of an organisation
in order to make the most of
all the advantages and emerging opportunities
and institutionalise a learning

HUMAN INVESTMENT
culture continually in line with the business
strategies.
The Corporate University is an excellent
way of promoting this training,
whilst bringing secondary advantages
to the organisation, such as improving
the organisation’s climate by greater
certainty of professional integration for
its employees and contributing to reinforcing
the image of the company.
A Corporate University is therefore a
strategic umbrella [8] centralised inside
the company to respond to its training
needs. It is used as a means of managing
the company’s knowledge, continually
and directly linked to its business
strategies. The profitability of the business,
the reinforcement and the increase
of the competitiveness which some
companies have been able to report
after investing in the Corporate
University have served to reduce the
constant concerns about the cost-efficiency
ratio in order to carry out the
continuous qualification of their
employees.
The energy sector, through the
Sonatrach Group, has taken up the
challenges of training and professionalisation
of the Algerian technicians and
executives, which has enabled the
country to put in place and develop ex
nihilo a formidable oil and gas industry.
The approach of the energy and mines'
sector until now consists of setting up a
network of all the training and research
capacities of the sector in order to
make learning and knowledge the cores
of any human resource development
and therefore of the progression of
the energy sector in taking up the
challenges.
The experience acquired almost four
decades ago is a major asset for the
putting in place of a Corporate
University which will be an important
machine in the operating of the companies
of the sector, given that the
Corporate University will be a place of
knowledge development in order to
implement the strategy of the energy
sector.
also be a place of changes to enable,
individually and collectively, the sector
to face up to the challenges of globalisation.
A. N.
IAP-CU Director
Boumerdès Engineering School
References
[1] Renaud-Coulon Annick, Universités
d’Entreprise et Instituts d’Entreprise, Evaluation
et comparaison internationale,
Volumes 1,2 et 3, 2003,
www.renaud-coulon.com/corporate.html.
[2] Barley, Karen. Process and partnership :
focal points for building and growing a corporate
university. Corporate University Review, vol. 6,
n° 5, sept-oct 1998,
www.traininguniversity.com/magazine/sepoct98/cuconnect.html.
[3] McMorrow, Justin. Newhouse, Bob. APQC
Corporate University Benchmarking Study.
Corporate University Review, vol. 5, n° 5, sepoct
1997,
www.traininguniversity.com/magazine/spoct
97/screen.html.
[4] Wheller, K. The Uses and Misuses of the
Term Corporate University. Apr 12, 1998,
www.kwheelerrsity.com/magazine/sep-oct
97/screen.html.
[5] Meister, Jeanne C. Corporate Quality
University. Irvin, 1994
[6] Ferris, Gregory L. Avoiding the hazards on
the corporate university road. Corporate
University Review, vol. 3, n° 9, nov-dec 1995.
[7] Niekerk, MH (Daleen) & Schoor, WA.
The Corporate University-an Overview, 1997,
www.workinfo.com/wptfree/HRDdirectory/cuuprop.html.
[8] Meister, Jeanne C. Ten Steps to Creating a
Corporate University. Training & Development,
November, 1998c, p.38-43.
[9] Farah Marco Antonio, Applicabilité du modèle
d’université d’entreprise à Petrobras,
Université Aix-Marseille, 2000.
[10] Meister, Jeanne C. Corporate Universities :
lessons in building a world-class work force. Mc
Graw-Hill, 1998.
[11] Densford, Lynn E. Motorola University :
The Next 20 years, Corporate University
Review, vol. 7, n°. 1, jan-fev, 1999,
www.traininguniversity.com/magazine/
[12] Levine, Charles I. Corporate University or
Corporate College : which is right for you
Corporate University Review, vol. 4, n°. 2,
Mar-Apr, 1996,
www.traininguniversity.com/magazine/marapr
96/college.html
The Corporate University will also be a
meeting place which will favour the
creation of human networks and will
Energie & Mines
149
november 2005

INVESTISSEMENT HUMAIN HUMAIN
Directive relating
to female employment
Today, whilst professional equality is recognised by law (Universal Declaration
on Human Rights, Algerian Constitution, etc.), it is not yet recognised in the
facts. It should be noted that, in spite of all the texts linked to the issue,
women continue to be the subject of a great deal of discrimination.
Energie & Mines
150
Convinced that the complete
development of a country
and, likewise, the well-being
of the world requires the
maximum participation of women as
well as men in all fields of life; that the
professional co-education is a source of
complementarity, of social balance and
economic efficiency, I endeavour to
develop an innovating culture in our
sector with the implementation of new
human resource management procedures
(job exchange, call for bidders,
organisation of the mobility, etc.),
which generate new behaviour and styles
of management which favour team
work and which encourage men and
women who, through their performances
and their excellence, enable us to
develop our comparative advantages
and to achieve the international standards.
Here, I would like to express my
unshakable desire to keep a cap on an
issue as crucial as promoting female
employment. Hence, I recall the necessity
for the decision makers in our sector
to make their desire and their commitments
a reality to put in place the
principles of equal opportunities and
equality between men and women,
according to the following principles.
In terms of recruitment,
training and career
development
■ Incorporate the promotion of female
employment in the human resources
policies and translate it into recruitment,
training and promotion objectives;
establish in the plans and reports
of the sector the criterion of gender as
a pertinent indicator; ensure an equal
representation of women and men in
the personnel assessment committees
november 2005
at the time of recruitment operations
and equal access to the jobs on offer in
the framework of the job exchange;
create the conditions such that women
with a technical profile may perform
their job and make progress in sectors
in relation to their skills; with equivalent
skills, the same possibilities of
career development must be offered to
men and women; adapt the internal
regulations of the companies (collective
agreement, internal regulations, etc.) to
the principle of non-discrimination to
women.
In terms of promotion and
tracking female employment
■ Put in place manager control and
assessment mechanisms in terms of
promoting female employment; offer
new services to the personnel, particularly
female personnel, enabling them
to reconcile personnel or family life and
professional life (pre-school institutions,
sitters for young school-aged
children, day care centres in remote
areas, etc.); put in place listening units,
run by qualified personnel to deal with
the issue of harassment in all its forms.
In terms of communication
■ Create female employment observatories
at the level of: the Ministry, the
Sonatrach and Sonelgaz groups as well
as their subsidiaries; organisations
coming under the sector as well as
supervisory bodies, analysis, reflection
and proposal forum for promoting
female employment; making the management,
the supervisory staff and all
personnel aware of the issue of gender
through information campaigns
(conference, seminars, study days,
etc.); disseminating all the studies and
surveys carried out by the different
observatories relating to this theme, the
subject of this directive; make known
the specific rights of women at work,
ensure, in all communication actions,
that a positive image of the working
women is promoted.
Furthermore, I ask you to consider the
issue of shift work at nights, which currently
excludes the female technicians
and engineers, thereby slowing down
their career development. You must
also ensure that the subcontracting
companies in business relations with
the companies in the energy and mines’
sector, and using female personnel,
respect the ethical conditions and the
legal provisions in terms of female
employment. The application of this
directive must be done in the framework
of an approach of pooling experiences
with a view to creating the
necessary synergies within our sector,
whilst taking account of our environment.
In this way of thinking, a biennial meeting
has been established relating to the
promotion of female employment.
Each time, this meeting will deal with a
specific theme and will see the participation
of national and international
competences. Furthermore, it would be
opportune to create a review of the
energy and mines’ sector devoted to
female employment.”
Drawn up in Algiers, on 5 January 2005
The Minister of Energy and Mines,
Mr Chakib Khelil

INVESTISSEMENT HUMAIN
Female employment in the energy and mines’ sector
With equal changes,
why not equal opportunities
“Whatever she does, the
woman must make double
the effort of a man to be
considered as his equal”,
this famous quotation from
the novelist Simone de
Beauvoir has been more
than shown during the
study year on female
employment in the energy
and mine’s sector. A meeting
which brought together
the majority of women
working in the sector, at
the El Aurassi hotel and
which enabled us to realise
that, despite the enormous
progress made in
terms of female employment,
a lot remains to be
done to promote them to
positions with
responsibility.
The study day, organised by the
Observatory of female employment, a
body created in February 2002, by the
Minister of Energy and Mines,
Mr Chakib Khelil himself, at a time
when he was Chairman and CEO of the
oil Group Sonatrach, also brought
together the "male" managing directors
of all the structures in the energy and
mines' sector.
A meeting which enabled us to highlight
the difficulties which women have
in accessing senior and decisionmaking
positions, and which "maybe"
enabled us to bring down certain prejudices,
since their male superiors who
were present in the room did not stop
emphasising all the commitments to
put an end to this type of discrimination
from the moment there legislative
texts make no difference between the
two sexes on the job market. “Rightly
so, I consider that our country is very
much in advance on this issue compared
to other more developed countries,
particularly, for example, in terms of
salaries where, in the majority of
European countries, women are not
paid the same salaries or benefits"; this
statement made by the Chairman and
CEO of Sonatrach, Mr Mohamed
Meziane, also enabled him to make this
precision, that it is the prejudice
“remains tenacious”, but that the organisation
of a meeting was the proof that
the sector it comes under has “the desire
to go onwards and upwards to push
things forwards on this matter”.
For the Minister of Energy and Mines,
who was also present at the opening of
the works, "this is not a meagre affair of
promoting the employment of women.
Psycho-social-type barriers, and despite
the progress made by the country,
still persist in numerous environments”.
The proportion in the sector
is 1 in 10 jobs
Because of this, for him, the female element
is a human resources wealth
which "must be exploited. For us, this
enables us to increase our performances
at the international level". Hence,
for the Minister of Energy and Mines,
there need to be consequent commitment
and desire; "we already have these
two options in our objectives.
Now we have to put in place the
mechanisms to track the evolution of
the promotion of women and ensure
that the people who apply these mechanisms
are also evaluated in line with the
integration and participation of women
in the management, in the job market,
and that all the barriers which still exist
may be abolished”. In this context, Mr
Khelil wished that women could play a
more preponderant role, at all levels of
his sector, “including on the building
sites, in the oil operations in the Great
South… There are already women
working in these places, why not more
then"
Going further, the Minister pointed out
that at the academic level, 50% of graduates
from Algerian faculties are
women. “There is a job market which
should be equitable, so then, we are
making efforts, and the first results are
already there. And I promise you that
we are going to continue this effort.”
With regard to the opportunity of creating
an observatory on female employment
in the sector, Mr Khelil said that
this type of institution exists all over the
place in the international organisations
and in the large foreign companies:
“We have only done what others have
initiated before us, and which has worked
with success, since women may
more easily access positions with
responsibility.” It is still the fact, however,
that there is still a lot to be done,
even if the figures show that there are
more and more female executives in the
sector’s companies, the proof being
that the proportion of women in the
Sonatrach oil company is 1 in 10, i.e.
out of 10 people employed, 1 is female.
So, out of 180,000 employees, there
are only 18,000 women working in this
company.
The meeting was the opportunity to set
the cat among the pigeons and to draw
the attention of the persons concerned
onto this “dreadful” aspect in the
employment world, since it is only
based on past prejudices, since women
have greatly proven their capacities in
the domain. Capacities which are
nevertheless recognises, since we did
not await a certain 8 months to organise
this seminar. When will the changes
take place
Amel Zemouri
Energie & Mines
151
november 2005

INVESTISSEMENT HUMAIN HUMAIN
Thanks to the Ansej system
7,543 companies are managed
by women
They not longer only
do tapestry; they also
work in woodwork,
plumbing, lifting and
industrial electricity.
That’s what we were
able to report at the
time of the holding of
the 1st International
Trade fair for Women,
which opened its
doors in pavilion B of
the Exhibition Hall,
Pins Maritimes.
This event, jointly organised by Safex,
Ansej and the World Trade Center
Association Algeria, was held between
6 and 9 March, under the name "Eve
2005".
It brought together over 140 exhibitors
in a very "design"-type atmosphere.
Exhibitors which were all directors.
And it’s very impressive, because we
see that these women, who all went
through the national agency to support
the employment of young people and
obtained consequent credits, have succeeded
in the niches which they have
chosen, whilst creating wealth and jobs.
Inaugurated by Mrs Noura Djâaffar,
deputy Minister responsible for the
Family and the Female Condition, this
first trade fair was an area for promoting
jobs which women do. And this
goes from buildings and public works
to ebony work, including breeding
sheep, cows, chickens, beekeeping, fashion
designers, building electricians,
concrete block manufacturers, owners
of publishing houses, travel agencies,
beauty salon, research firms, etc. they
were all there, available to answer to
concerns of other women, who perhaps
would like to work in this micro-company
niche. Women, but also young
girls, who may be interested in different
jobs which offer large perspectives if
not investments. Indeed, the case of
one of the women highlighted by the
managing director of Ansej who indicated
that successfully invented something,
whose patent has been sold to
the United States. With regard to
impressions of the Minister of the
Female Condition, she did not fail to
emphasise the giant steps made by
Algerian women in the economic sphere.
“Steps which have enabled them
today to be considered fully-fledged
directors, without any segregation in
the matter." And of this segregation,
Mrs Djâafar did however talk about the
necessity to do more to go further,
“furthermore, a survey on the work of
women will be made public shortly,
during the International Women’s
Day”. For the time being, and notwithstanding
the subject of the family
code, the Minister said that the current
priority of her department is the necessity
to develop day care centres for
young children, whose mothers are
working. “The Algerian women is
increasingly combative in the economic
synergy of the country; it is up to us to
give her the possibility of achieving her
ambitions”, she stated.
To go back to the Eve 2005 trade fair,
this gave the possibility to acquire and
buy a multitude of beauty and female
designed products in terms of mirrors,
ebony work, patisserie, perfume, silks,
jewellery, cleaning products… all designed,
created and made by women.
Quality products, of course, but also
very aesthetic ones. And this first
International trade fair for women,
whose organisers promise to make it a
tradition, will certainly be a great success
due to the level of the exhibitors
and the rare quality of the products
which they offer.
Energie & Mines
152
november 2005

SUSTAINABLE DEVELOPMENT
electricity efficiency
From awareness
to regulations
Today, the residential sector is a major stake for energy efficiency.
Alone, it represents over 32% of the national consumption.
By
M. S. Bouzeriba
With the opening up of the
market helping, the national
stock of housing will
keep growing: remember
that a million units is already scheduled.
Hence, the consumption of the
residential sector is inexorably likely to
grow in the coming years, also due to
the fact of the easy access of households
to a multitude of household electrical
equipment whose energy efficiency
does not always respond to the international
standards. However, the energy
consumption of this equipment is
random and varies from single to double
for the same level of service given.
Mindful of this stake, the APRUE and
Sonelgaz, as of 2003, launched several
general public awareness campaigns.
The last one was started in December
2004 via the television and radio channels.
These campaigns essentially aim
to inform the consumer about good
reflexes and gestures enabling them to
be more energy efficient without harming
their comfort.
At this stage in the evolution of the
energy efficiency strategy in Algeria,
and as reported in the objectives assigned
to these awareness campaigns,
the behaviour of households remains
the sole alternative for the time being.
But apart from encouraging large energy
efficiency savings, these campaigns
have the merit of contributing to installing
a culture of energy efficiency in the
customs and habits. As a great deal of
effort needs to be done for the rational
consumption of energy to become a
citizen responsibility.
Commendable and necessary, this
communication and awareness work
will bear its fruits in the long term and
must not therefore be stopped, in spite
☞
The Industrial Energy Efficiency
Project (IEEP)
Decreasing the greenhouse gas emissions
and promoting energy efficiency
in the industrial sector: a joint initiative
by the World Environment Fund
(WEF) and the Algerian Government,
in favour of Algerian companies.
The industrial companies emit large
quantities of greenhouse gases and
hence contribute to global warming, but
by investing in clean technologies they
may improve the output of their boilers,
ovens and other industrial processes
and produce the same quantity of steel,
cement, glass, bricks, etc. by consuming
less electricity, gas or fuel.
These companies then emit fewer
greenhouse gases – in the majority of
cases, the industrialist also making substantial
financing savings - and they
contribute to the national policy to fight
against climate change. Algeria has a
highly voluntarist policy on this matter; it
joined the international effort to fight
against climate control by ratifying, in
2004, the Kyoto agreement which defines
the terms and conditions of reducing
greenhouse gas emissions. In the
context of the international policy to fight
against climate change, Algeria is about
to benefit from aid from the World
Environment Fund (WEF) which could
reach 6 million dollars.
This financial contribution is designed to
subsidised the energy efficient industrial
investments, it will complete the efforts
which the industrialists and the Algerian
governments will agree to, via the
National Energy Efficiency Fund (FNME)
and other international financial backers.
This project, whose name is “Industrial
Energy Efficiency Project” (IEEP), will
support the energy efficient services and
equipment market in Algeria, enabling
the industrialists but also the research
firms and banks to discover the technologies
and services associated to energy
efficiency, as well as the innovative
financing instruments adapted to energy
efficiency in the industrial sector.
The APRUE (National agency for promoting
and rationalising the use of energy),
is responsible for building up the
project portfolio, co-financed by the
World Environment Fund (WEF) and the
FNME in the framework of the Industrial
Energy Efficiency Project.
In mid-February 2005, APRUE launched
an appeal to industrialists in order to
identify energy efficiency projects likely
to be co-financed within the framework
of the IEEP project. This appeal to the
Algerian industrialist particularly had the
objective of making them discover the
innovating financial instruments, which
are well adapted to the energy efficiency
investments. For this purpose, APRUE
will bring together the Algerian financial
organisations and banks in order to prepare
the Industrial Energy Efficiency
Project.
The consultation of industrial companies
and credit organisations will be continued
until an information and training
workshop is put together, which APRUE
will organise in mid-April 2005.
Energie & Mines
153
november 2005

SUSTAINABLE SUSTAINABLE DEVELOPMENT
☞
Energie & Mines
154
of its current limitations.
Notwithstanding, it is not appropriate
to count on the behaviour of households
alone given that this is likely
to lead to a phenomenon of weariness
of the consumer and, consequently,
of discrediting the approach
itself. The communication and awareness
strategy is closely linked to the
evolution of the context of energy
efficiency. Consequently, it is a comprehensive
component of the global
intervention strategy of APRUE
concerning all sectors, in particular
the residential sector.
As this is a sensitive sector, this sector
would benefit from specific attention
in the choice of message particularly.
For this purpose, the example
of low consumption lamps (LBC) is
very significant. Remember that these
lamps are already available on the
domestic market.
But launching an awareness campaign
to encourage the households to
use them would be a godsend for
counterfeiting which has already
started and is beginning to produce
its perverse effects. In fact, nature
hates emptiness and all the defects in
quality noted on these non conformant
lamps are obstacles which harm
the conformant LCB and their acceptance
by the households. To overcome
this situation, there are two possibilities
:
1. Setting up a quality label
We have to control from upstream.
To do this, we have to define a quality
label for the low consumption
lamps. This label will rely on technical
specifications and tests. All the
suppliers who sign up to it will be
certified conformant by a competent
body and may affix this label on their
products. The APRUE’s communication
will be based on the quality label
of the LCB lamps to encourage the
households to use the products with
the label. This procedure, if it is
applied appropriately, will enable the
consumer to be protected, whilst
adding a marketing role for the certified
manufacturers. However, this
procedure is difficult to implement,
particularly due to the fact of the lack
of a control and testing structure. We
therefore need time and resources to
ensure that is application is effective
on the field.
november 2005
Executive decree no. 05-16 of
Aouel Dhou El Hidja 1425
corresponding to 11 January
2005, fixing the specific rules
of energy efficiency applicable
to the equipment running
on energy, gas and oil products
:
The Head of the Government,
On the joint report of the Minister of Energy
and Mines and the Minister of Industry;
Considering the Constitution, particularly its
articles no. 85-4 and 125 (paragraph 2);
Considering law no. 89-02 of 7 February 1989
relating to the general consumer protection
rules; Considering the law no. 99-09 of 15
Rabie Ethani 1420 corresponding to 28 July
1999 relating to energy efficiency, particularly
articles 9 and 19; Considering the law no.
04-04 of 5 Joumada El Oula 1425 corresponding
to 23 June 2004 relating to standardisation;
Considering the presidential decree no.
04-136 of 29 Safar 1425 corresponding to 19
April 2004 appointing the Head of State;
Considering the presidential decree no. 04-138
of 6 Rabie El Aouel 1425 corresponding to
26 April 2004 appointing the members of the
Head of State; Considering the executive decree
no. 90-366 of 10 November 1990 relating
to labelling and to the presentation of non-electric
domestic products; Considering the executive
decree no. 96-214 of 28 Moharram 1417
corresponding to 15 June 1996 fitting the allocations
of the Minister of Energy and Mines;
Considering the executive decree no. 2000-90
of 19 Moharram 1421 corresponding to 24 April
2000 relating to the thermal regulations in new
buildings; Considering the executive decree no.
03-135 of 21 Moharram 1424 corresponding to
24 March 2003 fixing the allocations of the
Minister of Industry;
Decrees :
Article 1 : In application of the provisions of
aforementioned article 9 of the law no. 99-09 of
15 Rabie Ethani 1420 corresponding to 28 July
1999, the decree herein has the purpose of
fixing the specific rules of energy efficiency
applicable to the equipment running on electricity,
gas and oil products.
Art. 2 : The provisions of the decree herein
apply to any equipment running on electricity,
gas and oil products which are new and for
domestic use, designed to be sold or used on
the national territory, imported or locally manufactured.
Art. 3 : The equipment and categories of
equipment targeted by the decree herein are
those whose operating has a large impact on
the national energy balance, particularly taking
account of the considerations linked to:
– the specific consumption of the equipment; –
the distribution and large use of the equipment.
Art. 4 : The equipment and the categories of
equipment subjected to the provisions of the
decree herein are fixed by joint ordinances by
the Ministers responsible for Energy and standardisation
after consultation with the other
Ministers concerned.
Art. 5 : The requirements in terms of the energy
efficiency of the equipment, particularly their
output and their energy consumption level, are
fixed by joint ordinances by the Ministers
responsible for Energy, standardisation and
Trade, upon the proposal of the national organisation
responsible for energy efficiency.
Art. 6 : The equipment is the subject of a classification
established by joint ordinances taken
by the Ministers responsible for energy, standardisation,
finance and commerce; it will define,
by reference to the energy efficiency requirements:
- the “energy efficient” class(es) or the
“non- or somewhat energy efficiency” class(es).
Art. 7 : The indications concerning the energy
consumption, the energy output, the classification
or the scale of the energy outputs as well
as the mention of the class to which the equipment
belongs, must be mentioned on labels by
the manufacturers and clearly affixed on the
equipment and their packaging.
Art. 8 : Any piece of equipment whose labelling
does not correspond to the provisions of article
7 of the decree herein may not be put on the
domestic market.
Art. 9 : The control of energy consumptions
and the energy outputs of the equipment are
carried out on the basis of testing methods
which are the subject of an ordinance taken by
the Minister responsible for Energy.
Art. 10 : The energy efficiency control of the
equipment consists of:
- measuring the energy efficiency parameters
of the equipment, particularly measuring the
energy consumption, the energy output and,
where appropriate, the pollutant emissions of
the equipment;
- checking the conformity of the indications
mentioned on the labels.
Art. 11 : The terms and conditions for organising
and exercising energy efficiency control
are fixed by joint ordinances taken by the
Ministers responsible for Energy, Trade,
Finance and standardisation.
Art. 12 : The present law will be published in
the Official Journal of the Algerian Democratic
People’s Republic.
Drawn up in Algiers,
on 11 January 2005
Ahmed Ouyhia

SUSTAINABLE DEVELOPMENT
2. Targeted campaigns
for circulating LCB
The previous editions of the Energy
and Mines review have greatly evoked
the project of circulating a million low
consumption lamps. This approach will
enable it to ensure the quality of the
lamps through a strict application of
the marketing procedures – particularly
the commitment of the supplier. It
will also enable it to evaluate the impact
of the use of this type of lamp (LCB) on
the electricity consumption and, finally,
in the future it will contribute to the
putting in place of a local manufacturing
industry. The success of this programme
will largely depend on the
awareness campaign which will accompany
the implementation of this project.
This campaign will be paramount
to this project only and does not,
consequently, concern the LCB-type
lamps already sold on the market. All
these reasons have made it essential for
APRUE to launch several missions both
to create the conditions favourable to
the penetration on the market of efficient
household electrical equipment
and to their promotion. As we have to
admit that today, the stake is technological.
Some of APRUE’s missions
include :
a. The launch of a tailor-made campaign
: This tailor-made campaign has
visibility as its objective, i.e. understanding
and particularly explaining the electrical
consumptions, the unit consumption of
each type of equipment, identifying the
responsible uses during peak hours and
those which are a priority problem, or
even discovering some consumptions
which were not a concerned until now.
From this knowledge, intervention strategies
may be created to better target the
actions aimed at individuals, with the goal
being to reduce the electricity consumptions.
b. The introduction of energy efficiency
standards : The energy efficiency standards
consist, in the future, of imposing
minimum energy yields on the equipment
put on the market. The recent promulgation
of the decree no. 05-16 of 11 January
2005 arising from the energy efficiency
law does indeed respond to this concern.
The energy efficiency standards are power
tools which favour the marketing of the
most efficient equipment and their used
by the consumers. Whilst enabling the
household’s energy bill to reduce, this
equipment will enable this gain in electricity
to be assigned to other uses.
The establishment of these standards will
also enable the domestic market to be protected
and to prevent it from being the
receptacle of low efficiency products, or
even products prohibited from being sold
in the industrialised countries which
are highly regulated by energy efficiency
standards.
M. S. B.
Managing Director
of APRUE
Energie & Mines
155
november 2005

SUSTAINABLE SUSTAINABLE DEVELOPMENT
According to the Wall Street Journal
Algeria will reduce its carbon dioxide
emissions by 1 million tonnes
In one of its recent editions, the Wall Street Journal published
on page one an article in which it gave a glowing report
on Sonatrach for its efforts in terms of fighting against
pollution and protecting the environment.
This article, written by Jeffrey Ball, the special envoy of the
American daily newspaper and a specialist in energy issues,
deals with the project to burry under 1,500m in the In Salah
perimeters the carbon dioxide (CO 2 ) emitted by the oil and
gas wells. This project, worth 100 million dollars, put together
by the companies Sonatrach and British Petroleum, falls
in the context of respecting the clauses of the Kyoto agreement
which concern the restriction of CO 2 emissions in the
atmosphere. Thanks to the technique used, observes the Wall
Street Journal, Algeria will reduce its carbon dioxide emissions
by one million tonnes a year, which represents the equivalent
of the total CO 2 emitted annually by 100,000 utility or
sports vehicles. A great performance for Sonatrach.
France
LPG confirmed as
a green fuel
A large scale scientific study, presented
in the offices of the Ministry
of Ecology and Sustainable
Development, and which compares
the pollutant emissions of diesel,
petrol and LPG vehicles, shows that
the LPG engines, in particular, emit
20 times less nitrogen (NOx) than
the diesel engines, according to the
managing director of the French
Butane and Propane Committee
(CFBP), Joël Pedessac, in a meeting
recently accorded to the BIP.
The study also reveals that, contrary to popular opinion,
the CO2 emission levels of LPG are similar to
those of a diesel engine. LPG does not produce
particles, unlike diesel engines. The study mostly
confirms better performances of LPG compared to
petrol in terms of emissions. Presented by the
French Butane and Propane Committee (CFBP) to
the French Oil Institute (IFP), the study was carried
out by four independent European laboratories, in
France, Germany, the Netherlands and Great
Britain, and supported both by public institutions
(including Ademe), professional organisations and
the main LPG distributors. It analyses the emissions
of about ten automobile models sold on the
European market, representative of a range of
generalist manufacturers and all available with the
three fuels (petrol, diesel, LPG), i.e. about thirty
vehicles in total. These were consecutively subjected
to three series of standardised tests which enabled
conditions to be reproduced which were as
similar as possible to the conditions of daily use.
These results, observes the CFBP, come at a key
moment where all governments are looking to reduce
the urban pollution linked to transport. They also
given an answer to the former French Minister of
the Environment who had questioned the development
of the LPG sector during the presentation of
the clean Vehicles plan last September. At the same
time, the Committee is launched a double appeal to
the government and the car manufacturers. In the
first, the CFBP is asking for the renewal of the existing
tax incentive as well as the putting in place of
an information campaign, promoting clean motorisations.
As to the second ones, the CFBP is inviting
them to intensify the research, such as those on the
development of liquid injection in order to increase
the LPG performances. Remember that LPG fuel
currently represents 0.2% of the fuel consumption in
France. Its distribution is ensured by over 2,000 service
stations in the Hexagon - network larger than
Italy's (1,800 points of sale) even though 1.2 million
vehicles run on LPG in this country, compared to
only 180,000 in France.
Energie & Mines
156
november 2005

