Sonatrach


Sonatrach is the national state-owned oil company of Algeria. Founded in 1963, it is known today to be the largest company in Africa with 154 subsidiaries, and often referred as the first African oil "major".

Overview

Sonatrach is the 12th largest oil consortium in the world, with 154 subsidiaries operating over the entire oil value-chain from upstream, to midstream, and downstream activities.
Its gross sales was 1,530 billion Algerian dinars for a net income of 175 billion. With approximately 120,000 workers, the company produces 30% of the GNP of Algeria. Annually it produces 206 million Tonne of Oil equivalent, including 24 million ToE, or