SUSTAINABLE DEVELOPMENT
Hydrocarbons
Creates a multinational
company to fight against
marine pollution
A technical committee responsible for carrying out the studies necessary
to create a multinational company to fight against marine pollution on the
South-Mediterranean coasts and the West African coasts has been officially
started, indicated the Minister of Energy and Mines, Mrs Chakib Khelil,
at the end of the works of the 2nd African Oil Congress (CAPE II)
which was held over two days in Algiers.
This committee “is comprised of
representatives of 15 international oil
companies which have signed up to
this project”, including Sonatrach,
Total, Eni, Repsol, Statoil and
Petronas, specified Mr Khelil, also
chairman of the Association of African
Oil producing countries (APPA). At
the opening of the works of the congress,
President Abdelaziz Bouteflika
had called for the creation of a “multinational
company” able to quickly
intervene in case of major marine pollution
caused accidentally by hydrocarbons,
beginning with a company
limited to the South banks of the
Mediterranean and to the coasts of
West Africa.
This second Congress, organised by
this association, was, according to the
Minister “a great success” due to the
large amount of participants and the
themes dealt with in relation to the
current state of the oil industry, such
as marine pollution, gas flaring and
training. With the participation of
11 African Ministers of Energy
(Algeria, South Africa, Angola, Benin,
Ivory Coast, Gabon, Equatorial
Guinea, Mauritania, Niger, Chad,
Sudan), of 700 delegates and 80 companies
representing 25 countries, this
meeting “met our expectations” he
said. The works of these two days
which took place in four themed sessions
enabled “a rich reflection” to be
made, leading to recommendations
which should enable us to “explore the
means of promoting cooperation between
the different players involved in
the African oil sector”.
This continental form was also the
occasion, continued Mr Khelil, for
evaluating the progress made, exchanging
experiences and reinforcing the
cooperation in terms of energy at the
African and international level. The
exhibition organised on the fringes of
this event was also a great success
with the participation of 205 exhibiting
companies and the visit of 3,200
persons, particularly professionals.
The Minister indicated that the
Council of Ministers of APPA have
decided to put in place an APPA fund
whose headquarters will be in
Cotonou (Benin), and has elected
Angola as the president of the association.
As for the next congress which
will take place in 2008, it will “probably”
be held in Cameroon, according
to Mr Khelil. The participants in this
congress, in their recommendations,
insisted on the necessity to deal with
the problems of marine pollution
which could be generated by accidental
spillages of hydrocarbons, of to
undertake reforms which will enable
the growth produced by the income
from hydrocarbons to benefit the sustainable
development.
The participants in the congress further
recommended that the member
countries benefit from the experiences
of reducing flared gases undertaken by
certain countries such as Algeria, by
transforming these gases into an alternative
source of energy or by re-injecting
them into the fields.
Simulation exercise
of marine pollution by
hydrocarbons in Béjaïa
A simulation exercise of marine pollution by
hydrocarbons took place of 10 April within
the framework of the Tell Bahr plan. Carried
out in the presence of the Wali of Béjaïa, the
general commander of Algiers’ naval forces
and the commanding colonel of the East
maritime façade, the exercise simultaneously
took place in the sea and on land and mobilised
a great deal of resources belonging to
Sonatrach, Naftal and Hyproc.
The exercise simulated the collision of an oil
tanker and a trailer causing the spillage into
the sea of 1,000m 3 of fuel with contamination
of a beach. The decreed intervention plan is
carried out in two phases: the first in the sea
consisted of confining the oil layer using floating
barrages, with the second having the
purpose of recuperating the split product and
cleaning the contaminated beach. In spite of
unfavourable meteorological conditions, the
exercise was carried out with control.
Sonatrach, furthermore, is committed to
totally abolish flared gases by 2010.
It recently launched an important project
to bury under 1,500m, in the In Salah
perimeter, the carbon dioxide emitted into
the atmosphere by oil and gas wells.
Worth 100 million dollars, the project falls
within the framework of the Kyoto agreement
and, amongst others, aims to limit CO 2
emissions in the atmosphere.
Thanks to the technique used, observes the
Wall Street Journal, Algeria will reduce its
carbon dioxide emissions by one million tonnes
a year, which represents the equivalent
of the total CO 2 emitted annually by 100,000
utility or sports vehicles. This performance
made front page of the Wall Street Journal,
which hailed it as an exemplary action.
Energie & Mines
157
november 2005

SUSTAINABLE SUSTAINABLE DEVELOPMENT
Renewable energies
The wind turbines have the
wind in their sails in Brittany
Brittany, France’s
second largest region
for its wind potential,
has for a long time
been cautious in terms
of wind energy, but for
a few years now has
set about catching up
for lost time in spite of
the persistent opposition
of its detractors.
Energie & Mines
158
november 2005
Whilst currently only 6 wind turbine
sites (5 in Finistère and 1 in Côtesd’Armor)
have come to light, representing
a total of 21 megawatts, 22 building
permits have been recently granted
(14 in Finistère, 4 in Côtesd’Armor,
3 in Morbihan and 1 in Illeet-Vilaine)
for the constructions planned
by 2005, explains Mr Jean-Paul
Gaouyer, regional manager of the
Agence de l’environnement et de la
maîtrise de l’énergie (Ademe).
“We hope this will exceed 100 megawatts
in 2005”, he assures.
Furthermore, almost a hundred project
are being studied, for a total of 800 to
900 megawatts. “Not all will be accomplished,
by the trend is there”, he
explained.
The second most windswept region
after Languedoc-Roussillon, Brittany
is only is 4th position in terms of
infrastructures, after Languedoc-
Roussillon, the North and the Midi-
Pyrénées. The shortage comes down to
“the mono-energy, focussed on nuclear
energy”, which has “for a long time
been the only French model”, deplores
Mrs Catherine Gabillard of the CIELE
(Centre for information on energy and
development), in Rennes.
However, with the Kyoto agreements of
1998 which force France, by 2010, to
achieve 21% of production in renewable
energies, compared to 15% currently,
“wind energy is the solution”, she
confirms.
To make the population aware, the
CIELE regularly recalls that a wind turbine
produces energy without any
greenhouse effect. “The electricity produced
will be consumed near its production
site. We will hence avoid the
losses on lines”, added Mr Gaoyer,
emphasising that Brittany currently
produces on 5% of its electrical
consumption.
Finally, this is a profitable investment, he
confirms. The electricity is sold to EDF
at a favourable price and is a source of
revenue for the local authorities.
The evolution is however still slow, as
wind energy requires initial investment,
of course. “For a wind turbine of one
megawatt, we need a million euros”,
knowing that the sites cannot exceed
12 megawatts. Furthermore, there are
still a lot of detractors of wind energy in
Brittany. A lot of people are worried
about the deterioration of the landscape
and the associations of river dwellers
frequently attack the projects in the
courts.
The building permit authorisations are
only, furthermore, given after consulting
with and receiving the opinion of
the mayors and the sites’ commission.
To avoid any anarchical development,
departmental charters, such as in
Finistère, are being created in order to
prevent the construction of wind turbine
sites on sensitive areas (coastal
regions or classed sites).
To remedy this, the tendency is to
concentrate the large wind turbines on
a single site, rather than to have a scattering
of small wind turbines.
But those against wind energy also
denounce the proximity of residential
areas, and the noise. An argument refuted
by Mr Gaouyer : the new wind turbines,
which are slower and quieter,
are, on average, located more than
400m away from houses. “But this is
an important restriction as, in Brittany,
the habitat is very dispersed”, he
reveals.

In its head office,
the national hydrocarbons
company
Sonatrach organised a
breast cancer awareness
and information
day, run by the company's
specialist doctors
and the Centre Pierre
et Marie-Curie de cancérologie
(CPMC)
of the hospital
Mustapha-Pacha.
SONATRACH
Breast cancer awareness
and information day
social investment
This day took place in the presence of
the Minister of Energy and Mines, Mr
Chakib Khelil, the Minister of
Employment and the National Solidity,
Mr Djamel Oueld Abbès, the deputy
Minister of the Family and the Female
Condition, Mrs Nouara Djaâfar and
executives from Sonatrach. Professor
Flici, a doctor working in the maternity
and childhood protection Centre in
Sonatrach, recalled the company’s
experiment on senology carried out on
a sample of 1,171 women working in
the company, over the period 1997-
2004. This study revealed that 24.44%
of women have been screened for the
disease, whereas 32.88% were examined
after seeing their doctor for severe
breast pains and 41.76% after discovery
a tumour. 1,140 cases, i.e. 97.35%
of the women examined had benign
tumours whereas 31 cases, i.e. 2.62%
were malignant and 2 cases were in an
advanced stage of breast cancer, she
pointed out. Breast cancer is a heavy
burden for the public health", stated
Mrs Flici, before emphasising the
necessity to develop a national prevention
and awareness programme aimed
at women with cases of cancer, in addition
to reinforcing cancer screening
and treatment.
For his part, Professor Hamouda, a
specialist in screening for tumours at
the National Institute of Public Health
(INSP), focussed his speech on the
cells responsible for this disease.
Whilst breast cancer in the developed
countries affects women over the aged
of 50, i.e. after the menopause, he said,
in the developing countries it affects a
lot younger women. According to the
statistics of the World Health
Organisation (WHO), 9 million cases
of cancer a year are reported throughout
the world, 5 million of which in
the developing countries, i.e. 55%, half
of which are women. 25% of these
women suffer from breast cancer.
According to the WHO, 300 million
cases of breast cancer will be reported
in the coming years, two thirds of
which in the developing countries,
which only have 5% of the resources to
treat this disease. Cancer, added the
organisation, is the number two disease
causing death in the world, whereas
breast cancers is still the first cause of
death in women. In this respect, he
recalled that Algeria has over 20,000
cases of cancer a year, 5,000 cases of
which are breast cancer, i.e. 5% of the
cases in Algiers, alone, he added.
Professor Hamouda indicated that 5 to
10% of the cases of breast cancer are
hereditary, specifying that other causes
may also give rise to breast cancer,
namely, taking hormones, late menopause
and sterility. To prevent this dangerous
and costly disease, he felt it
necessary to undergo medical examinations
from the age of 35 in order to
potentially screen the disease at an
early stage. He furthermore recommended
the consumption of fruits and
vegetables, the adoption of a healthy
diet and controlling weight which is,
according to medical studies, one of
the factors causing cancer.
Furthermore, he presented the different
cancer treatment used in the four existing
centres throughout the national
territory, as well as the new methods
practiced in terms of breast ablation
and using prostheses. For his part,
Professor Bendib of the CPMC centre
indicated that 800 cases of breast cancer
were recorded and monitored in
2004.
Energie & Mines
159
november 2005

social SOCIAL investment
INVESTMENT
Sonatrach, number one sports
partner in Algeria
Tradition is well established in the national landscape: Sonatrach loves
sport and proves this every day through its involvement in different
domains – athletics, swimming, tennis and motor sports.
These actions are not the fruit of chance or a fleeting inclination,
but the product of a strategy targeting the elite, encouraging the
national sports movement as well the mass sports in general.
Energie & Mines
160
Athletics
Sonatrach is implementing a strategy
to support the national sports elite at
the world level, particularly in athletics.
The excellent results recorded in this
discipline in all the world's stadiums
over this last decade fully justify this
choice. To the medals of Boulmerka
and Morcelli (two Olympic champions’
titles and five world champion titles)
are added the talent and performance
of other athletes who
have, since, joined Sonatrach.
These champions, all Olympic or
world medallists such as Benida
Merah (gold medal at the Sydney
Olympics) and Abderrahmane
Hammad (bronze medal in
Sydney), Djabir Saïd-Guerni
(bronze medal in Seville and in
Sydney), Baya Rahouli (bronze
medal in Tokyo), Saïdi-Sief (silver
medal in Sydney) or Allik
(world champion in the
Paralympics) have held the country’s
flag high and are grateful to
Sonatrach for the support given
to them.
Tennis
In tennis, Sonatrach is encouraging
promising champions such as Fériel
Esseghir amd Lamine Ouahab so they
can reach world level.
Swimming
The phenomenal Salim Iles, number 1
Algerian swimmer at world level, as
well as Mehdi Addadi benefit from all
the resources to go faster and stronger.
november 2005
Motor sports
In motor sports and in Formula 3,
Nassim Sidi-Saïd is supported to win
first places on the podium.
Cycling
The traditional Sonatrach Cycling
Grand Prix, organised each year in
Hassi Messaoud on 24 February saw a
larger audience with the participation
of a larger number of countries.
Football
All Algerian sports people know just
how much Sonatrach is active and supports
the sport of kings. Hence, sponsoring
actions have targeted two elite
clubs which have represented the national
football at the African level.
Sonatrach annually sponsors the ASP
MCA which combines 13 different
sport disciplines. Thanks to this financial
contribution, sections such as
handball, athletics and swimming get
positive results at the national and
international level. The football
section, managed by the El
Mouloudia association, continues
to be supported by Sonatrach as
well as the Chabab Riadhi de
Belouizdad (CRB) and the Widad
athlétique de Tlemcen. Whilst
Sonatrach is helping those who
defend the national colours, it
does not however forget the regional
clubs such as the USM El
Harrach and the JSM Skikda in
the second and third divisions,
within the framework of promoting
football at the regional level.
Marathon
Sonatrach has contributed to the success
of the Djanet International
Marathon as well as those of Oued
Souf and Timimoun.
Nearby sports amenities
Each year, Sonatrach builds several
sports grounds and games areas in
the districts throughout the national
territory.

Mustapha Berraf
writes to Chakib Khelil
“Dear Minister,
I have the honour and pleasure of informing
you that the 4th Southern Olympic
sports week was a great success.
The success of this sports event
was guaranteed thanks to your great
sponsorship and support.
For this reason, I would like to present
you my sincere thanks for the support
which you have always give and for the
interest you show in
Olympic events.”
Lakhdar Belloumi
writes to Chakib Khelil
“Dear Minister,
At the time of the celebration of the
National Hydrocarbons Nationalisation
Day, the honourable president of La
Radieuse, in this case Mr Chaki Kada and
Lakdar Belloumi send you their sincere
congratulations and thanks and assure you
of their deepest support. No one is likely to
forget the efforts, the motivation and the
self sacrifice you have put into the development
of the Algerian economy and our
youth through your motto (Sonatrach, a
citizen company). La Radieuse, the spokesman
of the Oran youth, will always be
grateful to you for your support and hopes
that you will continue listening to the complaints
of its young people by renewing
your confidence in us for the year 2005.
Once again, may we express our sincere
thanks and congratulations.”
SOCIAL INVESTMENT
SONATRACH
Sonatrach’s contribution
to the anti-locust
campaign has had large
repercussions
Sonatrach’s contribution to the anti-locust campaign
has had large repercussions in the public, in Algeria
but also in the neighbouring countries.
Sonatrach was particularly sensitively
involved through the mobilisation of
important air means by its subsidiary
Tassili Airlines. It also gave a donation
of over 128 million dinars to the High
steppe Commission for the acquisition
of 600 tanks with a capacity of 30,000
broadcasted two key messages of
Sonatrach's new policy in terms of citizen
and social investment.
Sonatrach really confirms its motto,
"Sonatrach, the citizen company", by
systematically committing its efforts
for the general interest of the citizens.
The association
Ensemble pour l’avenir
de Vitry-sur-Seine
writes to Mr Mohamed
Meziane, Chairman
and CEO of Sonatrach
“Dear Sir,
The games organised in Algeria by
Sonatrach as part of the celebration of the
30th anniversary of its creation have been
a great success. Our association,
Ensemble pour l’avenir, localisée
à Vitry-sur-Seine in the Parisian suburbs,
was keen to participate in these games be
sending three young sportspeople
who participated and indeed won
two bronze medals. This was a moment of
pride for these three young sportspeople
and a great honour for our association.
On behalf of these sportspeople,
their families, our members and myself
personally, I have the pleasure of
congratulating you for the quality of the
organisation of these games and send
you all our thanks for the fraternal welcome
you gave to them. Sonatrach, the pride
of our country and jewel of our economy,
has always supported the Algerian people
in its development, in all domains.
Yours faithfully,”
litres each fitted with sprayers. The
written press, radio and television
widely broadcast the event. All the articles
deal with the following themes:
“Sonatrach’s donations for purchasing
equipment”, “The involvement and
commitment of Sonatrach in general
interest actions”, particularly within
the specific framework of the antilocust
campaign. Sonatrach, which
appears in all the titles, is associated to
the commitment and to the citizen
involvement. With regard to the
contents of the press articles, it should
be emphasised that the newspapers
In terms of image strategy, the notion
of value indeed appears central to
ensure the public understand and support
the company's activities and policies.
It hence emerges from reading the
press articles of the sponsorship action
put in place by the Group that
Sonatrach is a citizen company which
is involved alongside the public institutions
for the general interest. Relayed
by the press, the important contribution
of Sonatrach in the anti-locust
campaign shows the recognition of the
utility of the company in the public
domain.
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TOWN TOWN PLANNING
New elements of the town
planning policy in Algeria
By
Ewa Berezowska-Azzag
The town planning
policy is above all the
vision of its development
over time and its
control in terms of
space. A conscious
vision of the stakes,
based on a knowledge
of the potentials and
the weaknesses, both
globally and locally.
AHence, the town, the
expression of the genus of
society which designs it and
manages it at a time of its
history, becomes the support of the
society project, of its way of living and
its production, and accesses the patrimonial
pantheon of the testimonies of
civilisations. The existence of a society
project is a determining factor in the
definition of the town project – we
should not therefore be surprised
about the lack of consistency in the
development of our towns, if an intersectoral,
multi-players' consensus
around the targeted objectives of this
development is so difficult to achieve...
Knowing what we want would enable
us however to provided answers to the
question where, when, how and by
whom must the targeted objectives be
carried out. Building the vision of what
we want then becomes an essential
concern, faced with urban dynamics
which we all admit is irreversible. This
vision cannot be only conceived by
actions on the land, land occupancy,
development of the networks, supply
of equipment and services for an everincreasing
urban population - because
then, not does the action refer to the
"contents" of the town, by hiding the
"sap", its socio-cultural and economic
contents, but also because this restricted
approach prevents us from defining
the growth thresholds of the
urban environment. The urbanisation
perimeter seems to us to be able to be
extended at will and the increase in the
size of the town inevitable... Now, it is
up to the town planning policy to fix
the framework and the method of
growth so that the urban organisation
can claim maturity in all meanings of
the world, by respecting the transgenerational
right to welfare and the
assimilation of the laws of nature
which shelter us.
This almost organic vision of the town,
introduced by the sustainable development
approach, understands the town
as a relational system between the
content and the contained, where the
complexity of the links between the
built up environment, the natural environment,
the social and the economic
environment confers a real existential
force to everything. The town, just like
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TOWN PLANNING
a human body, then not only has a
morphology (physical, structural, functional)
but also a physiology (urban
metabolism) and an intelligence (capacities
of urban governance, political
portage).
What, then are the tools, the methods,
the players of this new town development
policy, established in the sustainable
development approach which is
beginning to take root in Algeria Who,
between the State and the authorities,
between the different professionals and
the users, must decide on the present
and the future of our towns
The recent research and analyses show
that neither the current instruments,
nor the methods of planning or urban
management – sectorised, rigid, nonadapted
to the partnership negotiation,
concealing the environmental dimensions
and territorial resilience, incapable
of triggering town renewal, or even
territorial recycling in the urbanised
perimeter and just as inappropriate to
contain the spill out from the urban
periphery - doe not enable us to give
answers to the requirements of this new
approach.
On the other hand, the results from
foreign experiences in this matter,
taken from town planning policy tests
over more than a decade, are significant.
They show that a multiplication of
diversified tools comprise the risks of
losing consistency of overall town planing
and blocking the implementation
at the local level. Assuredly, an interactive
town development strategy in its
approach and in its diachronic and
synergy relations must have a pilot tool
and clearly fix each of the prerogatives.
The success of a town planning policy
is, of course, everyone's business, but
also one of wishing to understanding
and act...
State of play
There is nothing new in stating that the
town, in general, and the Algerian
town, in particular, are suffering from
several evils: spatial spreading, exposure
to major risks, over-exploitation of
land and energy resources, harm and
various pollutions, ageing of the fabric,
saturation of the technical networks,
insufficient and malfunctioning urban
services, loss of aesthetic consistency,
functional and general structural deregulation...
This situation will be aggravated,
even though, at the same time,
the economic development and the globalisation
of exchanges push the towns
to be tertiarised, to open up to regional,
national and international urban networks,
to look for the attributes of a
new attractiveness, an identify and a
strong image of social and cultural
meaning, to take up the challenges of
this new century of global ecological
and IT revolution.
We are therefore in a paradoxical situation:
on the one hand, the demographic
and economic growth is pushing us
towards town development which
imposes increasingly stricter requirements
for quality of life in the urban
environment and which causes changes
in the shape and size of the town; on
the other hand, this development is not
finding tools capable of channelling
them and containing them. As urbanisation
is an irreversible phenomenon,
the urban development follows then its
own dynamic and obeys the laws of the
property and financial, formal and
informal, market with all the harmful
consequences which we are aware of.
In short, the blockages we regularly see
show that the current system of planning
and management no longer enables
us to respond to the requirements
of intervention.
What answers
This situation of difficulty of correlating
the global and local urban dynamics
and the planning tools is not specific
to Algeria only. A lot of developed
and developing countries have already
been confronted with the same dilemma
– I am particularly thinking here of
the countries of Eastern Europe, forced
to adapt their town planning policies to
the new socio-economic challenges of
the transition period, of the countries
of Western Europe subject to the requirements
of forced urban renovation by
the socio-democratic situation, and of
African countries faced with severe
environmental constraints. The
Mediterranean basin is also particularly
concerned by the necessity to find
urgent solutions faced with the pressu- ☞
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TOWN TOWN PLANNING
☞
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164
re of urbanisation and a large demographic
increase forecast for the coming
decades. (1)
The search for efficient answers is deemed
everywhere to include the adoption
of an urban sustainable development
approach. Born in the 1980s in
Europe, in response to the succession
of three different development
concepts: by the “economic entity”
initially, by the "socio-economic entity”
and by the “ecological entity” and finally
the “ecosystem” entity, the sustainable
development policy is marked by a
few key events, particularly (2):
• Stockholm Conference in 1972 with
the report of the Rome Club “The
Limits of Growth”
• Brundtland report “Our common
future” 1987 (concept of SD).
• Toronto Declaration on towns and
their environment 1991 (eco-development
plans)
• Earth Summit in Rio de Janiero 1992
(launch of the Agenda 21)
• Aalborg sustainable towns’ charter
1994
• World Cities Summit in Istanbul
(Habitat II) 1996
• Earth Summit in Johannesburg 2002
Since 2001, Algeria, which is a signatory
of the Rio protocol, the Aalborg
Charter and which participates in the
november 2005
Sustainable towns Initiative, has
attempted to implement a new urban
policy. New legislative tools have been
put in place and various actions used to
progressively bring urban development
in line with the principles of the UST
formulated by the Agenda 21 (3) (3Es:
economic efficiency, environment efficiency
and social equity) and to improve
the quality of life in the urban environment,
targeting the 10 target development
domains (4). Out of the most
important actions, we can cite (5):
• the promulgation of the laws :
no. 01.20 relating to sustainable development
and town planning, no. 02.08
relating to the conditions for creating
new towns and their planning, no.
03.10 relating to the protection of the
environment and sustainable development,
no. 04-05 relating to town planning;
a town law which is currently
being prepared;
• the launch of the Communal Charter
for the environment and sustainable
development in 2001; the national
report on the status and future of the
environment, NES (National
Environmental Strategy), the PNAEED
(National action plan for the environment
and sustainable development)
launch of the local Agendas 21;
• creation of a national Observatory for
the environment, the National
Conservatory of the Coastline (PAL),
the National waste Agency, the observatory
for the habitat and the occupation
of urban soil ;
• the launch of “co-town” workshops,
such as the framework of public effort
around the problem of the town.
The new planning instruments focussed
on the consistency of town planning,
but also urban layout, were proposed
by the law no. 01.20 (including
the SDAAM, the PATW), but the executive
decrees do not monitor, and
their applicability is not effective.
The legislation relating to the town
planning which establishes the PDAU
and the POS as major town planning
instruments underwent a revision with
the law no. 04.05 amending the previous
law no. 90.29, but the formidable
opportunity to this improve the efficiency
of the town planning in line with
the imperatives of sustainable development
was not corrected seized: the
revision only concerns dealing with the
protection against the major risks and
conservation of heritage.
According to the executive decrees
relating to their drawing up and their
content (no. 91-177 and 91.178),
these tools are still hopelessly spatial
and content themselves solely with looking
for the spaces for future urbanisation,
announcing the rules of soil occupation
and fixing the distribution of the
habitat, equipment and large urban
structures in line with a forecasted
demographic increase considered as a
planning imperative.
Now, the sustainable development
approach imposes another town design
and, consequently, a new planning
approach, new procedures and different
instruments.
New urban design
In this new approach, the town is comprised
of an ecosystem (6), a relational
unit of four closely overlapping environments
of the town: social, economic,
environment and construction. Hence,
the town is no longer only a function
attached to the soil and aimed a specific
population. An “ecosystem” really
means a “living organism” – and as
such, the town not only has a morpholo-

TOWN PLANNING
gy (geomorphic, geological, structural,
functional, landscape and heritage anatomy),
but also an urban physiology
(consumption and rejection metabolism,
breathing mechanism, flow circulation,
etc.) and an urban intelligence (capacity
of governance, political portage). Hence
the town acquires and fully defends its
identity. All these dimensions must be
taken into account with synergy in the
process of sustainable urban design,
which is a process of the approach by
project.
How to adapt
to this new vision
The new urban development policy is
undergoing the following major changes :
• at the urban management level, the
instruments now aim not only at space
management but the management of
the multi-dimensional development
(7),
• at the planning procedures’ level, a
major reversal in the trend is observed:
we are going from a hierarchical directive
town planning to a negotiated
incentive town planning, where the
design of an urban project and the
action of its implementation are closely
linked (8),
• at the player’s level, the participation
is extended to the new players involved
(9),
• at the planning logistics level, the
involvement of new concerns makes
the identification of the stakes and the
clear definition of the objectives to be
followed essential (10).
We can ask ourselves the question: why
are the current instruments inappropriate
Apart from the atypical aberrations
(as is the case for Algiers for
example where the PDA is considered
as a strategic instrument for the 57 districts
whereas it cannot play this role
given that it requires an opposability to
third parties and given that these administrative
limitations do not correspond
to the territorial limits; the current
town planning instruments advocate
the following defects :
• they do not obey a consensual strategic
vision of town development;
• they do not negotiate on the basis
consecutive to the listing of all assets
and local potentials, but also exogenous
and endogenous weaknesses and
threats which threaten the town;
• they do not take into considerable all
urban domains holistically, act only on
the spatial concept without taking
account of the load and territorial resilience
capacities, of the ecological
imprint and the hinterland capacity to
provide the necessary resources,
concepts which are directly dependent
on the demographic size accepted as a
limit, of the typology of the urban activities
and of the urban form with HQE;
• the programming process is linear
and not iterative, which makes it
impossible to evolve the programmes
with an amount of flexibility they doe
not accept reversibility of town planning;
• their spatial-temporal scales are
insufficient (coming-and-going between
the global and the local is not
done, the long term strategy is not
drawn up);
• their procedures for drawing up the
strategies are outdated (new methods
of urban diagnosis unknown, tools to
help decision making are not mastered,
excess sectorisation: the planning goes
in all directions: PDU, PPR, PPPAUP,
PAC, PAT, PLH drawn up without
coordination, often losing site of the
initial objectives and the inter-sectoral
stakes);
• their approval and revision procedure
is long and inefficient, induces unacceptable
inertia to make decisions and
often makes the plan obsolete which is
out of date even before it is applied.
What should be done
Initially, a fundamental question is
posed : can we make a plan when we
don't have a project The plan is only a
representation of the actions over time
and space which result from a vision
expressed by the project. Before going
towards planning, we first of all have to
draw up a town project, a vision of its
near and far future, which will indicate
the fundamental stakes, the main
objectives, the priority planning and
renovation areas and the actions to be
carried out in line with a strategic and
holistic development vision – and not
only in line with the property availabilities.
The project may be define both as
a political project, an architectural and
urbanisation project and a production
process project for the town or parts of
the town.
☞
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TOWN TOWN PLANNING
☞
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This pilot project, capable of adapting
to the changes in needs which are likely
to take place over time, will then
emerge in the guidelines of the town
design :
• by indicating the desirable directions
of the evolution of its morphology,
respectful of the regional environmental
and economic macro-equilibriums,
and thresholds of vulnerability to the
major risks;
• by fixing the limits of its growth in
line with the urban physiological thresholds
(territorial load capacity in line
with the available resources, capacity of
absorbing the hinterland, extent of the
ecological imprint, etc);
• by establishing a new partnership
november 2005
urban management system, based on
the 3M rule (partnership management,
forecasted financial package, extended
urban marketing), which identifies all
the players supposed to participate in
the project at all the spatial scales and
which introduces the corporate managerial
procedure which is close to 5
zeros: zero delay (delay in drawing up
the instruments and in the realisation
of the town planning operations in line
with a decreed planned), zero default
(minimalisation of the management
errors by a OPC coordination, effective
effort), zero paper (minimalisation of
the bureaucracy, introduce of modern
management methods by Pert and
Gantt planning, software to help decision
making and project management,
etc.), zero stock (optimisation of the
use of human and physical resources)
and finally zero breakdowns (obligation
to quickly remedy any malfunctioning
found in the management).
The large town project offers the
opportunity of synchronisation of the
sectoral policies and spatial policies.
The particular features of an approach
per project: well defined objectives,
identified and negotiated actions, designated
application territories, known
players, spatial, environmental and
demographic thresholds respected,
partnership management by 3M ensured,
show the certain advantage of this
type of approach compared to a traditional
approach per plan.
In this approach per project, the instruments
must be capable of ensuring an
iterative approach which is constantly
called to question. The plans themselves
are no longer up to date. They are
often combined with contracts and specific
instruments of project management:
PDUP (périmètre de déclaration
d'utilité publique), ZAC/PAC (zone et
plan d'aménagement concerté),
SEM/UDC (Société d'économie
mixte/Urban development corporation).
New jobs hence appear : that of the
project manager leading the OPC mission,
who has the financial, legal, architectural
and urban skills, as well as the
negotiation and communication,
management and collective collabora-

tion skills, and also competences specific
to the nature of the project: urban
transport, environment, countryside,
heritage… The specialists in participation
and communication will be increasingly
sought after by the research
department, and in the administrations,
the specialists of complex prime
contracting in terms of raising the
necessary financing, complex orders,
partnership contractualisation, mastery
of public contracts, etc.
This new approach requires the upgrading
of the training of the town’s
managers, of the prime contractor
responsible for the programming and
planning, the contractors responsible
for negotiating the stakes and objectives.
It requires the putting in place of
data banks, tools to help decision
making, sets of pertinent durability
indicators in the local context and facilitating
the audit of the sustainability of
the town. It finally requires the putting
in place of a town marketing policy,
aimed at all users, which clearly expresses
the support and the political sharing
of such or such a decision taken within
the specific framework.
It is only in the framework of a synergy
of efforts of all the players concerned
that we will be able to remove the current
ambiguity from our tow project.
The town, which remains a merciless
witness of the level of our society organisation
and which at the same time
aspires to access the hall of fame of witnesses
of our period.
E. B. A.
Architect, Town Planner,
Conference Director EPAU Algiers
Sources
• Ola Söderström, “L'usage du projet”, Payot,
Lausanne 2000
• Pascal Reysset, “Aménager la ville”, Foncier
Conseil, Paris 1997
• François Ascher, “Les ambiguïtés porteuses
de la notion du projet urbain”, Lyon 1993
• Alain Bourdin, “Comment on fait la ville
aujourd'hui”, Espaces et Société
n°105/106/2001
• Ewa Berezowska-Azzag, “Pour une gestion
intégrée du recyclage territorial”, Actes du colloque
national
• “Oran, problématiques de l'urbanisation”,
USTO Oran, January 2004
• Ewa Berezowska-Azzag, “Pour une démarche
de planification différente à Alger”, Actes du colloque
international “Alger, face aux nouveaux
défis de l'urbanisation” USTHB/LGAT, Algiers,
February 2004
• “Vues sur la ville” n°09, Observatoire de la
ville et de développement durable,
Lausanne/Geneva 2004
• Projet urbain de Rennes, 2000
• Claude Chaline, “L'urbanisation et la gestion
des villes dans les pays méditerranéens, évaluation
et perspectives d'un développement
durable urbain”, PNUE/Plan Bleu, Barcelona
2001
• Actes des Ateliers sur les Observatoires pour
l'environnement et le développement dans les
pays méditerranéens, PNUE/Plan Bleu, TUNIS
1999
• PRU G/1601/04/02/2004, “Projet urbain durable,
éléments d'approche méthodologique pour
une nouvelle conception de développement
urbain”, Alger EPAU/MESRS (Project leader :
Ewa Berezowska-Azzag)
Recommendations for a new
approach to town design
Thinking of the town in the regional urban framework system
– the town are now longer remote today, they must
be integral, form complementary and covalent networks…
• Thinking of the town as a complex organism,
which implies a design approach
per project (and not per plan) and a
systemic planning method.
• Thinking of the town as a living organism,
which implies the necessity of taking responsibility
for its design as well as its morphology (in
terms of urban model, soil occupation,
urban shape, etc.), and its metabolism (consumption and
rejects, air, water, energy).
• Recycling the urban territories from a
structural, functional and environmental point of view,
obeying the objectives of equilibrium of the urban ecosystem,
the economic attractiveness and the improvement of
the framework and of the quality of life in the town, and
respecting the development thresholds imposed by identified
geotechnical or environmental constraints.
o Putting in place the local general interest companies,
the tools to help decision making, the urban development
monitoring system (urban development observatory, not
only of the land occupation or the environment).
• Carrying out an urban audit according to the indicators
of pertinent durability in the local context (according to the
focus of the local Agendas 21).
• Identifying the players concerned by the design of a
town project at the different spatial-temporal scales and
drawing up a consultation framework between the different
players: social, economic, political, institutional and
professional players.
• Drawing up a town project before any other town planning
instrument, taking account of the local potentials and
needs, risks and threats, necessity of overall consistency,
and taking account of the actions launched by the PDAS
and the POS already operational, the project will designate
: - the urban development thresholds and their modes
(models) of future urbanisation, - the strategic stakes and
the objectives to be achieved, - the priority intervention
areas in line with the weighting of the strategic stakes and
targeted objectives, - the actions (urban projects) to be
put in place, with their phasing and financial estimate for
the programmes.
• Revising the legislative and regulatory texts as to the
content of the PDAU and the POS, making tools which do
not relate to spatial planning, but urban sustainable development
(like the PADD (French Sustainable Development
and Town Planning Plan), or the USDP (Urban
Sustainable Development Plan) in Great Britain).
• Opening up the institutions, putting in place an inter-sectoral
effort framework for maintaining the consistency between
the various specific tools (PRR, PDY, PSPP, PAC,
etc.) and to ensure the long term coordination relations
between the public and private partners, in a perspective
of progressive adaptation in a collection design approach.
• Creating property agencies per town planning zone
concerned to build up the property portfolios necessary
for the actions planned by the project (based on the right
of first refusal), as the global agencies have not player
their role of development regulators, and the potential
sectoral agencies: industrial, tourist, habitat agencies
rather favouring sectoral policies to the detriment of overall
consistency.
• Establishing the obligation of an OPC procedure (order,
piloting, coordination) for all the town planning operations
in the framework of the urban project.
• Training the urban managers in the modern 3M methods
(partnership management, planned financial arrangement,
extended urban marketing).
• Training the urban prime contractors (architects, town
planners, decorators) in the new methods and techniques
of urban diagnosis and systemic development design.
• Training in the new urban jobs: the project leader, negotiation
and communication specialist, complex project
management specialist, etc.

TOWN TOWN PLANNING
The town, between a complex
mission and noble perspectives
Energie & Mines
168
november 2005
By
Abderrachid Boukerzaza
Writing on the theme of the
town seems a priori simple,
but it is as intense as it is
passionate; it is an exercise
which takes you back to
the past and which, at the
same time, projects you
into the future, without
however skipping over the
present; in fact, quite to
the contrary, it represents
a permanent concern.
Speaking about the town, means
talking about urbanisation and
town planning but also about
the society which lives there, the
economy, the culture, the environment,
social welfare, etc. Was it not, through
history, a place for inventiveness and
creation And through geography, locomotion
and the economy Today, it is
strongly linked to the future of the society
from the point of mortgaging ones
future. The town in Algeria, as the other
towns in the world, is confronted with
two challenges:
o The increasing importance of towns
through the globalisation of exchanges
from the point of view of overcoming the
nations; to promote their images, the
towns are in permanent competition to
attract the investments, to organise the
large trade, sports, leisure events and to
host the financial economic, scientific
decision centres, etc.
o The growth of the urban population. In
fact, our towns are faced with intense
populations flows; an average forecast
for 2025 forecasts a rate of 80% of the
total population of Algeria in the towns.
What will be the role of our towns today
and tomorrow And what is the living
framework which will be offered to the
33 million Algerian’s of tomorrow
To do this, it is crucial to diagnose the
current situation of our towns. The first
finding is alarming due to the ambient
malfunctions and imbalances in the different
segments of urban life; those which
draw their origin from the anarchical
expansion of the towns and to the noncontrol
of their growth.
It is with realism which each citizen aspires
to live in a town where the ecosystem
is clean and healthy, where it represents a
place of quality public service and provides
real comfort in its role, where the
provision of services is efficient and the
economic activities advanced, that it is
also a place of consistent cultural animation.
It further has the ambition to become
a centre which attracts investors and
a growing centre so that its town can be
established and position itself in a network
of relations with the other towns.
These aspirations and these ambitions
are exactly the objectives and the ambitions
of the town policy, and it is in this
sense that the government has decided to
integrated its action into the framework
of the implementation of a town policy
which responds to the aspirations and to
the expectations of the citizens in their
capacity as active, concerned and interested
partners; a policy which transcends
the causal reasons of the current situation
of our towns.
It suffices to put in place mechanisms,
instruments, programmes and activities
to enable the citizen and, consequently,
the society, to be a truly active partner in
the implementation of this policy, from
the time it is drawn up to its completion,
alongside the local authorities which are
authorised by law to manage the town's
affairs. It is with such an approach that it
is possible to promote the citizenship and
make it a reality and, hence, to exercise
good governance because it puts in place
the appropriate conditions for a synergy
between the efforts of the State and the
participation of civil society in its diversity.
The future is preparing itself and is
not waiting; this is the approach adopted
by the government to prepare our towns
so that they are ready to face up to the
next two decades. As worrying and
upsetting as the situation of the Algerian
town is, it conceals factors of hope and
elements of optimism which enable it to
transfer these forces of inertia into a
buoyant dynamic, insofar as the small
and medium-sized towns are a major
asset and a certain wealth equivalent to
the youth which our country has the privilege
to have. In this sense, the small and
medium-sized towns represent almost
600 agglomerations of the country,
including 4 metropolises. This is why the
town bill has provided for new tools
which, from its definition (the town) and
its classification, will ensure its promotion
and development in line with
modern standards and sustainable development
in a competitive, transparent
and contractual context.
It is in this perspective that the sector has
taken it upon itself to put in place new
modern instruments and by combining
the most advanced technological means,
and which is shown by a partnership
agreement with the Algerian space agency
in order to use spatial techniques to
monitor urban expansions and the urban
sprawl of fertile farming land, monitoring
the major risks which threaten our towns
and the use of satellite images which
offer an overall and accurate approach
enabling us, initially, to examine all the
aspects relating to the urban phenomenon
and the town policy. To this is added
the launch of a series of studies for which
the government has given the necessary
resources and which will enable the elaboration
and implementation of programmes
relating to the town policy. As
an indication, the Geographic
Information System (GIS), the urban
dynamics indicators, the social and economic
map of the districts. This policy
aims not only to offer a better living
condition to the citizen and to increase
the value of the role of our towns in the
development, but also to guarantee the
social consistency and cohesion and,
hence the social and political stability of
our towns and our society. This is a complex
mission, certainly, but the nobility of
its purpose is undisputed.
A. B.
Deputy Minister
for Towns

The Agnelli, a dynasty
with a tragic destiny
REMEMBRANCE
The Agnelli, often
nicknames the “Italian
Kennedy’s”, form a
wealthy and influential
dynasty but also
struck by much mourning,
just like the family
of the American
President assassinated
in 1963.
Umberto Agnelli, the chairman of Fiat,
died at the age of 69 with cancer. He
died less than a year and an half after
his older brother, Giovanni Agnelli, called
the “Avvocato”, who died of the
same disease at the age of 81.
The two Agnelli brothers, who had a
large age gap - 13 years - had in common
that they had both lost a son in
their heyday.
Umberto Agnelli was buried in the
family crypt near Turin alongside his
son, Giovanni Alberto, who died, aged
33, in 1997, from a rare form of cancer.
The young man had made his
career at Piaggio (company inherited
from his mother's side) and had been
appointed by his uncle "Gianni" as protégé
to one day take over the reins of
the company. A little later on, Gianni
Agnelli had the pain of losing his only
son, Edoardo, who committed suicide
in November 2000 at the age of 40.
Before his death
in January 2003,
the “Avvocato”
chose as heir to
succeed to the
head of the family
company,
John Philip
Elkann, the
oldest son of his
daughter
Margherita.
Aged 28, born in
the New York,
the polyglot
“Jaki” Elkann
studied in Paris
at the polytechnic
school in
Turin.
His grandfather trained him for his
future role of company head, taking
him to meet a great many personalities,
include Pope Jean-Paul II, and passed
on to him some of his passions, like
support, and in particularly football
with the club which the family controls,
Juventus of Turin.
If one day John Elkann takes over the
controls of Fiat, history will be repeated.
“The Avvocato” had, in fact, been
appointed by his grandfather, also baptised
Giovanni Agnelli, who founded
the Turin company in 1899.
“Gianni” was chosen as protégé at the
age of 14 whereas his father, Edoardo,
died in a seaplane accident in 1935.
“The Avvocato” began his actual career
in Fiat in 1943 as vice president before
taking over full powers in 1966, succeeding
Vittorio Valletta, the man who
developed Fiat after the war, to the
position of Chairman. It remained
chairman until 1996, thus marking
50 years of Italian industrial history.
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HISTORY
The resistance of Cheikh Bouamama
1881-1908
Just like other regions of Algeria, the Oran West has suffered from
waves of French colonialism through its policy based on maintaining the
disagreement amongst the Algerians – a role devolved to the Arab office
responsible for disseminating discord and maintaining rivalry between
the tribes and between the large families in order to be able to act
as they please. This was the case between the Ghraba branch (those
of the West) to which Cheikh Bouamama belonged and the Chraga
branch (those of the East), his German cousins. But Cheikh Bouamama,
having seized the intentions of French colonialism, proclaimed
the battled to rid the country and its inhabitants of the shackles
of the French occupation.
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170
The causes of Cheikh
Bouamama’s resistance
Suffice it to say that the refusal of the
French occupation constitutes the most
important factor advocated by Cheikh
Bouamama to prepare for and organise
the revolutionary action against the
enemy in the Oran West. But there is
also a lot of reasons which greatly
contributed to accelerating the triggering
of the revolt, which include:
The assassination, on 22 April 1881, of
a French office, Lieutenant Wayne
Bruner, who occupied the position of
Head of the Arab office of the region of
El Bayadh, and of four of his guards
among the Spahis, at the time of his
vain attempts to put an end of Cheikh
Bouamama’s activity. The latter was
impregnated with the idea of a healthy
battle against the conquering Christian
colonisers and the call from Djamel
Eddine El Afghani and Sultan Abdul
Hamid II for the putting in place of an
Islamic alliance as a basis of changing
the situation of the Muslims and with a
view to chasing away the colonisers. To
this is added the role played by the tariqa
senoussya preachers in making the
populations of the Sahara region aware
against the penetration of the colonialism.
The deterioration of the economic
situation in the South Oran region
contributed to embracing the fight and
to triggering the resistance, particularly
november 2005
after the propagation of the famine
which had decimated the populations
and cause the loss of all their goods.
This deterioration caused the death of
the majority of cattle.
There was also the desire manifested by
the French authorities to establish a
military observation post at Ksar Tiout
after the failure of the official delegation
in studying the extension of the
railway project through the Sahara,
from the South-West towards the
department of Oran in 1879.
The stages of the resistance
First stage
Cheikh Bouamama only declare the
fight against the French colonialism in
the South Oran region after preparing
all the Saharan tribes and gathered
together about 2,300 soldiers between
knights and doughboys. The first military
confrontation between Cheikh
Bouamama and the French troops took
place on 27 April 1881 in the place called
Sfisifa, to the South of Aïn Sefra,
and ended in the defeat of the French
army and the death on the battle field
of some of Cheikh Bouamama’s men.
Given the seriousness of the situation,
the French authorities hastened to send
additional reinforcements to the region
in order to repress the revolt and tear it
apart.
The second military confrontation took
place on 19 May 1881 in the place called
El Mouilek, located near Ksar
Chellala in the Ksour mountains. There
were violent combats from which
Chiekh Bouamama emerged victorious,
despite the superiority of the enemy
both in terms of humans and equipment.
According to the reports of the French
themselves, this battled caused losses
for both parties, those of the French
being estimated at 60 dead and 22 injured.
After this battle, Cheikh
Bouamama remained master of the
situation. He moved towards Labiod

histoire
WHAT HAPPENED IN APRIL
7 April 1832
The Duke of Rovigo commits a massacre
on the El Aoufia tribe near El Harrach.
About 10,000 citizens were assassinated
(old people, women and children).
24 April 1835
The Emir Abdelkader conquers the town of
Médéa
4 April 1836
After encountering long popular resistance,
the French forces, under the command of
General Clauzel, seized the entire town of
Médéa.
30 April 1843
The French forces occupy the region of
Ténès, to the North of Chlef, one of the last
ports of Emir Abdeklader.
14 April 1845
The battle of Aïn Morane, near Chlef, put
the troops of Boumaaza up against the
colonial forces.
15 April 1845
A French decree announces the division of
the North of Algeria into three departments:
Algiers, Constantine and Oran.
22 April 1863
A decree allocates the farming land confiscated
from the Algerians to the European
colonists.
8 April 1864
Popular resistance of the Ouled Sidi El
Cheikh against the French forces.
11 April 1876
Start of the Cheikh Mohamed Ben Yahia
resistance in the El Amri oasis in Biskra.
23 April 1881
Cheikh Bouamama resistance in the
Algerian South-West.
19 April 1892
A French parliamentary commission comprised
of 8 deputies and presided over by
Jules Ferry is sent to Algeria to supervise
the situation.
6 April 1901
The inhabitants of Aïn Turqui à Miliana
revolt against the occupier.
20 April 1922
Appearance of the newspaper “The Future
of Algeria”, under the direction of Ben
Touhami.
26 April 1936
The French administration, approved by the
Federation of Algerian Muslim Scouts presided
over by Mohamed Bouras.
16 April 1940
Death of Cheikh Abd El Hamid Ben Badis,
founder of the Association of Algerian
Ouléma in Constantine.
10 April 1941
Ferhat Abbas sends a report to Marshal
Pétain on the tomorrow’s Algeria.
19 April 1945
Confrontations between the colonial forces
and the militants of the Algerian People’s
Party at the time of the visit of the governor
of Algiers near the place where Messali
Hadj was detained, which lad to the transfer
of the Koléa.
5 April 1949
The members of the Special Organisation
(SO) attack the Oran post office, the money
gathered will be used to finance the national
movement.
11 April 1955
The French authorities proclaim a state of
emergency for a period of 6 months in
Algeria.
15 April 1955
A Moudjahadine group destroys the tobacco
factory (Bastos) and cork stocks in
Anassers, Algiers.
18 April 1955
An Algerian delegation representing the
FLN participates in the Bandoeng
Conference as observers.
23 April 1955
Extension of the state of emergency,
announced on 11 April 1995, to Biskra
and El Oued.
12 April 1956
First contacts in Cairo between the representatives
of the FLN and those of the
French government.
17 April 1956
Death on the battlefield of the chahid
Souidani Boudjemâa in the outskirts of
Oued Mazafran, near Koléa.
3 April 1957
A unit of the ALN attempts a ambush of a
French military convoy on the road connecting
La Calle to Annaba. Numerous French
soldiers are killed and their equipment destroyed.
9 April 1957
A military patrol of parachutists arrests
Djamila Bouhired at the Casbah of Algiers
after having seriously injured him.
27 April 1958
Start of the works of the Tangiers
Conference in the presence of representatives
of the FLN, the Moroccan Istiqlal party
and the Tunisian Neo-Destour party.
2 April 1959
The vice president of the stand-in
Government of the Algerian Republic and
the Minister of Armed Forces, Krim
Belkacem, announces the death on the
battlefield of Colonels Amirouche and Si El
Haouès near mount Tammer in Boussâada.
29 April 1959
The elements of the ALN launch attacks
against the enemy forces in Ziama
Mansouriah.
30 April 1960
Krim Belkacem, Minister of Foreign Affairs
of the GPRA, is received by the Chinese
Marshal Mol Nong.
13 April 1961
Protests against the colonial repression
policy.
22 April 1961
Failure of the putsch of the French generals
in Algeria (Jouhaud, Zeller, Salan and
Challe).
1 April1962
The Secret Army Organisation (OAS) launches
a number of terrorist attacks in
Belcourt (Mohamed Belouizdad currently),
in Algiers. These operations caused hundreds
of deaths and injuries among the civil
populations.
7 April 1962
Installation of the stand-in executive in
Rocher Noir (Boumerdès).
Sidi Cheikh, which helped the uprisings
during this period to cut the telegraph wires
connecting Frenda to El Bayadh and to
attack the centres of the Franco-Algerian
company of allies.
To face up to the repeated victories recorded
by Cheikh Bouamama, the French authorities
initiated quick movements consisting of
sending troops to the South-West with a view
to surrounding the Cheikh Bouamama uprising.
It began by raising the mausoleum of
Sidi Cheikh located in Labiod Sidi Cheikh,
before perpetrating the head of the occupation
troops with terrible massacres against
the remote populations of the hills and plains
of the region of El Bayadh to take vengeance
for their participation in the uprising.
Horrible deeds were committed by the killer
Négrier, on 15 April 1881, who bombarded
the mausoleum of Sidi Cheikh and profaned
his tomb, which constituted a real attack on
the spiritual values of the Algerian people
and on its customs.
Between September and October 1881, the
French troops commanded by General
Colligneau and General Louis were attacked
by the Moudjahadine near Aïn Sefra and
there were several killed and injured on both
sides.
Furthermore, General Luis destroyed the two
ksour which Cheikh Bouamama possessed,
namely the upper ksar of Maghrar and the
lower ksar of Maghrar. Likewise the zaouia
of Cheikh Bouamama was destroyed and a
good number of the remote inhabitants were
killed.
Among the notable facts of this period, there
was the Cheikh Si Slimane Benhamza
assembly, head of the Ouled Sidi Cheikh El
Ghraba to Bouamama's revolt, at the head of
300 horsemen. He went on with his troops to
the North-West of Aïn Sefra and from there
to the region of Bakakra to put pressure on
the tribes who were the vassals of French
colonialism.
Given the numerical growth of the colonial
troops to which reinforcements were sent to
all regions, the pressure increased on Cheikh
Bouamama who was forced to withdraw to
the region of Figuig, in Morocco, where his
activity decreased and his partisans dispersed.
Some of them joined Si Kaddour Benhamza,
head of the Ouled Sidi Cheikh Chraga,
whilst others joined the ranges of Cheikh Si
Slimane Benhamza, head of the Ouled Sidi
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histoire HISTOIRE
Cheikh El Ghraba; the rest of the fighters
set up in Figuig and its surroundings.
On 16 April 1882, the occupation
troops pursued Cheikh Bouamama on
Moroccan soil, but he reacted by a violet
attack on the Tighri chott which
cause the enemy considerable human
losses, forcing it to break up.
This defeat had a considerable impact
in the French military environment and
increased the tenacity and the resistance
of those involved in the uprising,
showing once again their superiority
over the French troops.
Second stage
During this stage and, making the most
of a relative calm, Cheikh Bouamama
reorganised his troops in Figuig, in
1883.
Worried about this intense activity, the
colonial authorities quickly sent a telegram
signed by General Soucié, head
of the 19th battalion, calling for him to
exert pressure on the sultan of
Morocco for him to chase Cheikh
Bouamama from the Moroccan territory
as he was a danger for the interests
of France in the region.
This led Cheikh Bouamama to leave the
region to take refuge in Touat and ask
for protection from the inhabitants of
the Deldoul oasis. He remained there
until 1894 and founded a zaouia where
he gave religious education in order to
pursue his combat and stop the colonial
expansion in the South-West. He sent
messages to all the heads of the
Saharan tribes, particularly the Touregs
who suggested he come to live among
them in order to be able to support the
fight against the French enemy. On the
other hand, some tribes set up on the
Algerian-Moroccan borders supported
him and rallied around him.
The French colonialism attempted to
stifle the revolt by all means and to prevent
it from extending to the South, by
putting in place economic establishments
and creating trade centres in the
territory of Touat and Tadikalt.
Third stage
Cheikh Bouamama succeeded in rallying
numerous partisans and winning
the trust of the populations of the
Saharan regions. This led the colonial
authorities to attempt to rally it to their
cause using all means. Contacts were
made through the French Delegation in
Tangiers in 1892 in order to negotiate
with him the question of the aman
(negotiated peace0 which came to
nothing.
The friendships which existed between
Cheikh Bouamama and the Moroccan
authorities incited the concern of the
French colonial authorities, particularly
after he was recognised as head of the
tribes of the Ouled Sidi Cheikh which
had all the Saharan regions under its
authority. They attempted once again
to win his friendship in order to facilitate
their expansion attempts and to
extend their influence over the Saharan
regions. To do this, the governor general
Laverrière decided, on 16 October
1899, to grant a total, unconditional
aman. At the start of the 20th century,
Cheikh Bouamama entered Morocco
and settled in the region of Oujda,
which enabled the colonial authorities
in Algeria to congratulate themselves
for having been able to get rid of one of
its most determined enemies to combat
them. The combat led by Cheikh
Bouamama over many years had considerably
hindered the colonial expansion
in the extreme South, particularly
on the Western coast.
Consequences of Cheikh
Bouamama’s resistance
The Cheikh Bouamama uprising was a
major challenge to the policy of the 3rd
Republic aiming to complete total
occupation operations in Algeria.
Cheikh Bouamama’s revolt represents
the final phase of the strategy of the
national leaderships in the confrontation
of French colonialism through
popular resistance. Cheikh
Bouamama’s revolt was one of the
most violet popular resistances in the
19th century after the Emir Abdelkader
resistance.
The Cheikh Bouamama revolt revealed
the weakness of the French in overcoming
the resistance, which led them to
look for political solutions in order to
put an end to the revolt, particularly
after the second phase 1883-1892,
when the question of the aman (truce)
sought after by the French authorities
was posed to Bouamama, who rejected
it through the letters and negotiations
undertaken by France. The revolt accelerated
the completion of the railway
projects in the region connecting the
North to the South. Even if, due to the
hindrances encountered and more precisely
the difficulties in unifying the two
branches of the Ouled Sidi Cheikh as
well as the pressure exerted by the
Moroccan Sultan Abdelaziz on the
revolt and its confinement to the borders,
the Cheikh Bouamama resistance
was not able to achieve its objective,
which was to chase the colonialism out
of the region; it did however prove its
capacities of resistance, its endurance
and the blocking of the expansion of
colonialism in the region.
In the review
El Djeïch
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The prospective approach
Foundations
and methodology
By
Mohamed Ouddane
“What it’s urgent, it’s
already too late” Talleyrand
The future is uncertain, but
it is inevitable, as they say.
This phrase gives a twofold
impression of impotence
and necessity: impotence
of knowledge, necessity
for a decision
and action.
The future is a land where you
have to occupy both as a subject
and as a method of knowledge
but we do not have a
“culture” of the future”, and our
methods of understanding the world
remain marked by the method of analysis
which is determined and qualified,
known and finite: if there has to be a
future, it can only be presented in the
form of the extrapolation of data from
the present, i.e. in the linearity.
Now, we know that there is neither a
straight line nor statistics of the future
and we also know that our decisions
commit us irreversibly. Hence, it is the
case that the strategic decisions are
indeed types of irreversible decisions and
this irreversibility is proportional to the
temporal horizon.
Hence, the costs of an erroneous strategy
will be enormous, non-recoverable
and destructive (this does not just include
the financial costs but also the economic,
political, social, technological ones,
etc.) both for a company, a group or a
State.
We then have to admit that the future is
a very serious thing to be entrusted to
crystal ball readers.
That being the case, are we really in a
position to read the future
In this respect, this 21st century is a profound,
multi-dimensional crisis: - crisis
of sense, crisis of time, crisis of knowledge,
crisis of values, crisis… of the
future.
This century of speed and the instantaneous
devotes which has been agreed
upon to call the "tyranny of urgency":
The new information and communication
technologies reinforce a culture of
"real time". Meaning that the immediate
present, and construct, with the notion
of network a new relationship between
space and time, which, paradoxically,
updates the problem of controlling the
future, particularly with regard to decisions
:
Max Weber said that “the fundamental
task of a manager is to structure time
and construct the future".
If we accept, along with Gaston Berger
(creator of the term Prospective) that
“the future is the reason for being of the
present”, we have to agree that the
conception which me have of the future
will be a determined by the relationship
which we want to establish with it.
For this purpose, it is interesting to rely
on the proposals of Professor Michel
Godet (holder of the industrial prospective
chair at the CNAM), who identifies
four attitudes to the future :
• Passive: (the ostrich’s policy)
• Reactive: reaction after being hit
• Pre-active: preparing oneself for predictable
changes
• Pro-active: provokes the desired
changes.
It is obvious that it is the pro-active attitude
which favours the internalisation
and the implementation of the prospective
approach to support the strategic
action. But this attitude, before creating
an approach, is, itself, the product of a
new conceptual context.
The new conceptual context
We define the prospective (literally: looking
forward) as a discipline which
relies on the foundations of economics,
sociology and political science to
control the temporal dynamics (trends,
evolutions) and the changes which
result from them (structural impacts) –
(definition of Fabienne Goux-
Baudiment).
The prospective may be:
o Exploratory: its helps to create possible
futures, generally in the form of scenarios.
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☞
o Normative: it is a tool of collective intelligence which
enables us to define a vision of the future from which we
formulate objectives to be achieved.
This definition reinforces the position of the prospectives
for which "the future cannot be predicted, but the
futures may be invented".
In other words, the validity of the prospective approach
is linked to one of a permanent mobilisation of intelligence
and creativity.
The prospective is necessarily voluntarist and objective
is decision-making. In his Essay and theoretical strategy,
Lucien Poirier insists on the fact that the prospective
responds to a “profoundly felt need to no longer abandon
action to free play of improvisation before the solicitations
of the event, to establish the decision-making
procedures which are the best adapted to the accumulation
of a plethora of information, imperceptible in its
diversity, and to the obligation of anticipating the future".
The prospective exercise in a dialectic of the past, present
and future and is subject to the requirement of producing
a conceptual model of integration - a conceptual
model which requires the implementation of a new
paradigm.
With regard to the theory of knowledge, the Cartesian
paradigm (conceptual diagram), the paradigm of scientific
thought, has for a long time predominated, based
on three pillars: order, separability into elements, reason
(inductive-deductive logic), main elements of the
method which has contributed to organising knowledge
into categorised disciplines - the technical innovations
and progress have accelerated the movement of specialisation
and autonomisation of the disciplines and subdisciplines
and this movement, although positive initially,
has contributed to a fragmentation of the knowledge
to the point of posing the problem of the reconstitution
of the unit of knowledge - It is within this preoccupation
that the notions of pluridisciplinarity and now of transdisciplinarity
have emerged (borders and crossovers between
disciplines) whose objective is the unification of
the scientific knowledge into a total system.
It is in this context that new thinking tools have been
produced to breakdown between them specialised knowledge,
the whole and the parts, the global and the individual,
and realise situations of biological, political, economic
and social life which at the same time experience
relations of regulation and imbalance, chance and determination
of creation and of destruction, of order and
disorder, of continuity and breakdown.
This new conceptual environment has favoured the
design of theoretical systems whose objective is to enable
the reading of a reality definitively characterised by
complexity. The so-called complex school of thought
(Edgar Morin, Henri Altan, Llya Prigogine, Henri
Simon) wants to be "a way of seeing and presenting a
reality through principles linked to complexity and in an
uncertain future".
By complexity, we mean that it is connected or woven
together (etymological sense) with an emerging sense or
one to be defined: the complexity cannot be broken
down or rebuilt from simple and independent elements
(analysis by the separability).
The complexity is an entirety characterised both variety
(increasing number of variables) and variability (forms
which these variables may take and their multiple or progressive
interaction).
The complex school of thought is mainly based on three
large theories developed from the second half of the
20th century:
o the theory of information (Shannon) which, forging
the concept of information, wanted to contribute to the
treatment of uncertainty;
o cybernetics (Wiener) whose contribution is the
concept of retro-action which breaks away from the
principle of linear causality;
o the general theory of systems (Bertalanfy) which postulates
the identify of all as being greater than the sum
of the parts and the interaction of the parts with each
other.
All these three theories, the basis of complex thought,
enables us to deal with the phenomena of organisation
where processes of order and disorder, continuity and
breakdown coexist.
It is this conceptual framework which has favoured the
development of the prospective exercise. Indeed, it is the
philosophy of complexity which instrumentalises the
prospective approach as a construction of a model of a
system of which we predict the futures.
The prospective approach
The prospective approach is necessarily linked to a project,
to the formulation of strategies. It unwinds between
the two extremes of the decision chain :
• the situation at the prospective horizon;
• the current situation, itself a heritage from the decisions
of the past.
Between the two objectives is: knowing to be able to want
and be able to know the cause.
In other words, according to the approach of Lucien
Poirier :
• what to know on the future in all the domains concerns
and on the evolution factors
• what to want on this expiry date Targets
• what can be done to satisfy this desire: ways and means
capable of accomplishing the purposes
It should therefore be kept in mind that the prospective
does not have the purpose of predicting the future, but of
helping to build it.
Hence, from the onset, it should also be taken into
account that without prospective attitude there is no freedom
of decision: long time is the only one on which
actions can be committed in depth.
Anticipation and action have a permanent dialectic relationship.
For this purpose, the prospective approach has
three essential characteristics which differentiate it from
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forecasting :
1. It is a multi- and inter-disciplinary approach of systemic
inspiration. It considers the phenomena from the factors of
their inter-relations.
2. It is an approach which integrates the dimension of long
time, past and future. In the whole system, variables with a
great amount of inertia (invariable or heavy tendencies)
coexist, for example: ecosystem, demography, with others
which vary over increasingly shorter time scales (technological
innovations, political events, economic and financial
fluctuations, etc.). The analysis over a long time enables us
to eliminate the “period effects” and to apprehend the profound
dynamics of the system.
3. It is an approach which integrates the breakages, taking
account of the discontinuity phenomena (innovations,
changes to the rules of the games, threshold effect).
We consider that the prospective approach generally includes
five stages (such as formulates, for example by Hugues
Dejouvenel, director of Futuribles).
Definition of the problem
of the choice on the horizon
Demarcation of the scope, depending on the timing of the
decisions to be taken and the means, the system’s inertia
(heavy tendencies) and period effects (breakages).
Construction of the system
and choice of the key variables
Identifying all the variables which exercise or are likely to
exercise an influence on the problem studied.
The definition of the hypotheses,
data collection
For each variable, three essential questions are asked :
• what has been the past evolution of this variable
• what is its tendentious evolution
• what are the potential breakages which may counteract
this evolution
The answers to these questions depend on:
• the pertinent indicators chosen
• the quantitative and qualitative data
• the temporal series used (benchmark)
• the interpretations.
The objective of this phase is to be able to formulate hypotheses
of evolution on the future.
The construction of possible futures
Scenarios’ method according to Michel Godet “A scenario
is a unit formed by the description of a future situation
and chaining of events which permit from the original
situation to the future situation".
The outline of the scenario therefore has three levels:
• the base (current reality)
• the routes per progression over time
• tree structure of possible futures
• the final images obtained at different periods
• the exploratory scenarios try to decipher what may arise
by exploring the field of possibilities
• the normative or strategic scenarios explore what we
can do from an objective which we have set ourselves in
the future, by establishing the countdown of the actions to
be undertaken to achieve it (or regression).
The strategic choices
It is the decisional process which will back up the clarifications
made by the prospective approach on:
• the heavy tendencies
• the areas of uncertainty
• the risks of failure.
To draw up strategies and compare their advantages and
disadvantages.
Conclusion
The prospective is linked to the action through the strategy.
This relationship may only be dynamic and productive in
the framework of controlling the requirements and the
principles of knowledge of the complexity. No method to
evaluate the future can remove all the uncertainties on the
factors of evolution, their relative weight, their combination,
but we do indeed need a methodology to attempt to
control the relationship between the determined and the
undetermined. Lucien Poirier even proposes a "minimal
prospective" which relies on the determined future (the
heavy or invariable tendencies) which he perhaps considers
as a common basis to all scenarios which may be formulated.
In all the cases, the contribution of the prospective
approach is undeniable in terms of :
• structuring and simplification of the thought;
• visualisation of the results;
• perception of dynamics;
• possibility of simulation.
M. O.
Management
Consultant
Sources
• Alvin Toffler: Le Choc du futur. Gallimard
• Lucien Poirier: Essai de stratégie théorique. Les cahiers de la
Fondation de la Défense nationale
• Michet Godet: Manuel de prospective stratégique.
Dunon. Volumes 1 and 2
• Hugues de Jouvenil: Guide méthodologique de la prospective.
• Revue Futurible n° 247. Nov. 1999
• www-2100-org: website of the association 2100 run by Thirry Gaudin
• www-cnan-fr/deg/lips: website of the industrial prospective chair of
Michel Godet.
Energie & Mines
175
november 2005

prospective
PROSPECTIVE
The project, a favoured
means of anticipation
to reduce the uncertainty
Energie & Mines
176
november 2005
By
Anissa Ikououbel
In a turbulent economy,
where it is still difficult
to plan, and
sometimes even dangerous
to extrapolate,
the project, a new
form of anticipation
competes with the
forecasting, prospective
and planning tools
in order to act on the
environment, up to
even creating it
instead of attempting
to adapt to it to
overcome its unpredictability.
Uncertainty, an omnipresent
characteristic in our socioeconomy
from the start of
the 21st century which
affects both the internal and the external
environment of the company; it
hides multiple factors linked to the
internationalisation of the markets and
of the competition as well as the permanent
evolution of the consumer's
needs...
What would be the most appropriate
strategic behaviour to face up to it A
management by anticipation is called
for to compensate for these unforeseen
changes in the environment surrounding
the company. The “traditional”
approach is based on the applicable
of the forecast and the planning
thanks to which the managers can predict
the future with an accuracy enabling
them to choose a clear strategic
direction. The company must also use
the prospective, a conduct of cognitive
anticipation, which enables it to explore
the future to harness it.
Now, this method reduce to the predictive
activity only does not guarantee
better performance since it tends to be
paralysed when the environment is
very uncertain. Managers even go so
far as to question the use of plans:
“Throw away your strategic multi-year
plans which are already out of date at
the time you sign them". Renault has
shown how the forecasts could be limited.
“Our actions cannot be based
solely on the forecast; it is not reliable
and does not unfortunately make the
future certain, given the quick evolution
in the client’s requirements!" (1)
Furthermore, Tefal launches over sixty
or so projects a year, without any prior
market study; the trial-error principle
is central in this company! As for
Kodak, it spends 500 million dollars a
year to develop new products. Is it not
therefore more pertinent to consider
that a company which has succeeded
is the company which has been able to
transform, or even create its environment
before adapting to it “The project
as an operational method of anticipation
gives itself the purpose of
transforming the reality rather than
simply knowing it; this means less
forecasting then making a future desire
come to light. HP, Nokia and
SEB… are some of these numerous
other European and American companies
which are forced to invent their
own future, which no forecasting system
can today tell them what tomorrow
will be.
Where is the Algerian company with
all this What does it do to anticipate
Does it make use of a forecasting system
exclusively or as well as the "project"
The planned economy represented the
pillar of Algeria’s management system,
since its independence in 1962, before
it started its transition towards a market
economy over 15 years ago. Far
from being without consequences, the
vestiges of the planned economy
remain omnipresent in several
Algerian companies; they affect its
strategic focuses.
The plan and the forecasting databases
remain their main management tools.

prospective
Others, acting through unconscious
imitation, act a posteriori like their
competitors, to avoid being the first
ones to take the risk. The public works’
domain often sees changes of regulations
and the company has increasing
difficulties to structure prices, which
accentuates the reticence compared to
the pro-activity.
As a player in the construction industry,
Cosider finds itself restricted to
limiting itself to the reactivity and, in
certain cases, to unconscious imitation,
given that it is the client which imposes
its requirements, a pure improvisation
would destabilise the financial balance.
The project, a preferred form
of anticipation for other
Algerian companies!
Currently, the Algerian market, in certain
sectors, is seeing a progressive
opening up on the international scale,
awaiting the membership to the World
Trade Organisation and the coming
into force of the association agreement
with the European Union. The velocity
of the environment will not cease to be
accentuated! Faced with this situation,
numerous public and private companies
are not staying indifferent; threats
and opportunities are quick to be
detected.
“Dare to act and change” such is our
Group’s slogan”, confirmed one of
Saidal’s managers. Expressing positive
rebellion against an aggressive environment,
in no event does the company
want to undergo the fluctuations – but
rather to cause it! Associating the old
strategy to management by anticipation,
the pharmaceutical leader uses a
series of methods of anticipation which
interact in a cycle, where each methods
calls upon the other to, finally, give
birth to a project.
Corrective measures are made, taking
account of the variations detected. The
generic drug project is a perfect example
of this.
A standard
strategic behaviour
does not exist,
we should therefore
take account of the
contingency parameters
which influence
the choices
of the optimal strategy
relating to any
company, such as
the ownership structure
of the company, its
position on the market,
its financial situation,
and the nature
of the business…
The love of risk becomes visceral in the
Nouvelle Conserverie Algérienne!
“In our company, we consider the project
as a real anticipation tool, we think
possible something which, for the competitors,
is only a hypothesis. The risk
taking enables us to seize the opportunities
on the market to have a competitive
advantage" declared one of the
NCA’s managers. The Danao-type fruit
milk which was conducted before the
competitor which considered its launch
over a year ago. The company adopts a
strategy of innovation. Each year, it
puts new products on the market. An
extraordinary increase in product is
quick to be recorded; it went from 4
million litres a year in 2000 to 4 million
litres a month in 2004.
A paradoxical situation is imposed!
What would be the optimal strategic
attitude to adopt Adapting to the environment
and taking the risk of disappearing
at the slightest disruption
which would not be possible to manage
or to act and innovate in an uncertain
market with a probability of failure,
whose costs may be equally colossal
Of course, it is not easy to answer these
questions. However, we can propose a
start to an answer. This means putting
in place a process of flexible and interactive
anticipative, where, complementarily
and simultaneously four methods
are combined, called the “4P”. The
prospective which enables the future to
be explored will be followed by a forecasting
system, capable of predicting
the future and to choose the best scenario
from this which corresponds to
the company’s objectives.
Completed then by a rigorously formulated,
but flexible plan capable of being
progressively modelled and finally to
become a reality through a strategic
project. A monitoring system will be
combined with it so as to be attentive to
any change in the environment.
Now, a standard strategic behaviour
does not exist; it would therefore be
appropriate to take account of the
contingency parameters which influence
the selection of the optimal strategy relating
to every company, such as the company's
ownership structure, its position
on the market, its financial situation and
the nature of the activity...
A. I.
Academic
1. Proposals gathered at the Renault
Technocentre in Guyancourt, during an exploratory
interview carried out with Yves Dubreil,
director of vehicles’ programmes of the company
and former head of the Twingo project.
Energie & Mines
177
november 2005

HYDROCARBONS
LAW
SUPPLEMENT
Energie
&
Mines
The President of the Republic,
Considering the constitution, in particular
its articles 12, 17, 18, 199, 122-24
and 126;
Considering the Ordinance no. 66-154
of 8 June 1966, amended and supplemented,
dealing with the civil procedure
code;
Considering the Ordinance no. 66-155
of 8 June 1966, amended and supplemented,
dealing with the criminal procedure
code;
Considering the Ordinance no. 66-156
of 8 June 1966, amended and supplemented,
dealing with the penal code;
Considering the Ordinance no. 75-58 of
26 September 1975, amended and supplemented,
dealing with the civil code;
Considering the Ordinance no. 75-59 of
26 September 1975, amended and supplemented,
dealing with the code of
commerce;
Considering the Ordinance no. 75-74 of 12
November 1975, amended, on the establishment
of the general real estate register
and the institution of the land book;
Considering the Ordinance no. 76-80 of
23 October 1976, amended and supplemented,
dealing with the maritime code;
Considering the Ordinance no. 76-101
of 09 December 1976, amended and
supplemented, on direct taxes and similar
duties;
Considering the law no. 79-07 of 21
July 1979, amended and supplemented,
on the customs code;
Considering the law no. 81-10 of 11 July
1981 related to the employment conditions
of foreign workers;
Considering the law no. 83-13 of 2 July
1983, amended and supplemented,
related to workman site claims and professional
accidents;
Considering the law no. 83-17 of 16
July 1983, amended and supplemented,
on the water code;
Considering the law no. 84-12 of 23
June 1984, amended and supplemented,
on the general forests' system;
Considering the law no. 84-17 of 07
July 1984, amended and supplemented,
related to the finance laws;
Considering the Ordinance no. 84-02 of
8 September 1984, dealing with the
definition, composition and formation
and management of the military
domain;
Considering the law no. 86-14 of 19
August 1986, amended and supplemented,
related to the prospecting,
research, exploitation and eransportation
activities, by pipelines, of
Hydrocarbons;
Considering the law no. 88-07 of 26
January 1988 related to health, safety
and professional medical care;
Considering the law no. 90-08 of 7 April
1990 related to the commune code;
Considering the law no. 90-09 of 7 April
1990 related to the Wilaya code;
Considering the law no. 90-11 of 21
April 1990, amended and supplemented,
related to professional relations;
Considering the law no. 90-22 of 18
August 1990, amended and supplemented,
related to the trade register;
Considering the law no. 90-25 of 18
November 1990, amended and supplemented,
related to land orientation;

Considering the law no. 90-30 of 1 December 1990 related to
the estate law;
Considering the law no. 91-11 of 27 April 1991, amended, setting
the rules relating to expropriation because of public interest;
Considering the Legislative Decree law no. 94-07 of 7 Dhou El
Hidja 1414 corresponding to 18 May 1994, amended, related
to architectural production conditions and the exercise of the
architectural profession;
Considering the Ordinance no. 95-04 of 19 Chaabane 1415,
corresponding to 21 January 1995 related to the approval of
the agreement for settling disputes relating to investments between
the States and coming from other States;
Considering the Ordinance no. 95-05 of 19 Chaabane 1415
corresponding to 21 January 1995, relating to the approval of
the agreement creating the international investment guarantee
agency;
Considering the Ordinance no. 95-07 of 23 Chaabane 1415
corresponding to 25 January 1995 related to insurances;
Considering the Ordinance no. 96-05 of 19 Chaabane 1416
corresponding to 10 January 1996 related to the approval of
the United Nations agreement on maritime law;
Considering the Ordinance no. 96-22 of 23 Safar 1417 corresponding
to 9 July 1996, amended and supplemented, related
to punishment against violation of the foreign exchange
settlement legislation and capital assets flows to and from
foreign countries;
Considering the law no. 02-01 of 22 Dhou El Kaada 1422 corresponding
to 05 February 2002 related to electricity and gas
distribution;
Considering the law no. 03-10 of 19 Joumada El Oula 1424
corresponding to 19 July 2003 related to the protection of the
environment within the framework of sustainable development;
Considering the Ordinance no. 03-03 of 19 Joumada El Oula
1424 corresponding to 19 July 2003, related to competition;
Considering the Ordinance no. 03-11 of 27 Joumada Ethania
1424 corresponding to 26 August 2003, related to cash and
credit;
Considering the law no. 04-20 of 13 Dhou El Kaada 1425 corresponding
to 25 December 2004 related to the prevention of
major risks and the management of catastrophes within the
framework of sustainable development;
Considering the law no. 04-08 of 27 Joumada Ethania 1425
corresponding to 14 August 2004 related to rules for practising
commercial activities;
Considering the law no. 04-21 of 17 Dhou El Kaada 1425 corresponding
to 29 December 2004 related to the 2005 finance
law;
After adoption by the Parliament;
Promulgate the law whose content is as follows :
Considering the law no. 98-04 of 20 Safar 1419 corresponding
to 15 June 1998 related to the preservation of cultural heritage;
Considering the law no. 01-10 of 11 Rabie Ethani 1422 corresponding
to 3 July 2001 relating to the mining law;
Considering the Ordinance no. 01-03 of Aouel Jourmada
Ethania 1422 corresponding to 20 August 2001 related to the
investment development;
Considering the Ordinance no. 01-04 of the Aouel Joumada
Ethania 1422 corresponding to 20 August 2001 related to the
organisation, the management and the privatisation of economic
public companies;
Considering the law no. 01-20 of 27 Ramadhan 1422 corresponding
to 12 December 2001, relating to land planning
and sustainable development of the territory;
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••• CHAPTER I
GENERAL PROVISIONS
AND DEFINITIONS
Article 1
The purpose of this law is to define:
■ the legal system of the activities of research, exploitation,
transportation by pipeline, refining, hydrocarbons processing,
marketing, storage, oil products as well as the works and facilities
enabling their performance.
■ the institutional framework allowing the implementation of the
activities above.
■ the rights and obligations of such persons performing one or
several activities mentioned above.
Article 2
The establishment of the aforementioned institutional framework
to apply the principle of mobility and adaptability which
characterises the State’s action and then to return to the latter,
those of its prerogatives previously performed by Sonatrach
S.P.A.
Thus discharged of a mission which contradicts and hinders its
natural economic aim, Sonatrach S.P.A. benefits, by virtue of
law, from increased reinforcement and sustainability of its fundamental
role in the creation of wealth in favour of the national
collective.
Article 3
Hydrocarbon substances and resources, whether discovered or
not, located in the soil and subsoil of the national territory and
maritime spaces coming under the national sovereignty are
national community properties of which the State is the emanation.
These resources should be exploited by the use of efficient and
rational means in order to achieve an optimal conservation,
while complying with the environment protection rules.
Article 4
The activities referred to in article 1 above should be among the
vehicles that help foster the use and training of national human
resources and shall, therefore, benefit from incentive measures
as provided for by the law herein.
Article 5
Under the meaning assigned by the present law, we understand
by :
■ Oil upstream : the research and exploitation operations.
■ Prospecting Licence/Permit: permit issued by the Agency for
hydrocarbons resources valorisation which entitles its holder,
upon its request, to the non exclusive right to carry out prospecting
works in one or several perimeters.
■ Oil downstream: the operations of transportation by pipeline,
refining, processing, marketing, storage and distribution.
■ Barrel: a crude oil volume which, under normal pressure and
temperature conditions, equals 158.9 litres.
■ Barrel oil equivalent (b.o.e): liquid or gaseous hydrocarbon
volume with 1,400,000 kilo-calories of energy value equal to
that of a barrel of crude oil.
■ Eligible client: client who has the right to conclude natural gas
supply contracts with a producer, a distributor or a commercial
agent of his choice and for this purpose, has a right of access
to the transportation and/or distribution network.
■ Non-eligible client: client who does not have the right to
conclude natural gas supply contracts with a producer, a distributor
or a commercial agent of his choice or by the capacity that
he consumes. This is the client of the actual distributor (historic
operator) and he does not have the right of access to the
transportation and/or distribution network.
■ Gathering and injection systems: underground or over-ground
flow line networks, of various diameters, that help convey hydrocarbons
to a field, between wells and processing and storage
installations within the field, or dispatch the fluids between the
re-injection facilities and injection wells.
The following are also considered to be gathering flow lines:
underground or over-ground pipes that help convey hydrocarbons
between the storage facilities on the field and the transportation
by pipeline networks.
■ Marketing: the purchase and sale of hydrocarbons and oil
products.
■ Conservation: Fields exploitation method meant to ensure the
highest possible level compatible with the highest possible
reserves recovery rate, at the lowest price possible.
■ Assignment: a deed by which the Minister in charge of hydrocarbons
authorises the Assignee to build and operate for a limited
period of time Transportation by pipeline works provided this
latter implements the obligations contained within said deed,
which are part of his duty.
■ Assignee: any person to whom transportation by pipelines
has been assigned, at his own risks and expenses.
■ Contracting Party: any entity signatory (signatories) to the
research and exploitation contract or to the exploitation
contract.
■ Research and/or exploitation Contract, or contract: Contract
enabling the research and/or exploitation activities to be carried
out in accordance with the present law.
■ Association contract: research and/or exploitation contracts
concluded between Sonatrach S.P.A. and one or several foreign
partners under the law 86/14 above, before the publication date
of the present law.
■ Cycling : operation related to wet gas fields and which
consists of the re-injection of the gas produced after liquid fractions
extraction (condensate) and possibly LPG in order to
increase the recovery rate of these liquid fractions.
■ Distribution : any oil products marketing activity, whether wholesale
or retail.
■ Maritime space: the territorial waters as well as the continental
shelf and the exclusive economic area, such as defined by
the Algerian legislation.
■ Exploitation : all works allowing the Hydrocarbons to be
extracted and processed, to make them conform to the
transportation by pipeline and marketing specifications.
■ Force majeure : any proven unforeseen, unpreventable and
external act or event over which either party that claims the
occurrence has no control, and which makes it impossible for
the latter to momentarily or definitively execute one or several of
its contractual obligations.
■ Associated gas: gaseous hydrocarbons in whatever form
associated to a tank containing liquid hydrocarbons.
■ Wet gas : gaseous hydrocarbons whose involved quantity of
components fraction is sufficient to allow it to become liquid at
ambiant pressure and temperature to justify the realisation of a
facility to recover these liquids.
■ Natural gas or gas : all gaseous hydrocarbons produced from
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wells, including wet gas and dry gas that might or might not be
associated to liquid hydrocarbons, as well as the residue gas
accruing from natural Gas liquids extraction. The specifications
of this Gas must comply with the Algerian gas sale specificiations.
■ Non-associated gas : all gaseous hydrocarbons, whether wet
or dry, which :
• are well-head gases that contain more than 100 TCF (trillion
cubic-feet) of Gas per crude oil barrel each, or natural Gas liquid
produced by this resevoir.
• are produced from a reservoir said to be Gas bearing only,
even if this latter is located in a well bore whereby crude oil is
also produced internally through a further casing or tubing
string..
■ Liquefied Petroleum Gas (LPG): hydrocarbons whose basic
content is a butane and propane mixture, which is not liquid
under normal conditions.
■ Dry gas: gaseous hydrocarbons essentially composed of
methane, ethane and inert gases.
■ Deposit/Field : geographic area whose subsoil is formed by
one or several stacked reservoirs, and whose surface, according
to the geological and engineering surveys results, is distinct
and segregated from one or many other resevoirs.
■ Commercially exploitable field: a hydrocarbons field that the
Contracting party commits to develop and set in production pursuant
to the contract terms and conditions.
■ Hydrocarbons : liquid, gaseous and solid hydrocarbons, in
particular, bituminous sands and oil shales.
■ Liquid hydrocarbons : crude oil, natural gas liquids and liquefied
petroleum gases.
■ Price indexing: formula which takes account of inflation, in
order to maintain the original value. The basic indices will be the
ones in force at the start of the year the present law is published.
■ Days : calendar days.
■ Domestic market: all hydrocarbons required to cover national
Energy and industrial needs, except the Gas meant for Fields’
re-injection and cycling.
■ Domestic natural gas market: made up of domestic clients
and gas suppliers. These clients consume the gas on the national
territory.
■ Operator : any person with technical abilities, in charge of
conducting oil operations.
■ Plot : a square of eight (08) kilometres per side corresponding
to a square of five (05) minutes per side in terms of U.T.M. coordinates.
■ Perimeter : a limited area of the energy mining estate related
to hydrocarbons, composed of one or several plots.
■ Contracting area : a limited area of the energy mining estate
related to hydrocarbons, composed of one or several plots,
such as defined as the Contract comes into force.
■ Exploitation area: the contracting perimeter minus the perimeters
subject to relinquishment such as provided for by articles
38, 39 and 40 of this law.
■ Person : any foreign legal entity, as well as any private or private
Algerian legal entity, having the technical and financial
capabilities required by this law and by the regulations set out
for its application.
With respect to the activities relating to retail sale, natural persons
are privy to this notion.
■ Ten year sliding plan: The plan which is drawn up each year
for the next ten (10) years.
■ Point of measurement: the location provided in the exploitation
area whereby extracted hydrocarbons quantities will be
determined.
■ Third parties free access principle: the principle which enables
any Third Party to benefit from a right of access to the
transportation by pipeline and storage infrastructures within the
limits of available capacities in return for the payment of a nondiscriminatory
fee and provided the concerned products are
consistent with the technical specifications attached to these
infrastructures.
■ Oil products: all products recovered from refining operations
as well as those products recovered from the separation of
liquefied petroleum gases.
■ Prospecting: the works enabling hydrocarbons to be detected,
particularly by the use of geographical and geophysical
methods, including stratigraphic drillings.
■ Refining: operations that separate the oil or the condensate
into liquid or gaseous products suitable for direct use.
■ Research: all prospecting and drilling activities which reveal
hydrocarbon deposits.
■ Primary recovery: extraction of hydrocarbon reserves by
means of reservoir natural pressure or production drainage
mechanisms.
■ Secondary recovery: extraction of additional hydrocarbon
reserves using improved recovery methods such as gas injection
and/or water flooding.
■ Tertiary recovery: additional extraction, particularly by using
one of the following enhanced recovery methods: thermal, chemical
or miscible methods, of hydrocarbon reserves unattained
through the primary and secondary recovery methods.
■ Enhanced recovery: use of secondary and/or tertiary recovery
methods to recover hydrocarbon reserves.
■ Ultimate reserves: hydrocarbons that can be produced from
any hydrocarbon field irrespective of economic factors.
■ Reservoir: the porous and permeable portion of a geological
structure that contains a distinct hydrocarbons accumulation,
characterised by a unique pressure system such that the hydrocarbons
production of any portion of the reservoir will affect the
reservoir pressure as a whole.
■ Storage: surface or underground oil products storage particularly
including refined products, butane, propane and liquefied
petroleum gases, which enables it to lay out reserves meant to
supply the domestic market for a determined period of time.
The installations enabling such storage are neither connected
with transportation by pipeline, nor refining facilities, or on-site
operations, or those concerning the liquefied petroleum gas
separation units.
■ Swap: process enabling the exchange of gas supplies stocks
between various producers on the domestic market.
■ Transportation by pipeline system: one or several pipelines
transporting the same effluent, including the integrated installations.
■ Mining title: any deed or instrument stating authority to assume
hydrocarbons research and/or exploitation; this deed
assigns no right of ownership over the soil or subsoil.
■ Flaring: operation consisting of amospheric burning of the
natural gas
■ Annual investment tranches: portion of the investment
amount corresponding to the percentage stated in articles 87
and 91, meant for the calculation of the oil income tax.
■ Transformation: operations meant for separating liquefied
petroleum gases, gas liquefaction, petrochemistry and gas chemistry.
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•••
■ Transportation by pipeline: the liquid and gaseous hydrocarbons
transportation of oil products and the related storage,
excluding the gathering and recovery networks on the fields and
gas networks strictly dedicated to the domestic market.
■ Uplift: percentage by which the annual investment tranches
for the oil income tax calculation (TRP) are increased. This
“Uplift” percentage covers all operating costs.
■ Zone: the area such as defined in article 19 of this law.
Article 6
The performance of the activities set out in article 1, paragraph
1 above is an act of trade.
Any person or entity established in Algeria or having a branch
there, or duly organised in any other form that allows him to be
tax liable, may perform any or several of said activities provided
the provisions of this law, the code of commerce as well as all
other legal or regulatory provisions in force are respected.
Article 7
The contracting party to a research and exploitation contract or
an exploitation contract only, or any hydrocarbons transportation
by pipeline assignee may be entitled to the following benefits
and rights :
■ land acquisition and settlement rights, land contraints and
acquisition, granted according to the law no. 01-10 of 3 July
2001 dealing with the mining law and the related legislation.
■ The acquisition of maritime-related user rights, accorded in
accordance with the provisions of the ordinance no. 76-80 of 23
October 1976, amended and supplemented, related to the maritime
code.
■ Expropriation pursuant to the law no. 91-11 of 27 April 1991
setting the rules regarding expropriation due for the purpose of
the public interest, supplemented by article 65 of the finance law
for the year 2005.
The competent authority shall initiate all proceedings necessary
for granting the rights specified above through the national
Agency for the control and regulation of activities pertaining to
the hydrocarbons domain, should a case of transportation by
pipeline arise, or, through the national Agency for hydrocarbons
resources valorisation in the event of a research and/or exploitation
contract.
All costs inherent to such proceedings and those accruing from
them shall be charged to :
■ the contracting party, in case of a research and/or exploitation
contract,
■ the assignee, in case of a transportation by pipeline assignment.
Article 8
The importing and marketing of hydrocarbons and oil products
on the national territory are free, should the provisions of the law
herein be observed. Any obligation imposed by the State shall
give rise to a grant whose amount and terms and conditions of
award are legally defined. This obligation shall be payable by
the State.
Article 9
The prices of oil products and natural gas on the Algerian market
are established as follows:
• to encourage the operators to develop infrastructures necessary
to satisfy the domestic demand,
• to encourage the consumption of low pollution oil products
such as unleaded petrol, compressed natural gas and LPG fuel,
as a preference to other fuels,
• to encourage the comsumption of natural gas in the economic
activities of electrical production, industry and petrochemistry.
The sale price of the oil products on the Algerian market, excluding
taxes, must include the price of the crude oil entered in the
refinery, the refining costs, land transportation and transportation
by pipeline, storage costs and wholesale and retail distribution
cost, plus reasonable margins in each activity. The costs
must include the depreciations on the existing investments and
new investments as well as those on the investment renewals
required in order to continue these activities.
The price of the crude oil entered in the refinery is calculated for
each calendar year on the basis of the average price of crude
oil for exporting purposes over the last ten (10) calendar years
based on the statistics of the price of crude oil for exporting
recorded and published by the Minister in charge of hydrocarbons.
The terms and conditions and the procedures which the
Hydrocarbons regulation authority must apply in order to determine,
at the start of each calendar year, the sale price, excluding
taxes, of the oil products for said calendar year are defined
through legal procedures. The terms and conditions and procedures
defined through legal procedures must specify and identify
the parameters to be adjusted by indexing formulae specific to the
activity. Once determined, the sale price, excluding taxes, of the
oil products on the Algerian market for the calendar year in question
are notified by the Hydrocarbons regulation authority.
Article 10
The sale price of the gas to eligible and non-eligible clients on
the domestic market by the products must only include the production
costs, the costs of the infrastructures specifically required
to satisfy the domestic market, the operating costs of the
export infrastructures used to satisfy the needs of the domestic
market, plus reasonable margins in each activity.
The costs must include the depreciations on the existing investments
and new investments as well as those on the investment
renewals required in order to continue these activities.
The terms and conditions and the procedures which the
Hydrocarbons regulation authority must apply in order to determine,
at the start of each calendar year, the sale price on the
domestic market, excluding taxes, of the gas for said calendar
year are defined through legal procedures. The terms and
conditions and procedures defined through legal procedures
must specify and identify the parameters to be adjusted by
indexing formulae specific to the activity.
Once determined, the sale price, excluding taxes, of the gas on
the Algerian market for the calendar year in question are notified
by the Hydrocarbons regulation authority.
An identical price, excluding taxes, is applied by the gas producer
to the supply of all the eligible and non-eligible clients in the
domestic market.
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To be connected, the eligible clients must contact the gas
transportation network manager defined by the law no. 01-02 of
05.02.2002 on electricity and gas distribution by pipeline and
are subjected to the provisions of its articles 65 and 68.
The operators set out in the law no. 01-02 of 05.02.2002 relating
to the law on electricity and the distribution of gas by pipeline
will apply the gas prices to the clients such as defined in its
article 100 and 103.
Article 11
The Minister in charge of hydrocarbons ensures the optimal
valorisation of the national hydrocarbon resources.
He is responsible for proposing the appropriate hydrocarbons
measure and for implementing it once it has been adopted. The
Minister in charge of hydrocarbons introduces the approval
requests for the research and/or exploitation contracts which
are approved by law in the Council of Ministers.
Article 12
Two independent national agencies have been created, with legal
status and financial automy called Hydrocarbons Agencies :
• A national agency for the control and regulation of activites
pertaining to the Hydrocarbons domain, hereafter designated
“Hydrocarbons regulation authority”.
• A national agency for hydrocarbons resources valorisation,
hereafter designated ALNAFT.
The Hydrocarbons Agencies are not subjected to the rules
applicable to the administration, particularly with regard to their
organisation, their operating and the status of the personnel
running them. The hydrocarbons agencies draw their resources
in accordance with article 15 of this law. They have their own
assets.
The accounting records of the hydrocarbon agencies are set up
in a commercial form. They must draw up a distinct balance
sheet. They are audited by the State in accordance with the
regulations in force. They are governed by the trade rules in
their relationships with third parties. Each hydrocarbons agency
is administered by a board of directors.
To accomplish its mission successfully, the board of directors
relies on specialised divisions. The Agency has statutory auditors
to audit and approve the Agency's accounts, appointed in
accordance with the regulations in force. The board of directors
is composed of one chairman and five (05) directors appointed
by presidential decree, on the proposal of the Minister in charge
of hydrocarbons.
The board of directors enjoys the most extensive powers to act
on behalf of each hydrocarbons agency and to ensure that any
act and operation relating to its mission are authorised. The deliberations
of the board of directors are only validated with the
presence of three (03) members at least - one of whom is the
chairman.
The deliberations are adopted upon the simple majority of the
members present. In the event the votes are equal, the chairman’s
vote is preponderant. The chairman of the board of directors
ensures the operating of the Hydrocarbons Agency concerned
and assumes all the necessary powers, particularly in terms of :
• scheduling;
• appointment and dismissal or all employees and agents;
• personnel remuneration;
• administration of the company assets;
• acquisition, exchange or alienation of the furniture or buildings;
• representing the board in legal proceedings;
• accepting the withdrawal of memberships;
• replevin;
• oppositions and other duties before or after payment;
• to close off the inventory and accounts;
• to represent the Agency in all actions of civil life.
The chairman may sub-delegate under his responsibility all or
part of his powers and authorities. The remuneration of the
chairman and the members of the board of directors is fixed
through legal procedures. The remuneration system for the personnel
of each agency is defined by the internal regulations of
each agency.
The role of board member is incompatible with any professional
activity, any national or local electoral term of office, any public
use or any holding, direct or indirect, of interests in a company
in the hydrocarbons sector. Any member of the board of directors
exercising one of the aforementioned activities is officially
declared resigned, after consultation of the board of directors,
by presidential decree.
The President of the Republic provides for his replacement on
the proposal of the Minister in charge of hydrocarbons.
Any member of the board of directors who has been the subject
of a legal ruling against him which has become definitive, is
declared officially resigned after consultation of the board of
directors, by presidential decree.
The President of the Republic provides for his replacement on
the proposal of the Minister in charge of hydrocarbons.
At the end of their mission, the members of the board of directors
may not carry out a professional activity in the companies
in the hydrocarbon sector for a period of (02) years.
An advisory body, called an “advisory board” is established in
each hydrocarbons agency. It is composed of two representatives
from the ministerial departments concerned and potentially
of all the interested parties (operators, consumers, workers).
Each party delegates its representative(s). The advisory board
formulates opinions on the activities of the board of directors.
The board of directors assists the works of the advisory board.
The composition and the operating of the advisory board are
fixed through legal procedures. The board of directors adopts its
internal regulations which sets out the internal organisation, the
operating mode and the statuses of the personnel. The members
of the board of directors and employees of the
Hydrocarbons Agency carry out their roles in total transparency,
and with total impartiality and independence.
The members of the board of directors, of the advisory board
and the employees of the Hydrocarbons Agency are subject to
professional secrecy, except in the event they are called upon
to act as legal witnesses.
The non-respect of the professional secrecy established by a
definitive legal decision incurs the official cessation of the roles
within the Hydrocarbons Agency.
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The replacement is made in accordance with the provisions of
this law. The Hydrocarbons regulation authority organises its
own internal reconciliation service for the disputes resulting
from the application of the regulations and particularly the regulations
relating to access to the transportation by pipeline and oil
products’ storage system and to the prices. The Hydrocarbons
Regulation Authority draws up internal regulations relating to
how this service is run.
Article 13
The Hydrocarbons regulation authority shall, in particular, see to
it that respect is observed for :
• the technical regulations applicable to activities governed by
the present law,
• the regulations related to the application of tariffs and Third
Parties free access principle to transportation by pipeline and
storage infrastructures,
• the regulations related to hygiene, industrial safety and the
environment, and the prevention and management of major
risks,
• the construction specifications brief covering the transportation
by pipeline and storage infrastructures,
• the application of the norms and standards drawn up on the
basis of the best international practices; these norms and standards
will be defined through legal procedures,
• the application of penalties and fines payable to the Public
Treasury in the event of breach of the laws and regulations related
to :
• the technical regulations applicable to activities governed by
the present law,
• the regulations related to the application of tariffs and the Third
Parties free access principle to transportation by pipeline and
storage infrastructures,
• the regulations in terms of hygiene, industrial safety and the
environment.
The amounts and the terms and conditions for applying the fines
and penalties, set out in this article, are defined through legal
procedures.
It is also responsible for :
• studying applications meant for granting transportation by
pipeline assignments, and making recommendations to the
Minister in charge of hydrocarbons.
• recommending to the Minister in charge of hydrocarbons the
cancellation of a transportation by pipeline assignment in case
of serious breach of the provisions set out in the assignment
contract according to the conditions defined through legal procedures.
• managing the oil products and hydrocarbons’ transportation
prices’ compensation and adjustment fund, whose operating
terms and conditions are set out through legal procedures.
• collaborating with the Minister in charge of hydrocarbons in
terms of sectorial policy and drawing up regulatory texts governing
the hydrocarbons activities.
Article 14
The national Agency for Hydrocarbons resources valorisation
(ALNAFT) is particularly responsible for :
• promoting investments related to hydrocarbons research and
exploitation,
• managing and updating the hydrocarbons research and
exploitation databases,
• issuing prospecting licences,
• issuing appeals for tender and evaluating the tenders related
to the research and/or exploitation activities,
• granting research perimeters and exploitation perimeters and
concluding research and/or exploitation contracts,
• monitoring and controling, in its capacity as a contracting party,
the execution of the research and/or exploitation contracts, in
accordance with the provisions of the law herein,
• studying and approving the development plans and updating
them on a timely basis,
• ensuring that the hydrocarbons resources’ exploitation is carried
out by respecting optimal conservation.
• determining and collecting the royalties and paying them to the
Public Treasury on the first working day following their receipt,
after such amount specified in article 15 hereunder has been
deducted,
• promoting the exchange of information related to the gas market,
• ensuring that the oil income tax, and the land area tax provided
for by chapter VIII of the law herein are paid by the operator
as defined in article 29 hereinafter, as well as, should the
case arise, the settlement of taxes related to gas flaring and
water consumption in accordance with articles 52 and 53 hereinunder.
• helping to promote the national industry,
• encouraging the research and development activities,
• collaborating with the Minister in charge of hydrocarbons in
terms of sectorial policy and drawing up regulatory texts governing
the hydrocarbons activities.
• consolidating a medium and long term plan for the hydrocarbons
sector, using the medium and long term plans of the
contracting parties as a reference and sending them to the
Minister in charge of hydrocarbons on an annual basis in the
month of January.
• exchanging tax information concerning the research and/or
exploitation contracts with the tax admininstration.
Article 15
The allotment of budgets for both agencies specified in article
12 above is ensured through :
• Nought point five percent (0.5%) of the income from the royalties
stated in articles 25, 26 and 85 of this law which is paid into
ALNAFT's account. The Minister in charge of Hydrocarbons
ensures the distribution within the framework of the approval of
the budgets of each hydrocarbons agency,
• the remuneration of the services provided by both hydrocarbons
agencies,
• any other income related to their activities.
The budgets and balance sheets of these two hydrocarbon
agencies are approved by the Minister in charge of hydrocarbons.
The Public Treasury will avail a redeemable advance
payment to allow these two hydrocarbons agencies to carry out
their activities during the first six (06) months of their inception.
The terms and conditions for releasing and repaying this advance
payment are fixed by a Public Treasury agreement with the
agency in question.
Article 16
Without prejudice to the provisions set out by the laws and regulations
in force concerning industrial safety, the activities gover-
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ned by the law herein must be conducted by the contracting parties
and operators in a manner such to prevent all risks that are
inherent to them.
Article 17
Under the carrying out of the activities subject of this present law,
the most stringent respect should apply to the obligations and prescriptions
related to :
• the health and safety of the personnel,
• health and public sanitation,
• the essential mainland or maritime environment characteristics,
• archeological interests,
• the provisions of the laws and regulations in force related to the
protection of the environment.
Article 18
Any person must, prior to carrying out such activity subject of
the law herein, prepare and submit to the approval of the
Hydrocarbons regulation authority an environmental impact
study and an environmental management plan duly comprising
the description of such environmental risks prevention and
management measures associated to said activities in accordance
with the legislation and regulations in force related to the
environment.
The Hydrocarbons regulation authority is responsible for coordinating
these studies in collaboration with the Ministry of the
Environment and to obtain the corresponding signature of the
contracting parties and operators concerned.
CHAPTER II
OIL UPSTREAM
PROSPECTING, RESEARCH
AND EXPLOITATION
Article 19
For research and exploitation purposes, the national mining
estate relating to hydrocarbons shall be split into four (04) areas
called zones A, B, C and D. This subdivision shall be specified
through legal procedures. There shall be no retrospective change
in the demarcation of the zones.
The national mining estate related to hydrocarbons shall be
subdivided into plots which are the basic unit for determining the
perimeters, the subject of a prospecting licence and a research
and/or exploitation contract.
The Plot number, which comprises each perimeter and the geometry
of the latter shall be set out through legal procedures.
The maximum perimeter sizes for each area and the minimum
work programmes shall be set out through legal procedures.
Article 20
The Prospecting Licence may be granted by the National
Agency for Hydrocarbons resources valorisation (ALNAFT) to
any person wishing to carry out hydrocarbons prospecting activities
over one or several perimeters.
This prospecting licence is issued for a period not exceeding
two (02) years, according to the procedures and conditions
established through legal procedures.
Article 21
The research and/or exploitation contract shall take precedence
over the prospecting licence. Consequently, any plot concerned
by a research and/or exploitation contract shall be, prima facie,
excluded from the perimeters which are covered by the prospecting
licence.
Article 22
All data and results arising from prospecting works shall be
made available to the national agency for hydrocarbons resources
valorisation (ALNAFT) according to the procedures set out
by the regulations.
Article 23
The research and/or exploitation activities shall only be undertaken
on the grounds of a mining title issued exclusively to the
national agency for hydrocarbons resources valorisation (ALF-
NAFT) according to the terms set out by regulations.
Prior to carrying out said activities, all persons must conclude a
contract with the national agency for hydrocarbons resources
valorisation (ALNAFT), in accordance with the terms of the law
herein.
Article 24
The research and exploitation contract entitles the contracting
party to the exclusive right to undertake in the perimeter defined
by said contract :
• research activities,
• exploitation activities, should a discovery be declared commercially
exploitable by the contracting party, and after the national
Agency for hydrocarbons resources valorisation (ALNAFT) has
approved the development plan related to said discovery.
The exploitation contract related to one or several already discovered
fields, entitles the contracting party to the exclusive
right to undertake exploitation activities within the perimeter
defined by said contract, in accordance with the development
plan approved by the national agency for hydrocarbons resources
valorisation (ALNAFT). With respect to all contract types
defined above, the contracting party may undertake research
activities within the exploitation perimeter and shall apply the
use of any appropriate recovery method, in accordance with
article 3 of the present law.
Article 25
All hydrocarbons extracted under a research and/or exploitation
contract are the property of the contracting party at the point of
measurement and are subject to royalties, according to the
terms and conditions set out by said contract.
These royalties shall be settled by bank cheque or by any other
authorised instrument of payment and may be paid by an electronic
funds transfer.
Article 26
The royalties are established on the basis of the quantities of
hydrocarbons produced and deducted at the point of measurement,
after onsite processing operations.
To calculate these royalties, the quantites of Hydrocarbons are
excluded which are :
• either used for direct production requirements,
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• or lost before the point of measurement,
• or re-injected into the field(s), provided this(these) field(s) are
party to the sole and same contract.
The lost or used hydrocarbon quantities excluded from the calculation
of royalties, must be restricted to levels which are technically
acceptable and can be proved.
Article 27
There is no right of ownership attached to the soil defined by a
research and/or exploitation contract.
Article 28
The hydrocarbon fields and wells are buildings but are not eligible
for mortgages.
Article 29
Should the contracting party be more than one person, the
contract shall specify who amongst the persons the operator is.
Any operator change shall be subject to the prior approval of the
national agency for hydrocarbons resources valorisation
(ALNAFT).
Article 30
The research and/or exploitation contract as well as any rider to
this contract is signed by the national agency for hydrocarbons
resources valorisation (ALNAFT), and by the contracting party.
Said contract, as well as any rider to this contract, is approved
by decree made in the Council of Ministers and comes into force
on the date said approval decree is published in the Official
Journal of the Algerian Democratic Peoples’ Republic.
Said date is designated by “effective date”. The contracting
party and the national agency for hydrocarbons resources valorisation
(ALNAFT) are designated “contracting parties”.
Article 31
The person constituting the contracting party or the persons
grouped together as a “contracting party” may, jointly or severally,
assign all or party of their rights and obligations in this
contract between each other and to any other person.
To be valid, this assignment must have the prior consent of the
national agency for hydrocarbons resources valorisation
(ALNAFT) and must be formalised in a rider to this contract
which is approved in accordance with the provisions of article 30
above.
In all cases, the national agency for hydrocarbons resources
valorisation (ALNAFT) will give a right of first refusal to
Sonatrach S.P.A. which must exercise this within a period not
exceeding 90 days from the date this assignment is notified by
ALNAFT.
All assignments are subject to the payment to the Public
Treasury by the assignees, of a non-deductible tax, whose
amount is equal to one percent (1%) of the value of the conversion.
The calculation and liquidation method of this right is specified
through regulations.
The Ministry in charge of Hydrocarbons may, upon a motivated
or detailed report, derogate to these provisions for reasons of
public interest within the framework of the policy in terms of
hydrocarbons.
Article 32
The research and/or exploitation contract is concluded further to
an appeal for tenders in accordance with the provisions set
down by legal procedures. In particular, these legal procedures
will define :
• the pre-qualification criteria and rules,
• the selection procedures for the Perimeters to be offered up for
tender,
• the tender submitting procedures,
• the procedures for evaluating the tenders and concluding
contracts.
The research and/or exploitation contracts provided for each
appeal for tenders, will be approved by a decision made by the
Minister in charge of Hydrocarbons.
The Ministry in charge of Hydrocarbons may, upon a motivated
or detailed report, derogate to these provisions for reasons of
public interest within the framework of the policy in terms of
hydrocarbons.
Article 33
For each perimeter subject to competitive tendering in view of
the conclusion of a research and exploitation contract, the national
Agency for hydrocarbons resources valorisation (ALNAFT)
shall determine and specify which of the following will be retained
as a sole tendering selection criterion, on a case-by-case
basis :
• minimum works programme estimated for the first research
phase,
• non-deductible amount of the bonus to be paid to the Public
Treasury upon the signature of the Contract,
• proposed royalties rate above the minimum fixed by the law
herein.
Tender opening shall be public and the contract conluded forthwith
with the highest bidder.
Article 34
With regard to the conclusion of exploitation contracts related to
the already discovered fields, the national agency for the hydrocarbons
resources valorisation (ALNAFT) shall proceed onto a
two-phase competitive tendering :
■ a first so-called technical phase, meant to define the standard
technical tender which will underlay the economic tender, and
satisfy the criteria set out by the national agency for hydrocarbons
research valorisation (ALNAFT), and which consists, particularly,
of :
• the percentage of on-site recovery volumes,
• the production optimisation,
• the production facilities’ capacities,
• the required investment projects’ lead time,
• the minimum amount of investment guaranteeed, based on
standard costs issued by the national agency for hydrocarbons
resources valorisation (ALNAFT).
■ a second so-called economic phase, meant to select one of
the tenderers. The national agency for hydrocarbons resources
valorisation (ALNAFT) shall determine and specify, as soon as
the first phase commences, which among any two of the following
shall be retained as a sole selection criterion :
• the proposed royalties rate above the minimum fixed by the
law herein, or
• the non-deductible amount of the bonus to be paid to the
Public Treasury upon the signature of the contract.
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Tender opening concerning the economic phase shall be public
and the Contract conluded forthwith with the highest bidder.
Article 35
The research and exploitation Contract shall comprise two (02)
time periods : a research period and an exploitation period. The
duration of the research and exploitation Contract will be thirtytwo
(32) years and will comprise :
• without prejudice to the provisions of articles 37 and 42 below,
a seven (07) year research period commencing on the date the
contract comes into effect.
This initial phase shall be referred to as the first research phase,
and will be followed by a subsequent second and third
Research phase of two (02) years’ duration each.
• An exploitation period corresponding to the total duration of the
contract, less the research period effectively used.
• This duration of thirty-two (32) years shall be extended to any
withheld period used in compliance with article 42 hereunder.
• For the dry gas fields, an additional period of five (05) years
will be added to the exploitation period.
Article 36
With respect to an exploitation contract related to an already
discovered field, the duration period is twenty-five (25) years
commencing on the date the contract comes into force. This
duration will be thirty (30) years in the case of a dry gas field.
Article 37
Pursuant to the application of article 42 hereunder, the research
and exploitation contract shall be automatically terminated by
right and without further enquiry, should the contracting party fail
to declare the field as commercially exploitable or select a perimeter.
The contracting party may ask for an exceptional extension of the
research period of a maximum period of six (06) months, to enable
him to complete the drilling and/or evaluation of the research
wells which will have been initiated over the last three (03)
months before the expiry of the research period.
This extension will be granted by the national agency for hydrocarbons
resources valorisation (ALNAFT) upon the justified
request of the contracting party, notified before the end of the
research period.
Article 38
With the exception of the exploitation perimeters or perimeters
which have been the subject of the application of article
42 hereunder, the contractual perimeter will be reduced by thirty
percent (30%) at the end of the first research period phase.
With the exception of the exploitation perimeters or perimeters
which have been the subject of the application of article
42 hereunder, the remaining perimeter will be reduced by thirty
percent (30%) at the end of the second research period phase.
Article 39
At the end of the research period or the exceptional extension
defined in article 37 above, the contracting party shall make
available to the national agency for hydrocarbons resources
valorisation (ALNAFT) the whole contracting perimeter with the
exception of the exploitation perimeter(s) or the one (those)
where article 42 hereunder is applied.
Article 40
The contracting party may waive, totally or partially, his contract
during the research period provided he has already fulfilled the
conditions and obligations of said contract and the conditions
and obligations resulting from the law herin and the texts taken
for its application.
Article 41
The selection and demarcation procedures related to :
• perimeters upon which article 42 hereinafter shall apply,
• exploitation perimeters,
• relinquished perimeters,
shall be determined through regulations.
Article 42
In the event the contracting party discovers one or several
hydrocarbons fields for which he is unable to produce a commercially
exploitable field notice during the research period,
owing to ascertained restriction or absence of transportation by
pipeline facilities, or provable absence of gas production market,
he may, prior to the end of the research period, give written
notice to the national agency for hydrocarbons resources valorisation
(ALNAFT) of his decision to secure an area encompassing
said field(s) for a restraint period of :
• three (03) years maximum commencing on the date such notification
is received for the oil or wet gas fields,
• five (05) years maximum commencing on the date such notification
is received for the dry gas fields,
The determination of the perimeter demarcating said field(s), as
well as those studies concerning the absence or restrictions of
the transportation by pipeline infrastructures and the absence of
gas outlets shall be approved by the national agency for hydrocarbons
resources valorisation (ALNAFT).
The restraint period effectively used can only be added to the
research period.
Article 43
The research and exploitation contract must specify the minimum
works programme which the contracting party commits to
achieve for each of the phases of the research period.
The research and exploitation contract must also specify the
amount of the performance bond guarantee payable in Algeria
on a simple request made by the national agency for hydrocarbons
resources valorisation (ALNAFT), as established by a top
rated financial institution agreed upon by ALNAFT, and covering
the amount of the minimum works to be carried out by the
contracting party for each research phase.
Article 44
With respect to the execution of the contract, in no event shall
the State assume any financing obligation or financing guarantee
and be accountable to third parties.
The contracting party shall ensure, at its own expenses and
fees, that all technical and financial resources and equipment
necessary for the execution of the contract are mobilised. All
expenses required for the execution of the contract will be borne
by the contracting party.
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Article 45
The contracting party must, in particular, comply with the norms
and standards decreed by the regulations in terms of :
• industrial safety,
• protection of the environment,
• operational technology.
He should, also, provide on a timely basis and without delay, the
national Agency for Hydrocarbons resources valorisation
(ALNAFT) with all data and results achieved under the execution
of the contract, as well as all reports required by said agency
(ALNAFT), within forms, terms and frequencies to be specified
by the published procedures pertaining to the national
Agency for Hydrocarbons resources valorisation (ALNAFT).
Article 46
The contracting party having made a field discovery may be
entitled to benefit from an authorisation of early production from
one or several wells for a period not exceeding twelve (12)
months commencing on the date said authorisation is granted
by the national agency for hydrocarbons resources valorisation
(ALNAFT).
This autorisation shall enable the contracting party to further
identify the characteristics necessary to the drawing up of the
development plan. This early production will be subject to the
tax system of the law herein.
Article 47
With the commercially exploitable declaration notification, the
contracting party must submit to the national agency for hydrocarbons
resources valorisation (ALNAFT) a draft development
plan along with an estimate of the development costs and a
demarcation of the exploitation perimeter. A budget must be provided
annually.
To be completed, this draft must be approved by the national
agency for hydrocarbons resources valorisation (ALNAFT). Any
proposed change to the development plan must also receive the
prior approval of the national agency for hydrocarbons resources
valorisation (ALNAFT).
The annual budget must also receive approval from the national
agency for hydrocarbons resources valorisation (ALNAFT). The
development plan must specify the point(s) of measurement, in
the exploitation perimeter, where the volume of hydrocarbons
used to calculate the royalties will be determined.
Article 48
Each research and exploitation contract will contain a clause
which will give Sonatrach S.P.A., when it is not the contracting
party, an option to participate in the exploitation which may be a
maximum of thirty percent (30%) but not be less than twenty per
cent (20%).
This option given to SONATRACH S.P.A. must be exercised no
later than thirty (30) Days after the approval of the commercial
discovery development plan, by the national agency for hydrocarbons
resourses valorisation (ALNAFT).
Sonatrach S.P.A. cannot assign all or part of its participation,
acquired within the framework of this option, before a period of
five (05) years from the date on which the option is exercised.
For each commercial discovery where the option is exercised,
Sonatrach S.P.A. will, at its own costs and expenses, pro rata of
its participation, bear all the investment and exploitation costs
related to the development plan approved by the national agency
for hydrocarbons resources valorisation (ALNAFT).
Sonatrach S.P.A. will reimburse to the contracting party which
has made the discovery, pro rata of its participation, all the costs
of the discovery’s well, as well as the costs relating to the
assessment works of this discovery, approved beforehand by
the national agency for hydrocarbons resources valorisation
(ALNAFT).
Sonatrach S.P.A. and the other persons constituting the
contracting party must conclude an operations agreement attached
to the contract no more than thirty (30) Days after the
option has been exercised. This operations agreement must
define the rights and obligations of Sonatrach S.P.A. and other
persons constituting the contracting party, and must specify the
terms and conditions for paying the future costs within the framework
of the contract as well as the amount and the terms and
conditions of reimbursement by Sonatrach S.P.A. of the
research costs mentioned in the previous paragraph.
Once approved by ALNAFT, this operations agreement is
approved by decree made in the Council of Ministers and
comes into force on the date said approval decree is published
in the Official Journal of the Algerian Democratic Peoples’
Republic.
The agreement binding Sonatrach S.P.A. and the contracting
party must contain a marketing clause for any gas coming from
the discovery in the event this gas is to be marketed and sold
abroad.
Article 49
The contracting party is duty bound to apply the necessary
methods enabling optimal conservation of the fields.
For this purpose, each development plan for a field must contain
the works’ commitments and expenses aiming to optimise the
production for the entire duration of the field.
For this purpose, the contracting party is duty bound to apply
the regulatory prescriptions in terms of conservation and estimation
of the hydrocarbons reserves in particular with regard to
the ultimate reserves.
Article 50
For reasons relating to the objectives of the national energy policy,
field production restrictions may potentially be applied.
These restrictions will be the subject of a decision made by the
Minister in charge of Hydrocarbons which will set down the
quantites, the intervention date of these restrictions and their
duration.
The breakdown of these restrictions will be fairly applied by the
national agency for hydrocarbons resources valorisation
(ALNAFT) to all contracting parties, pro rata of their respective
production.
Article 51
Domestic market gas supply and gas export procedures as well
as the role of the national agency for hydrocarbons resources
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valorisation (ALNAFT), are set down in chapter III of the law
herein.
To satisfy the needs of the domestic market, the national agency
for hydrocarbon resources valorisation (ALNAFT) may ask
each gas producer to contribute to the satisfaction of these
needs, pro rata of its gas production subject to royalties.
Article 52
Gas flaring is prohibited. However, the national agency for
hydrocarbons resources valorisation (ALNAFT) may, exceptionally
and for restricted periods which cannot exceed 90 days,
grant a flaring authorisation upon the request of the operator.
Without prejudice to the application of article 109 hereinafter,
the operator asking for such exception shall be liable to a specific,
non-deductible tax of eight thousand Algerian Dinars
(DZD) per thousand Normal Cubic Meters (Nm3), payable to the
Public Treasury.
The national agency for hydrocarbons resources valorisation
(ALNAFT) is responsible for controling the quantities flared and
will ensure the operator pays this tax. This tax will be updated
according to the following formula:
Average foreign exchange sale rate of the US dollar into dinars,
of the calendar month preceding each payment, published by
the Bank of Algeria (Algeria’s central bank) divided by eighty
(80) and multiplied by the amount of the tax set above.
The update of this specific tax will be applied on the first (1st) of
January of each year.
Article 53
In the event the development plan proposed by the contracting
party and approved by the national agency for hydrocarbons
resources valorisation (ALNAFT), provides for the use of drinking
or irrigation water to ensure enhanced recovery, a specific
non-deductible tax shall be levied on the operator to conform to
the legislation in force.
This specific tax, payable annually to the Public Treasury, is
fixed at eighty (80) Algerian dinars per cubic metre used.
The national agency for hydrocarbons resources valorisation
(ALNAFT) is responsible for controlling the quantities flared and
will ensure the operator pays this tax.
This tax will be updated according to the following formula:
Average foreign exchange sale rate of the US dollar into dinars,
of the calendar month preceding each payment, published by
the Bank of Algeria (Algeria’s central bank) divided by eighty
(80) and multiplied by the amount of the tax set above.
The update of this specific tax will be applied on the first (1st) of
January of each year.
Article 54
Should a field declared commercially exploitable encompass at
least two perimeters covered by distinct contracts, the parties to
the contracts shall set out a joint field development and exploitation
plan, once they are notified of such by the national agency
for hydrocarbons resources valorisation (ALNAFT). This
plan will be referred to as a "unitisation plan". It is subject to the
approval of the national agency for hydrocarbons resources
valorisation (ALNAFT).
In the event the contracting parties do not agree on a unitisation
plan within a six (06) month period after being so notified by the
national agency for hydrocarbons resources valorisation
(ALNAFT), or if this latter does not approve the unitisation plan
proposed by the contracting parties, it shall, at the contracting
parties’ costs and expenses and based on a list contained within
the contract, commit an independent expert to work out said unitisation
plan, which shall become effective as it is completed.
In the event such field encompasses one or several other noncontracting
perimeters, the national agency for hydrocarbons
resources valorisation (ALNAFT) shall proceed to competitive
tendering to enter into an exploitation contract covering such
field extension
The signatory (signatories) of this contract will be duty bound to
conform to the process for drawing up the unitisation plan as
defined above. In the event the commercially declared field
encompasses two or several areas, the applicable tax system
will be determined using the calculation parameters applicable
to each zone, pro rata of the original volumes of hydrocarbons
originally contained in each zone.
Article 55
The person, as defined by the law herein, may or may nor be a
resident. Any person or entity whose registered office is overseas
is considered a non resident. A non resident person or
entity acquiring an interest in a company of Algerian law shall be
released through an import of convertible currencies duly established
in accordance with the foreign exchange regulations in
force. The Algerian branch of a non resident person or entity is
considered to be non resident under the foreign exchange regulations.
The equipment of this branch shall be financed through
imported convertible currencies.
Provided the non resident person or entity has hedged its
research expenses through duly established imported convertible
currencies, this non resident is authorised to do the following :
• During the exploitation period, it is allowed to maintain abroad
the income from its hydrocarbons exports earned within the framework
of the contract. It is, however, duty bound to pay Algeria
amounts in convertible currencies necessary to hedge its development,
eventual research, exploitation, transportation by pipeline
and management costs, as well as, those monies that are
required for the payment of royalties, taxes and fees owed.
• It is allowed to freely use the income from sales, on the domestic
market, of hydrocarbons acquired within the framework of the
contract or to transfer the amounts in surplus of its costs and
obligations abroad.
It shall make available to the national Agency for hydrocarbons
resources valorisation (ALNAFT) a quarterly statement of these
convertible currencies’ imports and transfers. All residents are
duty bound to repatriate and sell to the Bank of Algeria the income
from its hydrocarbon exports in accordance with the foreign
exchange regulations in force. It may freely transfer dividends
from its non resident partners abroad. All residents may also,
after the agreement of the monetary policy committee, make
any transfer enabling it to carry out its activities, covered in the
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law herein, abroad. This agreement from the monetary policy
committee may take place no later than thirty (30) Days after the
receipt of the request’s regulatory file. Should the monetary policy
committee refuse, it should provide reasons for this within the
same timeframes.
Article 56
The contracting party shall, pursuant to the legislation and regulations
in force, keep for each tax year a separate account per
exploitation perimeter that makes it possible to draw up "added
value" and "operating results" accounts and a balance sheet
showing the results of the said activities, the assets and liabilities
factors either assigned or related directly to it, as well as the
gross profits or losses relating to these operations.
However, any investment, stock or spare part acquired directly
in foreign currencies or locally with imported currencies will be
recorded in US dollars. Each annual investment tranche will be
accounted in their equivalent amount in dinars, at the foreign
exchange purchase rate of the US dollar, on the last day of the
financial year, as fixed by the Bank of Algeria.
Article 57
Without prejudice to the provisions of hereinafter article 58,
when the contracting party does not comply with the subscribed
commitments or when it no longer satisfies the conditions and
obligations arising from the present law and documents related
to its application, the contract may be terminated, after failure of
this latter to abide by a thirty (30) Days’ formal notice made for
its attention, and which was effective upon its receipt date.
Article 58
Disputes arising out of the contract interpretation and/or execution
or the application of the present law and/or to the documents
issued in this regard between both of the national Agency
for Hydrocarbons resources valorisation (ALNAFT) and the
contracting party, shall be subject to a prior conciliation according
to the terms and conditions agreed in the contract. If the
matter fails to be settled amicably, the dispute may then be
referred to an international arbitration in the conditions agreed
in the contract.
However, when Sonatrach S.P.A. is the sole contracting party,
the dispute will be settled by arbitration of the Minister in charge
of Hydrocarbons. The applicable law for settling disputes is
Algerian law, particularly the law herein and the texts taken for
its application.
CHAPTER III
GAS
Article 59
Other than the missions defined in article 14 of the law herein,
the national agency for hydrocarbons resources valorisation
(ALNAFT) is responsible for :
1. Keeping and updating a gas reserves statement, a gas requirements
statement to satisfy the domestic market and a statement
showing the quantities of gas available for export.
2. Periodically determining, in accordance with article 61 hereinunder,
a benchmark price for the gas, hereafter designated
“benchmark price”.
3. Ensuring that the contracting parties ensure domestic market
supply.
4. Issuing exceptional gas flaring authorisations and making
sure that the specific tax is paid as provided for in article 52
above.
5. Supplying and publishing gas market studies to the different
contracting parties.
6. Organising, periodically, a gas market consulting forum and
information exchanges to which shall be invited to attend all gas
producers, whether in Algeria or abroad, contracting parties
having discovered still untapped gas reserves, as well as, representatives
from the Hydrocarbons regulation Authority and the
electricity and gas regulation committee (C.R.E.G), set out in
the aforementioned Electricity and Gas distribution law.
Article 60
In order to allow it to establish a benchmark price, the national
Agency for hydrocarbons resources valorisation (ALNAFT) shall
be provided with all gas sale contracts currently in force on the
date the present law is published, together with any of its riders
thereof, as well as, the contracts and agreements committed
after such publication.
These contracts must particularly include :
• the buyer’s name,
• the total quantity of gas estimated for the transaction,
• the duration of the contract,
• the delivery terms and conditions and frequencies,
• the client’s delivery points and terms and conditions,
• the gas cash market,
• the price,
• the price calculation formulae and parameters, as well as the
price revision conditions,
The contracts concluded after the publication of the present law
must include a letter of commitment from the vendor specifying
the non-existence of potential dependency relations binding him
and the buyer. The nature of these dependency relations is defined
by regulations.
All information contained in these contracts and riders will be
kept strictly confidential in accordance with the provisions of
article 12 of the law herein.
The national Agency for hydrocarbons resources valorisation
(ALNAFT) shall periodically publish statistics on Algerian gas
sales abroad provided that each of these contracts and riders’
confidentiality is strictly abided by.
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On the other hand, and all due consideration for the confidentiality
of the contracts and riders, the Electricity and Gas regulation
committee (C.R.E.G.) shall, periodically, publish statistics
on Algerian domestic market gas sales.
Article 61
The national Agency for hydrocarbons resources valorisation
(ALNAFT) shall, on a timely basis, determine a benchmark sale
price to be approved through a bylaw by the Minister in charge
of Hydrocarbons. The initial benchmark price calculated upon
the law publication date shall be the weighted average price of
the previous half year obtained from various Algerian export gas
sale contracts.
The benchmark price shall be calculated in line with prices
obtained in the previous period from all Algerian gas exports.
The prices used for calculating the benchmark price will be the
highest of the following prices :
• price resulting from each contract,
• benchmark price of the previous period.
The benchmark price in b.o.e. shall not be lower than a percentage
of “Sahara blend” FOB average price of the previous quarter
as published by an established specialised review.
This percentage of the average price FOB of Sahara Blend is
established and readjusted periodically by a decree issued by
the Minister in charge of Hydrocarbons, in line with the data on
the gas market.
Article 62
At the start of each year, the national agency for hydrocarbons
resources valorisation (ALNAFT) will draw up an updated ten
year sliding plan, comprising :
• the developed gas reserves,
• the as yet untapped gas reserves,
• the domestic market’s gas needs,
• the gas requirements for enhanced recovery and cycling,
• the quantities of gas available for export.
Article 63
• The price of the gas intended to be used in the domestic market
is fixed as stipulated in article 10 above.
• Sonatrach S.P.A must continue to ensure the domestic market’s
gas needs which it ensured before the publication of this law.
Article 64
1. One hundred and eighty (180) days at least before the start
of each calendar year, the electricy and gas regulation committee
(C.R.E.G.) must provide, in writing, the national agency for
hydrocarbons resources valorisation (ALNAFT) with :
a) A ten year programme reflecting, on a yearly basis, the estimated
quantities to satisfy the domestic market's needs,
b) The quantities necessary to satisfy the domestic market, for
the following year, which exceed the quantities to be provided
by Sonatrach S.P.A. in accordance with article 63 above,
c) The quantities of gas already contracted and which are part
of this surplus,
d) The quantities of gas which are part of this surplus, but not
yet contracted, and which require recourse by the national
agency for hydrocarbons resources valorisation (ALNAFT) to
the application of article 51 above.
The bases and methodology for calculating the estimated quantities
required to satisfy the domestic market’s requirements will
be fixed through legal procedures.
2. In the event the information defined in point 1 above is not
provided within the stipulated time frames, the national agency
for hydrocarbons resources valorisation (ALNAFT) shall use the
information contained in the previous ten year programme.
3. In order that such requirements specified in sub-paragraph
1.d- here above be met, the national Agency for hydrocarbons
resources valorisation (ALNAFT) shall determine and keep
each contracting party informed of the allowed gas quantity, calculated
in proportion to its annual production; it is entitled to
directly take out with the entity (entities) in charge of the gas distribution
activity, no later than fourteen (14) days after the
receipt of the information defined in point 1 above.
4. Within a period not exceeding sixty (60) days after the receipt
of a notification made by the national Agency for hydrocarbons
resources valorisation (ALNAFT), the entity (entities) in charge
of the gas distribution activity shall, as defined in point 3 above,
enter into a gas buying contract with each contracting party as
specified by the national Agency for hydrocarbons resources
valorisation (ALNAFT).
The gas sale price will be the price at the point of delivery, ex
pipeline, defined in articles 09 and 10 above, adjusted periodically
through regulations.
The contract, entered into by and between the company or companies
in charge of gas distribution and the contracting party or
parties, and to which reference is made in point-4 above shall
comprise a "take or pay" clause covering an obligation to lift a
gas contracted quantity, that cannot be lower than eighty-five
(85%) percent.
Article 65
Except those amounts meant for re-injection and cycling needs,
any gas production carried out from a contracting perimeter dedicated
to market supply shall be compliant with Algerian sale gas
specifications fixed through a bylaw by the Minister in charge of
hydrocarbons.
Article 66
To satisfy the needs of the domestic market as best as possible,
a Swap procedure may be freely negotiated and applied between
the different suppliers.
This procedure must not in any case negatively impact the level
of tax proceeds. The national agency for hydrocarbons resources
valorisation (ALNAFT) will receive a copy of each Swap
contract which it will keep strictly confidential.
Article 67
Any credit use, transfer or assignment related to greenhouse
gas emissions shall be approved by a joint bylaw of the
Ministers in charge of Hydrocarbons and of the environment.
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This approval will give rise to the payment of a specific tax to be
paid to the Public Treasury by the contracting party, and which
corresponds to the credit this latter might secure on the international
market. The methods and procedures for calculating this
tax are defined through legal procedures.
CHAPTER IV
TRANSPORTATION BY PIPELINE
Article 68
1. All requests for transportation by pipeline assignments will be
submitted to the Hydrocarbons regulation authority which will formulate
a recommendation sent to the Minister in charge of
Hydrocarbons.
2. In the case of an application expressed by a contracting party
in order to evacuate its hydrocarbons production, the
Hydrocarbons regulation authority will formulate a recommendation
to the Minister in charge of Hydrocarbons with the aim of
granting the assignment to said contracting party.
3. In the case of other assignment applications, the Hydrocarbons
regulation authority will formulate a recommendation sent to the
Minister in charge of Hydrocarbons :
• either to grant said assignment to the person who has requested
it,
• or to issue a competitive tender for the purpose of awarding this
assignment.
4. Under the national infrastructures development plan, the
Hydrocarbons regulation Authority shall propose to the Minister in
charge of Hydrocarbons to appeal for competitive tendering for all
such Assignments not subject to an application.
5. For all assignments granted, the assignor must make use of an
appeal for competitive tenders to award the completion of the
infrastructure in question.
6. A bylaw by the Minister in charge of Hydrocarbons will define
the gaseous hydrocarbons pipelines pertaining to the hydrocarbons
sector and the pipelines that are part of the gas grid exclusively
dedicated to the domestic market.
Article 70
1. For the purpose of granting any transportation by pipeline
assignment, in the cases set out in paragraphs 3 and 4 of article
69 below where an appeal for competitive tenders is required,
the Hydrocarbons regulation authority will launch an appeal
for competitive tenders whose sole selection criteria is the pricing
of the transportation on the basis of the reasonable return
on the investment required by the regulation authority provided
that the technical provisions of the brief are respected.
2. The appeal for competitive tenders for awarding the completion
of the infrastructure concerned by the Assignment will take
place in two (2) phases :
■ a first so-called technical phase meant to define the standard
technical tender that will serve as a basis for the economical tender
and which should be compliant with the specifications stated
by the Hydrocarbons regulation Authority and, in particular :
• the capacities of the transportation by pipeline installations,
• the necessary investment completion time frames,
• the continuity of the service,
• the fuel gas consumption.
■ A second so-called economic phase, meant to select one of
the tenderers. The selection criterion used will be the
Transportation tariff on the basis on a reasonable return on the
investment required by the regulation authority.
Tender opening concerning the economic phase shall be public
and the contract conluded forthwith with the highest bidder.
The Minister in charge of Hydrocarbons may, upon a justified
and detailed report, enable Sonatrach S.P.A. to take an interest
when it is not a contracting party, in any hydrocarbons transportation
by pipeline assignment which is granted.
Article 71
The assignments stipulated above are granted for a maximum
period of fifty (50) years.
Article 72
The right of use of the transportation by pipeline infrastructures is
guaranteed, on the basis of the third party free access principle,
in exchange for the payment of a non discriminatory tariff per
zone.
For this, a transportation by pipeline fund is created, put in place
and managed by the Hydrocarbons regulation authority.
This fund is responsible for the equalisation of the transportation
by pipeline tariffs per transportation area.
The third party free access principle, the methodology for calculating
the transportation by pipeline tariff per zone, the organisation
of the transportation by pipeline fund and its operating, will be
specified through legal regulations.
Article 73
For the international pipelines arriving from outside the national
territory in order to cross it and the international pipelines whose
origin is on the national territory, the Minister in charge of
Hydrocarbons grants the transportation assignment after receiving
the opinion of the Hydrocarbons regulation authority. This
assignment defines to what extent, potentially, part of the capacity
of these pipelines will be the subject of the third party free
access principle.
The Minister in charge of Hydrocarbons may, upon a justified
and detailed report, enable Sonatrach S.P.A. to take an interest
when it is not a contracting party, in any hydrocarbons transportation
by pipeline assignment which is granted.
Article 74
The principles for determining the pricing of the transportation
by pipeline must take account of the following criteria :
• offering the lowest tariff possible for the users of the transportation
by pipeline infrastructures whilst respecting the regulations
in force and ensuring the continuity of service,
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• improving the efficiency of the operations,
• reducing the operating costs,
• based on a rational and prudent management, enabling the
assignee to cover his operation costs, settle his taxes and
duties, depreciate his investments, financial fees and benefit
from a reasonable rate of profitability.
Article 75
For the transportation by pipeline activities, the following are
established by regulations :
• the pre-qualification criteria and rules, including the human
resources and equipment necessary to ensure the industrial
safety of the installations and operations,
• the application procedures for a transportation by pipeline
assignment,
• the competitive tender procedures,
• the procedures for obtaining construction and operation permits,
• the pricing,
• the third party free access principle's regulations,
• the technical norms and standards,
• the industrial safety standards,
• the protection of the environment measures,
• the penalties and fines set out in article 13 above,
• the provisions for repairs and overhauls.
Article 76
With the exception of force majeure, the assignee cannot
suspend his activity. He must ensure the continuity of service
within the framework set out by article 75 above, without prejudice
to the provisions set out by the legislation in force in this
domain.
CHAPTER V
HYDROCARBONS REFINING AND PROCESSING
Article 77
The hydrocarbons refining and processing activities may be carried
out by anyone.
The procedures for obtaining the required authorisations for the
works construction and for their exploitation shall be defined
through regulations.
CHAPTER VI
OIL PRODUCTS STORAGE AND DISTRIBUTION
Article 78
The transportation by pipeline, storage and distribution of oil
products activities may be carried out by anyone. The procedures
for obtaining the required authorisations for the works construction
and for their exploitation shall be defined through regulations.
Article 79
Based on the third parties free access principle and in return for
a non-discriminatory fee payment, any person may use the
transportation by pipeline and the oil products storage infrastructures.
The tariff for the use of the storage infrastructures is
defined through regulations according to the same methodology
used to determine the transportation tariff set out in article 74
above.
The rules relating to the transportation of oil products by pipeline
and the storage of oil products activities will be set out
through regulations and will be administered by the
Hydrocarbons regulation authority.
CHAPTER VII
TRANSFER OF OWNERSHIP UPON END
OF CONTRACT OR ASSIGNMENT
Article 80
At the end of the duration of a research and/or exploitation
contract, the ownership of all the works enabling the pursuit of
the activities, will be transferred in favour of the State. The national
agency for hydrocarbons resources valorisation (ALNAFT)
shall notify the contracting party with a list of facilities and works
for which the state propriety interest is to be disposed of within
a period of time not exceeding three (03) years before the end
of the research and/or exploitation Contract. This transfer of
ownership will be done without any cost for the State.
At the time of the transfer, the works to be transferred by the
contracting party must be operational and in good working
order.
Pursuant to the contract provisions, especially those related to
industrial safety and environment, all site relinquishment and/or
restoration costs that become due with regard to any work
whose ownership transfer is not contemplated by the state shall
be borne by the contracting party.
Article 81
At the end of the duration of the transportation by pipeline
assignment, the ownership of all the works and installations
enabling the exercise of operations, will be returned to the State
free of any cost or expense.
The Hydrocarbons regulation Authority shall notify the assignee
with a list of facilities and works for which the state propriety
interest is to be disposed of within a period of time not exceeding
three (03) years before the end of such assignment. At the
time of the transfer, the works to be transferred by the assignee
must be operational and in good working order.
Pursuant to the contract provisions, especially those related to
industrial safety and environment, all site relinquishment and/or
restoration costs that become due with regard to any work
whose ownership transfer is not contemplated by the state shall
be borne by the contracting party.
Article 82
The contract or assignment shall set out the terms and conditions
enabling the contracting party or the assignee to collect
provisions before the end of said contract or assignment, in
order that he may answer the site relinquishment and/or restoration
costs in compliance with Articles 80 and 81 here above
To bear the costs of the site relinquishment and/or restoration
which must be carried out at the end of the exploitation, the
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contracting party must pay, each calendar year, a provision into
an escrow account. This provision is considered as an operating
cost which can be deducted from the taxable profits for the
financial year. This operating cost is fixed per production unit on
the basis of the recoverable reserves remaining at the start of
each calendar year.
The reliquishment and restoration programme for the sites as
well as the related budget must be an integral part of the development
plan for the research and/or exploitation contracts.
The amount of this provision is defined by ALNAFT on the basis
of an expert report. ALNAFT must ensure that its payment has
been credited to the escrow account.
The site relinquishment and restoration audit will be carried out
by ALNAFT in collaboration with the Hydrocarbons regulation
authority and the Ministry of the Environment.
With regard to the hydrocarbons transportation by pipline and
the related installations, and in order to bear the costs of the site
relinquishment and/or restoration which must be carried out at
the end of the exploitation, the assignee must pay, each calendar
year, a provision into an escrow account.
This provision is considered as an operating cost which can be
deducted from the taxable profits for the financial year. At the
start of each calendar year, the transportation tariff for each product
unit transported must include this operating cost.
The site relinquishment and restoration programme as well as
the related budget must be an integral part of the hydrocarbons
transportation by pipeline exploitation and development plan
and of the related installations.
The amount of this provision is defined by the Hydrocarbons
regulation authority on the basis of an expert report. The
Hydrocarbons regulation authority must ensure its payment has
CHAPTER VIII
TAX SYSTEM APPLICABLE TO THE RESEARCH
AND/OR EXPLOITATION ACTIVITIES
Article 83
The tax system applicable to the research and/or exploitation activities
defined by the provisions of the law herein consists of :
• a non-dedutible area (land) tax to be paid on a yearly basis to
the Public Treasury,
• a royalty payable on a monthly basis to the national agency for
hydrocarbons resources valorisation (ALNAFT) as provided for
in Article 25 and 26 above,
• an oil income tax (T.R.P) payable monthly to the Public
Treasury,
• an additional tax on the profits (I.C.R) payable annually to the
Public Treasury,
• a land tax on the properties other than the exploitation ones,
such as fixed by the general tax legislation and regulations in
force,
As well as the duties and taxes stipulated in articles 31, 52, 53
and 67 of the law herein.
Article 84
The area tax is payable by the operator annually in Algerian
Dinars or in U.S. Dollars at the foreign currencies purchase rate
fixed by the Bank of Algeria on the day of settlement, such as
defined by Article 55 of the law herein, as the contract comes
into force.
This tax is calculated on the basis of the perimeter area on the
due date of each payment. The amount in Algerian Dinars of the
area tax per square kilometre (km2) is fixed as follows:
These amounts shall be updated according to the following
formula :
Years Research period Restraint period defined Exploitation period
article 42+ exception period
1 to 3 inclusive 4 and 5 6 and 7 defined article 37
Zone A 4 000 6000 8 000 400 000 16 000
Zone B 4 800 8000 12 000 560 000 24 000
Zone C 6 000 10 000 14 000 720 000 28 000
Zone D 8 000 12 000 16 000 800 000 32 000
been credited to the escrow account.
The site relinquishment and restoration audit will be carried out
by the Hydrocarbons regulation authority in collaboration with
the Ministry of the Environment.
Average foreign exchange sale rate of the US dollar into dinars,
of the calendar month preceding each payment, published by
the Bank of Algeria (Algeria’s central bank) divided by eighty
(80) and multiplied by the amount of the tax set above. Cost
indexing will be applied on the first of January each year, to the
amount of the tax due. ALNAFT will ensure that the tax is paid
to the Public Treasury.
Article 85
All quantities of hydrocarbons extracted from each exploitation
perimeter and detemined in accordance with article 26 above
are subject to royalties.
The royalty amount for a given month will be equal to the sum
of the values of each production tranche of said month, multiplied
by the royalty rate applicable to said tranche.
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The production value is calculated as stipulated in articles 90
and 91 below, and the royalty rates applicable will be the ones
contained in each contract.
Royalties shall be determined on a monthly basis on hydrocarbons
quantities extracted from the exploitation perimeter and
measured by the basic price monthly average such as provided
for in article 26 here above, and processed as defined by
Articles 90 and 91 hereinunder.
When the hydrocarbons quantities extracted from the exploitation
perimeter, expressed in barrel oil equivalent (b.o.e.), are
lesser than or equal to 100,000 b.o.e /day, calculated on a
monthly average, the royalties rates per production bracket
contained in each contract cannot be lower than the levels
shown in the table below :
Zone A B C D
00 à 20 000 b.o.e/day 5,5 % 8 % 11 % 12,5 %
20 001 à 50 000 b.o.e/day 10,5 % 13 % 16 % 20 %
50 001 à 100 000 b.o.e/day 15,5 % 18 % 20 % 23 %
For the hydrocarbons quantities greater than 100,000 b.o.e. per
day determined on a monthly average, the royalties rate applicable
to the whole production and specified in each Contract
cannot be lower than the levels shown in the table below :
Zone A B C D
12 % 14,5 % 17 % 20 %
Pursuant to Article 29 herewith, in the event the contracting
party is more than one person, the operator or Sonatrach
S.P.A., when the latter is the sole operator on an exploitation
perimeter, shall pay the amount of the royalties for the whole
production to the national Agency for Hydrocarbons resources
valorisation (ALNAFT) in accordance with the provisions of article
55 of the law herein.
The royalties are costs which can be deducted from the tax
basis for the purposes of calculating the I.C.R.
Article 86
The oil income tax (T.R.P.) will be paid on a monthly basis by the
operator. This oil income is equal to the annual hydrocarbons
production value of each exploitation perimeter, calculated in
accordance with Article 91 hereunder, minus the annually
authorised deductions.
Pursuant to Article 26 herein above, the Hydrocarbons production
cumulative value (PV), since the exploitation start-up, is
equal to the hydrocarbons quantities proceeds extracted from
the exploitation perimeter subject to royalties by the price used
for the calculation of royalties.
The deductions authorised are composed of the following elements
:
• the royalties,
• the annual development investment tranches, by applying the
Uplight rules defined in article 87 below. These investments
must only concern the exploitation perimeter and must be
approved in the annual budgets,
• the annual research investment tranches, by applying the
Uplight rules defined in article 87 below, and where appropriate,
• the provisions to meet the relinquishment and/or restoration
costs in accordance with article 82 above.
• the national human resources training costs for the activities
governed by the present law,
• the enhanced recovery gas price cost.
The nature of the investments to be taken into consideration is
defined through legal procedures. In no event shall these investments
include the interest and general costs.
The national Agency for hydrocarbons resources valorisation
(ALNAFT) shall see to it that the operator, such as defined in
article 29 above, has settled the oil income tax due to him pursuant
to provisions of article 55 herein above
The T.R.P. is a cost which can be deducted from the tax basis
for the purposes of calculating the I.C.R.
Article 87
The rates fixed in the following table will be used to calculate the
T.R.P. :
P.V. expressed in DZD109
such as defined in article
86 above
T.R.P.
Rates
First threshold S1 70
Second threshold S2 385
First level 30 %
Second level 70%
The T.R.P. will be calculated by applying the rates above to the
oil income defined in article 86 above. The thresholds S1 and
S2 listed in the table above and in the formula below will be
updated according to the following formula :
Percentage (%) TRP = (PV - S 1 ) + 30
40
S 2 – S 1
Average foreign exchange sale rate of the US dollar into dinars,
of the calendar month preceding each payment, published by
the Bank of Algeria (Algeria’s central bank) divided by seventy
(70) and multiplied by the amount of the each threshold listed in
the table above. When the P.V. is less than or equal to the threshold
S1, the T.R.P. is calculated using the rate relating to the first
level.
When the P.V. is greater than the threshold S2, the T.R.P. is calculated
using the rate relating to the second level.
When the P.V. is greater than the threshold S1 and less than or
equal to the threshold S2, we will use the following formula to
calculate the tax rate on the oil income :
The annual research and development tranches, apart from
those concerning the enhanced recovery, will benefit from an
Uplift fixed as follows :
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Zone A
and
Zone B
Zone C
and
Zone D
Uplift Rate 15 % Annual investment
tranche: 20% corresponding to a
duration of five (05) years.
Uplift Rate 20 % Annual investment
tranche: 12.5 %
corresponding to a duration
of eight (08) years.
For enhanced recovery investments, a twenty (20%) percent
annual investment trench corresponding to a five (05) years
depreciation period and a twenty (20%) percent Up lift rate shall
be applied to all Zones.
The gas cost price meant to cover gas re-injection and cycling
operations, training costs for national human resources and,
should the case arise, relinquishment costs shall be deductible
for TRP calculation considerations, at no Up lift.
Article 88
Each Person party to a contract is liable to an I.C.R. processed
on the IBS corporate tax rate according to the prevailing terms
and conditions, and the depreciation rates attached in the appendix
of the present law. For this purpose, each person may consolidate
the profits from all its activities in Algeria, subject of the law
herein. The list of these activities is defined by regulations.
Each person, investing in the activities covered by the aforementioned
law relating to electricity and the distribution of gas may
benefit from the reduced I.B.S. corporate tax in force for calculating
the I.C.R. The implementation terms and conditions of the
reduced tax stipulated in article 88 of the law herein are fixed by
regulations.
Article 89
The research and/or exploitation activities govered by the law
herein are exempt from :
• the value added tax (V.A.T.) on goods and services related to
the research and/or exploitation activities,
• the professional activity tax (T.A.P),
• the customs taxes, fees, royalties and duties on imports of
capital goods, materials and products intended to be assigned
and used in the research and/or exploitation activities of the
hydrocarbons fields,
• any current or future tax or duty, other than those described in
herein above articles 31, 52, 53 and 67 under this chapter,
imposed on the operation proceeds and set for the benefit of the
state, public bodies and any legal entity of public right.
The capital goods, services, materials and products specified in
this article are those in the list set up through legal procedures.
Article 90
The base prices, used for royalties, taxes and duties calculation
and specified in Article 91 hereafter are the average amounts of
the calendar month prior to the one for which they are due :
a. FOB prices published by an established specialised review,
for the oil, LPG, butane and propane produced in Algeria.
b. FOB prices for the condensate produced in Algeria, such as
published by an established specialised review, or if such publication
is not available, those prices notified by the national
Agency for hydrocarbons resources valorisation (ALNAFT).
These reviews will be specified in the contract.
Failing such availability of publication for any of the defined products
above, the national Agency for hydrocarbons resources
valorisation (ALNAFT) shall see to it that the current prices of
these same at the nearest delivery points shall be used through
a countdown calculation process, or any other method the
national Agency for hydrocarbons resources valorisation
(ALNAFT) deemed necessary to identify said FOB prices.
However, for domestic market needs, the base price used for
liquid hydrocarbons and oil products shall be the price in force
during the calendar year in consideration as defined by articles
8 and 9 of the law herein.
For gas, the base price used to calculate the royalties, taxes
and duties will be the price defined as follows :
• In the case of an export gas sale contract.
• The price listed in the contract, if this price is greater than or
equal to the benchmark price defined in article 61 above, or
otherwise the base price will be equal to the benchmark price.
• In the case of a domestic gas sale contract.
• The gas sale price applied on the domestic market will be the
price in force in the calendar year in question, in accordance
with the provisions of articles 8 and 10 of the law herein at the
delivery point, ex gas pipeline.
• In the case of gas purchase for the needs of enhanced recovery,
the base price will be price freely negotiated between the
vendor and the buyer.
When the base prices are expressed in US dollars, the rate
used to convert them into dinars is the average sale exchange
rate of the month to which they refer, published by the Bank of
Algeria. The conversion rates into b.o.e. will be notified by
ALNAFT.
Article 91
The value of hydrocarbons production extracted from the
field(s) contained within the exploitation perimeter, is equal to
the product of hydrocarbons quantities which are liable to royalties
by the basic prices, defined in Article 90 here above, minus
the transportation by pipeline tariff between the point of measurement
and the Algerian port of loading or the Algerian export
border, and should this be the case, between the point of measurement
and the point of sale in Algeria.
In the specific case of gas sold in liquefied form and of LPG sold
in the form of butane and propane, a workmanship cost processed
on investments only shall be deducted. The annual investment
tranches will benefit from an Uplift fixed as follows :
• Uplift rate: twenty (20) percent.
• Annual investment tranche : ten (10) percent corresponding to
a duration of ten (10) years.
Article 92
Royalties payments shall be made monthly before the tenth
(10th) of the month which follows the production month, to the
national agency for hydrocarbons resources valorisation
(ALNAFT).
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Should a delay in payment occur, the amounts due shall be
increased by one per thousand (1 0/000) per day late.
Article 93
The duration of the financial year cannot exceed twelve (12)
months. If this period is twelve (12) months, the financial year
must coincide with the calendar year. If it is less than twelve (12)
months, the financial year must be comprised in the same
calendar year.
Article 94
The T.R.P. of a financial year is paid in twelve (12) provisional
payments or instalments on tax due in this financial year. The
calculation methods for settling the provisional monthly
amounts will be defined through regulations.
The instalments are paid without notice before the 25th of the
month following the one for which they are due.
Before the I.C.R. has been determined, the liquidation of the tax
on the oil income is made by the operator and its amount paid
by him, after deducting the instalments already paid, at the
latest on the expiry date of the period fixed for returning the
annual income return for the financial year.
Should a delay in payment occur, the amounts due shall be
increased by one per thousand (1 0 / 00 ) per day late.
Article 95
The supplementary income tax shall be settled at the latest on
the expiry day of the period fixed for filing the annual income
return for the financial year.
The methodology for calculating the amount of the supplementary
tax on the profits will be defined through the regulations.
Should a delay in payment occur, the amounts due shall be
increased by one per thousand (1 0 / 00 ) per day late.
Article 96
The tax system applicable in the domain of Hydrocarbons to
activities other than the research and/or exploitation activities is
the one enacted by the common law in force.
The Persons are authorised to consolidate the profits from their
activities subject of the present law and the law related to energy
and gas distribution by pipeline, as provided for by the Article
88 here above.
The terms and conditions for implementing the aformentioned
profit consolidation are defined by regulations.
Article 97
The activities relating to hydrocarbons transportation by pipeline,
liquefaction of gas and liquefied gases separation, are
exempt from :
• the value added tax (VAT) on goods and services exclusively
related to the aforementioned activities.
• the customs taxes, fees, royalties and duties on imports of
capital goods, materials and products intended to be assigned
and used exclusively for the aforementioned activities.
The capital goods, services, materials and products specified in
this article are those in the list set up through legal procedures.
Article 98
Salaries and wages related to foreign oil corporations or companies
employees shall be exempt from national workers' insurance
contributions when any such employees are still depending
on the social insurance foreign body they subscribed to
before they came to Algeria.
Article 99
The following are considered as buildings: machines, equipment,
materials and tools for drilling and other works fixed permanently
and used for the exploitation of fields, storage and the
transporation of the extracted products.
Also considered as buildings are the machines, engines, materials
and tools directly related to the exploitation of the hydrocarbons
fields.
Considered as personal estate are the extracted or produced
materials, supplies and other furniture, as well as, shares, stake
holdings and interests in a corporation, a company or a jointventure
or partnership for the activities of research, exploitation,
transportation by pipeline, refining, transformation of hydrocarbons
and oil products distribution.
CHAPTER IX
INTERIM PROVISIONS
Article 100
Pursuant to the provisions of hereby law, Sonatrach S.P.A.
shall, upon the demand of the national Agency for hydrocarbons
resources valorisation (ALNAFT) assign part or whole of the
elements constituting the data banks it detains, and the technical
data related to the activities of research and exploitation of
hydrocarbons over the national mining estate
This assignment, for the national Agency for hydrocarbons
resources valorisation (ALNAFT), shall be completed no later
than six (06) months after the establishment of the ALNAFT
Agency.
Sonatrach S.P.A. may retain a copy of all or part of the information
concerned by this assignment.
Article 101
The association contracts entered into prior to the date of publication
of the present law, as well as, said contracts' riders entered
into prior to same date shall remain in full force and effective
until their expiry date.
The law herein safeguards the free will of the parties to the
association contract.
Article 102
For each of the association contracts mentioned in Article 101
above, and in compliance with Article 23 above, within a time
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frame not exceeding ninety (90) Days after the ALNAFT Agency
has been established, a parallel contract shall be entered into
by and between the national Agency for hydrocarbons resources
valorisation (ALNAFT) and Sonatrach S.P.A Until the parallel
contract has been signed, Sonatrach S.P.A. shall continue to
ensure the same prerogatives within the framework of the law
86-14, amended and supplemented by the law 91-21. Once
said contract has been signed, Sonatrach S.P.A. shall return to
the Ministry in charge of Hydrocarbons such mining titles in its
possession to the effect of allocating them to the national
Agency for hydrocarbons resources valorisation..
The duration of this parallel contract is equal to the remaining
duration of the association contract.
This parallel contract will particularly set out the terms and
conditions of the payment by bank cheque or any other authorised
instrument of payment and may be done by electronic funds
transfer by Sonatrach S.P.A.:
1. For the case of production sharing contracts and services at
risk contracts :
• to the national agency for hydrocarbons resources valorisation
(ALNAFT), the royalties on the whole production, calculated in
conformity to article 85 above,
• of the land area tax, calculated in conformity to article 84
above,
• of the oil income tax (T.R.P.) according to the rates provided in
article 87 when Sonatrach S.P.A. is involved in investments
financing or at the maximum rate i.e. seventy percent (70 %)
when Sonatrach S.P.A. is not involved in investments financing.
Oil income is the production value calculated in accordance with
article 91 above, from which is deducted :
• the value of the royalties,
• the Uplifted research and development investment tranches,
• the value, calculated by application of the base price defined
in article 90 above, of the part of the production due to the
foreign partner as remuneration,
• the tax on the remuneration paid by Sonatrach S.P.A. on
behalf of its foreign partner, in accordance with the aforementioned
law no. 86-14 and, where appropriate :
- the costs for training national human resources,
- the enhanced recovery gas price cost,
- the provisions to meet the relinquishment and/or restoration
costs in accordance with article 82 above.
In addition to the deductions authorised in accordance with articles
85 and 87 above, the following will also be deductible for
the purposes of calculating the supplementary tax on the profit
(I.C.R.) :
• The value, calculated by application of the base price defined
in article 90 above, of the part of the production due to the
foreign partner as remuneration,
• The tax on the remuneration paid by Sonatrach S.P.A. on
behalf of its foreign partner, in accordance with the aforementioned
law no. 86-14,
2. For the case of particular partnerships :
• only the percentage of production pertaining to Sonatrach SPA
will be subject to the tax system of the law herein.
• the percentage of production pertaining to the foreign partner
remains subject to the tax conditions set out in the association
contract.
Article 103
Within a period of thirty (30) Days after the ALNAFT Agency has
been set up, Sonatrach S.P.A. must provide the national agency
for hydrocarbon resources valorisation (ALNAFT) with the
following :
1. the demarcation of the research perimeters made on this date
by Sonatrach S.P.A. and which it wishes to keep,
2. the demarcation of the exploitation perimeters made on this
date by Sonatrach S.P.A. and which it wishes to keep,
This demarcation must conform to the provisions of the law
herein.
Article 104
The research perimeters which Sonatrach S.P.A. wishes to
dispose of shall be subject to competitive tendering in view of
concluding a research and/or exploitation contract.
The exploitation perimeters which Sonatrach S.P.A. wishes to
dispose of shall be subject to competitive tendering in view of
concluding an Exploitation contract. Sonatrach S.P.A. will continue
to operate these perimeters until its activities have been
assigned to the new contracting party.
If the competitive tendering does not allow it to attain a new
exploitation contract, the national Agency for hydrocarbons
resources valorisation (ALNAFT) will decide to relinquish the
perimeter(s) concerned. In this case, Sonatrach S.P.A. must
take responsibility for all the operations necessary to the relinquishment
in accordance with article 82 above.
In any case, Sonatrach S.P.A. shall return to the Ministry in
charge of Hydrocarbons such mining titles in its possession
related to these perimeters over which it detains a property interest,
to the effect of allocating them to the national Agency for
hydrocarbons resources valorisation (ALNAFT) pursuant to
Article 23 above.
Article 105
Within a period of ninety (90) Days after the elements mentioned
in article 103 above have been received :
1. For each research perimeter specified above in sub-paragraph-1
of Article 103, a research and exploitation contract shall
be entered into by and between the national agency for hydrocarbons
resources valorisation (ALNAFT) and Sonatrach
S.P.A., or any of its subsidiaries it chooses to appoint pursuant
to the provisions of herein, and including, in particular, the minimum
work programme to achieve during each research phase
prior to the conclusion of said contract, the contracting party
shall, in respect of its commitments, benefit for a period of three
(03) years from a credit corresponding to the works already
completed.
2. For each exploitation perimeter mentioned in Article 103.2
above, an exploitation contract shall be entered into by and between
the national Agency for hydrocarbons resources valorisation
(ALNAFT) and Sonatrach S.P.A., or any of its subsidiaries
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it chooses to appoint pursuant to the provisions of the law
herein. This contract will, in particular, define the threshold to
take into account for calculating the T.R.P. in order to enable it
to continue the exploitation, whilst provisioning for the costs of
relinquishment and restoration of the site, where appropriate.
Upon the signing of the contracts mentioned above, Sonatrach
S.P.A. shall return to the Ministry in charge of hydrocarbons the
mining titles it holds in its possession and related to these perimeters
subject of the contracts mentioned herewith, and which
shall be handed over to the national Agency for hydrocarbons
resources valorisation (ALNAFT) pursuant to article 23 here
above.
Article 106
For each of the exploitation contracts mentioned in paragraph 2
of Article 105 herein above, Sonatrach S.P.A. shall, within a
time-frame not exceeding one hundred and eighty (180) days
from the effective date of said contract, submit to the approval
of the national Agency for hydrocarbons resources valorisation
(ALNAFT), a development plan such as defined in the contract,
along with the financial estimates required for its implementation,
in due compliance with the provisions of Article 3 above.
Should Sonatrach S.P.A. and the national Agency for hydrocarbons
resources valorisation (ALNAFT) not agree on said plan
within a time-frame not exceeding 360 days after said contract
comes into force, the Minister in charge of Hydrocarbons shall
decide which plan Sonatrach S.P.A. shall carry out to conform
with Article 3 of the law herein, after consulting an expert chosen
by the mutual agreement of both parties.
Article 107
During the interim period, in between the date of publication of
this law and the effective date of the contracts as defined in
Articles 102 and 105 above, Sonatrach S.P.A. shall still be subject
to the taxation system prevailing before the publication of
the law herein
All corresponding down payments will be considered as instalments.
Once the contracts come into force, the tax system defined
in this law will be applied, taking account of the amounts
already paid by Sontrach S.P.A. as instalments.
Article 108
Within a period of ninety (90) days after the establishment of the
Hydrocarbons regulation authority, an assignment for the
transportation by pipeline for each of the transportation by pipeline
systems will be allocated by the Minister in charge of
Hydrocarbons to Sonatrach S.P.A. or any of its subsidiaries this
latter chooses to appoint, pursuant to the provisions of the present
law and regulations contained in the chapter IV herein.
Sonatrach S.P.A must keep distinct profit and loss accounts for
each of the transportation by pipeline systems, as well as for
each hydrocarbons processing and refining facility.
Article 109
A maximum period of seven (07) years of conformance starting
from the publication date of hereby law shall be granted so as
the activities, subject of the present law, be in keeping with the
legal procedures which provide for technical specifications and
standards related to the industrial safety and protection of the
environment.
Furthermore and in derogation with Article 58 above, whenever
Sonatrach S.P.A is the sole contracting party or assignee, any
dispute arising from the interpretation and/or execution of any
contract or assignment deed shall be settled through the arbitration
of the Minister in charge of Hydrocarbons, in the absence
of any amicable settlement.
CHAPTER X
SPECIFIC PROVISIONS
Article 110
Any authorisation or consent application made by the contracting
party or the assignee, for its own benefit and in accordance
with the present law and/or the texts provided for its application,
and which is necessary for the execution of the contract or the
assignment, shall be subject to an approval decision or justified
rejection, once the filing documents related to it are completed.
This approval or rejection decision must be notified in a period
not exceeding ninety (90) days.
Article 111
For all the missions of the national agency for hydrocarbons
resources valorisation (ALNAFT) and the Hydrocarbons regulation
authority for which a verification of the application and
confirmation is required against the decreed rules, particularly
the auditing of the accounts of the contracting parties or assignees,
these agencies may call upon established national or
international professional firms.
The costs of these firms will be paid by the Agency concerned.
The costs of the expert reports carried out within the framework
of the settlement of disputes on the audit or on the determination,
by ALNAFT, of the amount of the provision set out in article
82 of the law herein are payable by the contracting parties or the
assignees concerned.
Article 112
The provisions set out by the law herein are applicable as of the
date of its publication in the Official Journal of the Algerian
Democratic People's Republic.
Article 113
The application terms and conditions of the present law will be
defined by legal procedures, as and when needed.
Article 114
All provisions contrary to the present law shall be cancelled, in
particular the aforementioned law no. 86-14, subject to the provisions
of article 101 above.
Article 115
The present law will be published in the Official Journal of the
Algerian Democratic People’s Republic.
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APPENDICES
Depreciation rates for calculating
the supplementary tax on profits
and for calculating the company profit tax
Type of the Fixed Asset
Rates
Research fixed asset other than drilling 100
Improductive drilling
Research drilling 100
Development driling 100
Productive drilling
Research drilling 12,5
Development driling 12,5
or the amount of costs
to be depreciated at the time these drillings are abandoned
Other drilling, particularly drilling used for the
enhanced recovery and the underground storage 12,5
or the amount of costs to be depreciated
at the time these drillings are abandoned
Buildings
Buildings on solid ground 5
Removable buildings on blocks 15
Transportation routes and infrastructure work
Transportation route and road 25
Aerodromes 20
Water wells 15
Hydrocarbon exploitation facility
Extraction facility 10
Enhanced recovery facility 10
Collection network 10
Primary processing and separation facility 10
Storage and connection facility 10
Crude product processing facility 10
Drainage pipeline and facility 10
Related exploitation facility 10
Plant and machinery
Lodging and camp equipment 33
Derrick / substruction and equipment 10
Other plant and machinery 15
Transport equipment
Automobile equipment assigned to the Wilayas of the South 50
Automobile equipment allocated to other Wilayas :
• Light vehicles 20
• Trucks 25
Aerial equipment 25
Other non specific tangible fixed assets
Bond furniture 5
Office furniture and other furniture 15
Layout, arrangement of land and buildings 15
Communications and other IT means 25
Other general installations 20
Specific installation and hydrocarbons transport by pipeline
Main pipelines 7,5
Other pipelines 10
General intangible installation
Preliminary costs 100
General studies and research 100
(with the exception of all tangible investment)
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Hydrocarbons law
Reconciling the imperatives
of national development
and the stakes of globalisation
This modest contribution is proposed to make an objective analysis of the hydrocarbons
law (LRH) by setting it both in the context of the reforms initiated by the country and
the new global changes with regard to the energy sector, and, above all, to moderate
some hasty ideological judgements which have distorted the scope of the LRH. As this
means, for ideological reasons, avoiding dangerous comparisons, the reasoning of those
against the APC is based on two main axes : one political argument and one argument
hidden under a dialetically technical term which enable them to conclude
the pointlessness of the hydrocarbons bill.
By
Abderrahmane Mebtoul
The political arguments are
that the implementation of
this law would be the same
as cheaply selling off the
public heritage by privatising this
sector and that this law would be
anti-constitutional.
Algeria would lose its national
sovereignty, due to that fact that its
policies would be dictated by the
IMF, the World Bank and the large
international companies, but
without defining what we mean by
sovereignty within this ever-changing
inter-dependent world. The
technical arguments are that the
hydrocarbons bill does not respond
to an optimal organisation – what
we have now is good – and that it
would cause huge redundancies
whilst not enabling the surplus of
the benefit to be maximised in
favour of the State.
The conclusion is obvious : the status
quo is preferable given that,
with the current prices,
Sonatrach’s income is insufficient,
with some authors invoking the
experience of Venezuela and that of
Argentina which have not been
conclusive.
I will also focus my demonstration
on three inter-dependent parts :
• The social and economic context
of drawing up the LRH
• the basis of the LRH
• raising certain misunderstandings
by gratuitous affirmations or
dangerous comparisons
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The social and economic
context of drawing up the
LRH : the adaptations
to the imperatives of national
development and the stakes
of globalisation
Energy will remain at the centre of
our development, encouraging
partnership and national and international
private investment.
But income from oil must be used
advisedly for the development.
Thanks to a rational management
of human resources – a central
concern of all development processes
– men will remain the guarantors
of this success.
The strategic positioning of the
country, both in the context of
association with the European
Union and in the UMA (Arab
Maghreb Union), should arise from
the importance which this asset
represents in our negotiations. The
last Euro-Mediterranean Forum
did, however, do a great job of formalising
the priorities, namely :
integrating the networks, supporting
energy exchanges and promoting
the renewable energies.
Once again, gas will be an important
factor in formulating our economic
strategy. Its role should far
exceed our expectations, by integrating
gas going to Europe and
coming from Nigeria. The NEPAD
should see the achievement of certain
objectives which underly its
creation.
Hence, first of all, this bill cannot
be isolated from all internal reforms
– particularly those of the financial,
administrative system (assuming a
re-establishment of the new role of
the State in the economic and
social development as a regulating
agent), of the socio-educational
system, of the customs, tax and
state-owned system and, finally, of
a new policy of social regulation
aiming at the most disadvantaged,
avoiding the implosion of the social
security funds (tens of billions of
dinars of unpaid debts with a
reduction in social security contributions
due to the economic recession)
with the social partners being
social partners, no longer having to
manage these funds if we want to
avoid a situation of millions of pensioners
not being paid in the future.
It is time to define, in this new
context, the new role of the social
partner – in a market economy (the
political choice of Algeria) – which
cannot set itself up as a co-manager,
or impose the eocnomic policy,
insofar as all economic policies
pertain to the Government’s prerogatives
whose mission is to optimise
the overall function of social
welfare by listening to all segments
of society.
As is generally recognised, about
26 billion US dollars, i.e. approximately
2,018 nillion dinars only for
the period 1991-2004 was used to
make the public companies healthy,
which returning to the initial case,
were spent to make the public companies
healthy in this ten year period
in order to create over 500,000
jobs, about 1.4 million F3 type
apartments for an average unit cost
of 1.5 million dinars. If we continue
along this path it will be economic
and social suicide for Algeria.
As a reminder, the recent re-capitalisation
of the public banks over
these last three years (bad debts,
the public sector and the administration
representing over 80%, 20%
on average for the private sector)
required billions of US dollars and
currently the public banks are sick
of their clients who are monstly
public companies.
Secondly, linked to the previous
actions, we need to adapt to the
irreversible global changes with the
consolidation of these great areas
– ALENA in America having to
extend to the entire continent –
APEC in Asia, the recent decision
of the African Union and the new
partnership plan for Africa
(NEPAD), the European construction
which has just enlarged whose
gas directive mainly poses the case
of destination clauses. We have not
negotiated our entrance for a trade
free area with Europe or with the
World Trade Organisation (WTO)
just by pure chance.
This implies a profound reorganisation
of the entire Algerian economy.
For the hydrocarbons sector,
the liberalisation will concern, by
2010, all downstream with the problem
of the prohibition of quantitative
restrictions and the duality of
the prices as well as the norms and
the taking account of the environment
in spite of, currently, divergences
between the USA and
Europe (Kyoto agreement which
the bill includes).
We must take into account the specificity
of this sector, particularly to
have an energy strategy which takes
account of the world energy strategy
– the nuclear replaceable economies,
but also taking account of the
breakthrough of the ecologists,
solar energy, the more intensive use
of gas as a “clean” energy compared
to oil and coal and, above all,
hydrogen which should progressively
replace hydrocarbons in 20 to
30 years’ time, with the USA
recently releasing several billion US
dollars for this research.
Furthermore, we should take
account of the different competi-
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tion and strategies of the large
companies which we have seen reestablished
due to the large amount
of fields discovered in the world,
particularly in the oceans (3 and 4
D method), with the importance of
the new technological discoveries,
as, having raw materials in the 21st
century – the era of knowing - is no
longer a condition of prosperity, an
era in which salaries are paid
without anything productive in
exchange for a fictitious social
peace. These do not, paradoxically,
increase unemployment and slow
down economic growth.
Hence the global data is fundamental
for this sector and it is time to
take account of the essential elements
which influence and which
will influence the sale price both of
oil and gas :
• The evolution of the growth rate
of the global economy and particularly
China and India and specifically
of the energy strategy of the
United States of America for which
50% of their supplies currently
depend on exports, explaining the
active presence of the USA in the
Middle Ease, in the Caspian sea, its
strategic alliance with Iran and
their presence in Iraq.
• The different concentrations of
the large companies, particularly
the latest mergers taking account of
the control of different segments of
genealogical trees of oil and gas, a
source of high added value, and the
control by the companies of the
services and downstream which
will, by 2009, be subject to the
rules of the World Trade
Organisation (WTO).
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• The new global organisations
where we have seen for over two
decades the substitution of hierarchical
organisations of traditional
military types with organisations in
flexible networks, taking account of
the segmentation of the market and
of the personalised demands :
Sonatrach having to evolve in terms
of management, with the transfer
prices within the group (consolidation
of the balance sheet) not enabling
the previsional management
to be controled.
• The percentage of the non OPEC
countries which represents 67% of
the production sold (OPEC representing
about 33%).
• Collossal investments in the
Caspian sea which constitutes, with
a cost lower than 3 US dollars,
important reserves, with Asia and
particularly Japan and China
having to get their supplies from
this region.
• The competition of the countries
such as the ex-Soviet Republics
and Iran (respectively the world’s
no. 1 and no. 2 gas producer
powers) with large investments
such as in Qatar (LNG), without
forgetting Eygpt and other African
countries.
• The entrance of Iraq which is
currently the world's number two
exporting power in terms of oil
reserves and cost less than 2 dollars
open cast with the raising of the
embargo.
• The soon-to-be liberalisation
both upstream and downstream of
Libya which will constitute a very
serious competitor.
• It is also appropriate to take into
account, in addition to the volume,
the fluctuations of the dollar and
the euro which have direct repercussions
on the monetary value
given that we know that in 2003,
the dollar depreciated by about
25% against the euro, with Algeria
exporting its oil and gas in dollars
(over 95% of its exports) and
importing from Europe about 2/3
in euros.
Which leads me on to examining
the basis of the LRH.
The basis of the LRH
A bill which enables good governance
by a clear separation of the functions
and the institutionalisation of open and
transparent appeals for tenders.
Hence, it is planned in the LRH to
have bodies, namely the regulation
authority and ALNAFT which are
not private entities but are powerful
public State entities in order to better
clarify the functions to attain
management transparency, with
the State shareholder acting on
behalf of the Algerian population.
This new structuring enables us to
have a clear vision in the future of
the function of the commercial
company which Sonatrach is.
As currently, and this is not a
reproach, although all Sonatrach’s
executives and workers have
accomplished remarkable work,
they have been concerned above all
with increasing the level of production;
but this organisation has reached
its limits. We have to go
beyond the current situation if we
want to avoid, in the event of an
abrupt fall in the price of oil, causing
a very serious crisis within the
company and, consequently, at the
country level due to the fact that
this income which is the property of
the entire national collective procures
over 95% of our currency
receipts.
Currently, the company Sonatrach,
accumulating the function of public

authority and commercial entity, is
seeing its negotiating abilities weakened,
often explaning the periods
of negotiation which are far from
the national norms, with time being
money in this era of globalisation.
We could justify this in the past
where the primordial action was
only to produce without worrying
about efficiency, or the costs of
production; a vision of an entire socalled
socialist system which has
historically shown its limitations.
How can we achieve the transition
to the market economy with these
different functions which prevents
it from fulfilling its main mission
which is to be a commercial company
just like all the oil and gas
companies in the world where
competitiveness must become the
rule if we want to gain market share
- as some missions devolved to the
Ministry are transferred to agencies
insofar as the the role of the State
through its ministerial departments
– in a competitive economy – far
from any monopoly whether public
or private, would not be able to
interfere in the current management
but be an essential guidance
regulation and monitoring element
of the government’s policy.
As was planned in this period of
transition, a system of equalisation
of prices in order to protect the
most impoverished, particularly in
the disadvantageous regions due to
the cost of transportation; as in the
end the competition should enable
both the quality to be improved and
the prices to be reduced.
This separation of functions of the
Regulating State from the economic
missions devolved to any company,
will, for the first time, enable
the costs to be known. This implies
the rewriting of the current inadequate
national accounting plan, in
order to have real time and not historic
analytic accountancy enable
us to control both the short term
management but, above all, to be
able to plan in the medium and
long term taking account of this
specific fluctuating market.
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Currently, with the consolidation of
the balance sheets and the transfer
accounts, it is impossible to know
both the prospecting and the
exploitation costs which also harms
any reliable contract with the partners
which seem to know them better
in relation to certain international
standards and norms which
may entail losses of tens or even
hundreds of millions of US dollars
annually.
This will mean maximising the profits
and, consequently, the remunerations
which, in the future, should
be linked to performance contracts
(the job exchange initiated at the
MEM having enabled the emergence
of valuable executives) with the
managers whose remuneration
should be linked to the company's
results.
To support good governance, the
LHR also plans de-monopolisation,
competition and transparency - the
basis of all efficiency - with any
monopoly inducing surcharges
entailing the wastage of rare
resources, the generalisation of the
appeals for tenders, which will be
institutionalised, the negotiations
may lead to occult practices particularly
for such a strategic sector
for the country. For this transparency,
it is the ALNAFT’s obligation
to launch competitive tendering
in two phases – a technical
phase and an economic phase (article
30) whose tender opening will
be public and the contract awarded
forthwith to the highest bidder- as
this practice, which was started 4
years ago now at the MEM through
regulations, saw the arrival of
numerous investors, some of which
had never submitted tenders.
The objectives are technical and
economic-political: on the one
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november 2005
hand, to achieve production of
1.5 million barrels a day in 2005
and over 2 million by 2008-2010,
enabling us to negotiate better the
increase of our quota with regard
to OPEC, and on the other hand to
democratise the management of
the income linked, furthermore, to
the political and economic democratisation
of the country. It would
be desirable for this transparency to
now be generalised to the management
of all the Ministries, administration,
EPIC and public companies.
The LRH provides for a tax system
enabling income to be optimised
The different simulations at the
Ministry of Energy and Mines and
the Sonatrach's General
Management clearly show an
increase with variations depending
on the cost of Brent, the dollar and
volume.
If we tabulate between a range of
20 to 24 dollars – in view of the
income on an average of over 5
years – the new project for 2010
will enable us to increase the current
income by over 50%, being
aware that a doubling of production
in physical volume is not proportional
to its value, the current
situation enables all the more a stabilisation
in value in case of stabilisation
of the prices and the parity
of the dollar.
This is even more important given
that in case the price of Brent falls
below 12 to 15 US dollars, the
1986 scenario and the 1994 cease
in payment would be likely to be
reproduced and in this case the
demands of the International
Monetary Fund would be catastrophic
for the country.
And then what about national sovereignty
or sacrifices of future generations
The objective, through the LRH, is
to encourage national and international
investment, and to avoid tax
evasion by the over-invoicing of
some operators. This is because the
current tax system and its limitations,
which hardly encourage
investment, with the reduction of
costs since they are reimbursed in
the year under the form of costoil
(cost of investment and exploitation)
regardless of their costs
because the oil income tax does not
take account of the exploitation
costs by deducting them from the
calculation basis but only from the
investment costs.
In return for its expenses, the
foreign partner receives part of the
production at the unloading part
net of any tax charge. The portion
of the foreign partner’s profit is net
of tax, with Sonatrach paying on
behalf of the foreign partner a
remuneration tax whose rate is that
of the IBS. For the services
contract, in return for its expenses,
the foreign partner receives a payment
in kind or in cash net of any
tax change, with the payment
depending on the risks taken by the
partner. But when the risks are
taken by the partner, the service
contract becomes the equivalent of
a production sharing contract.
Therefore, the tax system hardly
encourages the foreign companies
to get involved in making the national
economy more dynamic insofar
as there are few companies which
have chosen to share involvement;
with Sonatrach being a compulsory
route, acting as a tax intermediary
between the administration and the
foreign partner – thus making its
management more opaque. Still
with this idea in mind, it is a system
which enables the foreign company
to stay offshore since all its tax obli-

gations are settled by the national
company, i.e. Sonatrach.
This raises the constraint which
Sonatrach imposes - to allocate a
large portion to the transportation
investments which are less profitable
than the exploration/production
reducing its self-financing
capacities and its room for
manoeuvre.
The LRH is part of the framework of
the Constitution and does anywhere
plan the privatisation of Sonatrach,
or redundancies
In this context, the application of
this new law falls within the framework
of the Constitution and
should favour the maximisation of
the income in favour of the State
and the creation of jobs.
The strategic objective is to enable
Sonatrach to maximise the income
receipts in favour of the State by
reinforcing it and it has never been
a question in this bill to privatise it.
Sonatrach remains a State company,
supporting the public authorities.
The new decree relating to
stake holdings and privatisation
does not mention it anywhere.
As articles 23 and 24 of this bill are
clear in conformity with the fundamental
principles of the
Constitution and stipulate : the
research or exploitation contract
does not give right of ownership on
the soil defined by said contract
(art 23) – The hydrocarbons fields
are buildings and are not eligible
for mortgages (art. 24).
On the contrary, this bill will reinforce
the prospecting and exploitation
capacities. In fact, the number
of contracts initiated by Sonatrach,
in the framework of the hydrocarbons
law in force, law 86/14 amended
by the law no. 91/21, is four
(04) a year which is done through
long and painful negotiations between
the two partners, whereas the
objective is to reach 15/20
research-exploitation contracts a
year on the basis of open and
transparent appeals for tenders.
In this context, it is fitting to
remind you that the average for the
exploitation wells in Algeria is eight
(08) wells per 10,000km2 whereas
it is one hundred (100) wells as a
world average and five hundred
(500) wells in Texas for the United
States of America.
It is undisputable that the cited
laws have enabled the production
level to be maintained and even to
increase it: did we not predict in
1975 that Algeria would become an
importer of oil by 2000 But they
have reached their limits in view of
the acerbic international competition
and limited financing means.
As Sonatrach’s financing requirement
for the next decade will
exceed 25 billion US dollars in
order to maintain the existing capacity
(over 12 billion US dollars for
Sonelgaz explaining the adoption
of the important law on electricity
and gas transportation by pipeline
in 2002).
As our developed gas reserves have
practically all been the subject of
export contracts until 2015-2020 -
it is therefore deemed necessary to
develop the existing reserves and to
discover new ones to make the
most, over time, of the new opportunities
offered in particular by the
European market which is opening
up and becoming liberalised and by
the American market which is procuring
attractive prices, whilst guaranteeing
the domestic market's
needs are covered.
Also, this new law will support the
extension of the prospecting being
done, due to the fact of the mining
potentials in Algeria – in relation to
training adapting to the requirements
of the hour – (new technologies).
It is the first time that a chapter has
been devoted to the compulsory
training in this sector – extensively
dealing with the aspect of the most
effective and safest social protection
- a legitimate concern for workers
– which will enable both keeping
existing jobs but also to create
thousands of others whilst, as previously
noted, enabling management
economies which will increase
the financial potentials of the
country.
As to the idea that Sonatrach would
lose all right of first refusal with the
implementation of this law – you
just have to carefully read this text.
Careful reading of this law will put
this judgement into perspective.
Article 98 is very explicit : “the
contracts entered into prior to the
date of publication of the present
law, as well as, the contracts' riders
entered into prior to same date
shall remain in full force and effective
until their expiry date”. And,
above all, article 100 eliminates the
fears of Sonatrach losing its right
of first refusal by stipulating:
“Within a period of 30 days after
the law herein has been published
the company Sonatrach must provide
the following :
• the demarcation of the research
perimeters made on this date which
it wishes to keep,
• the demarcation of the exploitation
perimeters made on this date
which Sonatrach wishes to keep.”
This, therefore, reinforces the central
idea which is the efficiency of
Sonatrach which may relinquish
the perimeters which it does not
feel profitable and which the State,
in the past, imposed on it, in order
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•••
to concentrate on its core businesses.
As stipulated in article 44
“each research and exploitation
contract – in addition to the current
exploitation blocks and perimeters
devolved to Sonatrach –
will contain a clause giving
Sonatrach, when it is not a
contracting party, an option to participate
in the Exploitation which
may be a maximum of thirty per
cent (30%)”.
This is important with regard to its
current financial and technological
capacities, especially given that
Sonatrach will not take any financial
risk, unlike its competitors.
As to the argument that the imposed
timeframe of thirty (30) days is
relatively short and will put
Sonatrach at a disadvantage compared
to its competitors, the bill,
which the President of the Republic
has recently given directives for its
examination by the government, is
specific insofar as it stipulates that
the option to participate is given
after the development plan is adopted
by ALNAFT.
The time needed to study the development
plans and for the field
demarcation works may require six
months to one year, and sometimes
more. This period should be made
the most of by Sonatrach which
will have data to carry out its evaluation
studies and decide whether
or not to exercise the option depending
on its perception of the report.
This clearly shows that Sonatrach
has 7 months to one year to exercise
the option and not 30 days.
Which leads me onto the third part
of my report.
Avoiding dangerous
comparisons
Initially, an inflationist pressure is
invoked, penalising the consumers
further to the application of the
LRH, particularly with regard to
the price of fuels. Although the laws
which underlie the content of the
LRH may be found in that of Brazil
and, to a lesser extent taking
account of the experience of
Norway, the unfortunate experiences
of Venezuela and Argentina are
invoked.
If we accept the Argentinean case
whose drift is explained by an
inconsistency of the overall economic
policy and generalised corruption
(Algeria must of course greatly
consider this experience) which
has nothing to do with the hydrocarbons
policy due to the fact that
it is a very marginal producer; it is
fitting to dwell on the liberalisation
of the prices of the oil products and
on the Venezuelan case whose
comparison does not rely on any
solid argument in order to avoid
dangerous comparisons.
This project falls within the framework
of controlled liberalisation
To proclaim that with the application
of this law, the price of petrol would
immediately double, does this argument
rely on a scientific basis An
audit recently initiated by the
Ministry of Energy and Mines which
has just been completed after two
years of intense work which saw the
cooperation of the executives of
Sonatrach, the Ministry of Energy
and Mines supported by the international
consultancy firm Ernst and
Young and national experts on the
theme – the simulation between
2004-2010, taking account of the
national and international environment
of the price of oil products in a
competitive environment, contradicts
all the speculations that the price of a
litre of petrol in the event of liberalisation
would mechanically double.
The simulations clearly show that
between 2004-2010, to the contrary,
it almost avoided an application of
the euro exchange rate because the
end price to the European consumer
sometimes contains over 70% of tax
on oils.
Other than that, the LRH stipulates
5 years for the liberalisation of the
price of products made from oil and
10 years for gas - the period required
to push forward the reforms – the
competition by de-monopolisation
will enable the future stabilisation of
the prices, even their reduction,
dynamically, taking account of the
future structure of the growth rate,
the exchange rate as well as the national
distribution of income.
Furthermore, as a factor of stabilisation,
these simulations show that if
the consumer has a choice between
several options between traditional
fuels (2 start petrol, 4 star petrol, diesel)
or the gaseous fuels (LPG fuel
particularly or GNW in some large
agglomerations as a substitute particularly
for diesel, provided the distribution
network is improved and
there is a more attractive tax policy),
he would choose the gaseous fuels
due to the relatively lower price.
A reorientation of the oil product
consumption policy would favour
this choice, especially given that
Algeria risks being an importer of
diesel by 2010 or building a refinery
which, with the same capacity as the
Skikda refinery, would require about
1.5 billion US dollars – as Algeria is
endowed in terms of comparative
advantages with natural gas.
As the audit shows, a low price discourages
the investors which cannot
reconstitute the capital in advance
like NAFTAL, due to low margin,
entails both leaks outside the borders
and wastage as the experience of the
Indian company IPSAT in Annaba
has shown which with the same volume
of electricity has doubled its capa-
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city. Even more so that, technically,
these less polluting products with the
concern of protecting the environment,
concerns taken into account
recently even by the WTO, tend to be
generalised in the developed countries
where anti-pollution taxes are
applied on the traditional polluting
fuels (Kyoto agreement).
This does not mean during this
transition period ending all the subsidies,
but, as stipulated in the 2005
Finance law, these must no longer be
given to support companies whose
sole aim is to produce wealth, but
budgeted at the government level by
the APN which must target the disadvantaged
layers and the sectors
who are creating growth.
To give more precision soley for
natural gas, Sonatrach subsidises
about 1.5 billion US dollars a year.
Furthermore, tax incentives are planned
to develop the downstream,
through the consolidation of the activities
for the payment of the supplementary
income tax (ICR) is authorised
to encourage the operators to
investment both in the researchdevelopment
of fields but also in
downstream activities – a growth
vector which creates jobs particularly
in refining, distribution, storage,
petrochemistry and transportation by
pipelines.
But it is still the case of encouraging
the national and international private
sector or in partnership not to renew
the negative experiences of the past
where the public company did not
master the costs or the progressive
technology in this sector, or the
world trade circuits which have an
increasingly oligopolistic characteristic
at the global level.
To compare the Venezuelan
experience to the contents of the LRH
does not rely on any serious grounds
A diversified portfolio in Algeria and
American concentration in Venezuela
To unfairly assimilate Venezuela and
Algeria, some people state the primacy
of American companies both
in Venezuela and Algeria.
Now, the portfolio in our country,
unlike Venezuela’s, is diversified. In
fact, whilst the primacy in Venezuela
is given to American companies at
over 80% (being four countries who
supply the USA with the receipts –
its hydrocarbons exports of about
80% and 20% for aluminium) it is
not the same in Algeria where the
portfolio is diversified : BP
(English), AGIP (Italian), Repsol
(Spain), Andarko (American),
Maerck (Danish), BHP (Australian)
and recently Chinese, Vietnamese
and even Tunisian companies.
Thanks to the new provisions, the
research and/or exploitation
contracts concluded in partnership
by Sonatrach with foreign companies
have enabled us to rebuild our
reserves, bringing them back to their
1971 level. The discoveries made
and already being exploited will very
soon contribute with a contribution
of 50%.
The reduction in tax revenue in
Venezuela is due to the confusion between
the owner State and the commercial
function of the Venezuelan oil
company which the new Algerian
hydrocarbons law to be avoided
To explain the reduction in tax
revenue in Venezuela (paradoxical
increase in exports in value and
reduction in tax revenue), it is time
to take account of the specificity of
the national Venezuela company
PDV (Sonatrach’s equivalent)
which should adopt an accounting
system which would consolidate all
losses and profits, as the losses
coming from its results in the overseas
subsidiaries have affected its
results. In fact, as PDV was hit by a
tax on profits of 67.7% in
Venezuela and only 34% in the
USA, it preferred the foreign market
and therefore PDV did in fact
see its overall results improve
although PDV Venezuela suffered
losses and likewise reduced the
country’s tax revenue.
Furthermore, PDV charged in
Venezuela the financial costs of a
debt of 9 billion US dollars which
was in favour of its overseas activities.
In fact, from 1983 further to
PDV’s internationalisation strategy,
the company used its overseas
subsidiaries to export its profits
through transfer prices.
This transfer has reached 500
million US dollars a year. Profiting
from the negative experiences both
in Venezuela and in Argentina,
Algeria’s strategy concerning the
International Holding company is
different. The Sonatrach international
holding company, unlike
Venezuela’s, has to finance itself,
thus avoiding the internal revenue
transfer abroad.
The concept of marginality contained
in the LRH is different in Algeria and in
Venezuela thus enabling tax evasion to
be avoided
In fact, there is a difference in size
between Venezuela and Algeria
relating to the marginal deposits
and to the corresponding tax system.
For Venezuela, the country
has opened up marginal deposits to
private investors, with some fields
producing over 500,000 barrels a
day.
The Venezuelan 1993 finance law
exempted these contracts from
67.7% tax on profits to apply only
the 37.7% devolved only to the non
petroleum sector (legal device for
supposedly service contracts and
not production ones) and PDV
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••• convinced the Congress to abolish
the export customs duties of 59%
to an average of 43% between 1993
and 2000.
Supplément
210
Furthermore, the Venezuelan oil
law sets down a minimum tax system
in the form of royalties of 30%
of the volumes extracted in oil and
20% of the volumes extracted in
gas, without distinguishing the size
of the fields and their locatioin.
In the case of Algeria – unlike
Venezuela which does not limit the
ceiling – the marginality is applied
to small sized fields – depending on
the geographic remoteness, in
order to enable their exploitation
which was not possible in the former
law.
Confusion of roles in Venezuela
and transparency in the LRH
The drifts in Venezuela through the
speculative movement of capital
through an oil company playing the
roles both of a public authority and
a commercial company enabling
the resources to be diverted to the
costs of the development of this
country are due to the confusion of
the roles between public authority
and the commercial entity.
This is a notable difference where
articles 51 and 52 of the
Venezuelan law attributed the regulation
body to the Ministry of
Energy whereas, in Algeria, this
was attributed to an independent
institution, as well as the issuing of
authorisations for the operators,
from licences by the same Ministry,
as some client relations reinforce
occult practices, as in the former
planned economies.
It is precisely to avoid this confusion
of roles which could entail
insider trading, the non-transparency
in the management and the
reduction in tax revenue that the
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november 2005
hydrocarbons bill clearly demarcated
the role of the ALNAFT
responsible for generating the income
in favour of the State and
Sonatrach which becomes a commercial
entity subject to international
competition in order to make it
more competitive.
Conclusion
Real nationalism is the future for all
of us to contribute to increasing
our added value within the global
economy by reconciling economic
efficiency and a fair redistribution
of the national income, without
harming creative energies. If we
agree on the strategic objectives, it
is obvious that the centralised
bureaucratic diktats ignoring the
decentralised networks are largely
overcome. This assumes, as this
falls within the report on the report
of the State, a more participative
and citizen company.
It is in this framework of sustained
effort and dialogue, that the bill has
already been subjected for more
than two years to a large debate at
the civil society level to have the
most diverse opinions – hoping for
the involvement of the economic
and social partners, other segments
of society and the university to submit
concrete proposals.
To summarise, other than the
aspect of mobilisation of the financial
surplus for development purposes,
the LRH enters within the
framework of the transition from a
highly centralised economy to a
competitive market economy in the
context of global inter-dependence,
linking economic efficiency and
social cohesion.
The fundamental axis after the
improvement of the security axis is
to solidify the micro-economic and
institutional reforms – the current
macro-economic stability may be
ephemeral as realised by exogenous
factors – if we want to return to
sustainable growth.
This law – thanks to the permanent
and responsible dialogue – will
reinforce the potentials and the
efficiency of Sonatrach in favour
both of the workers and the entire
national collective and, in close
relation with the political, economic
and social reforms, will enable
all Algeria to take up the challenges
of this new millennium.
A. M.
International Expert
University professor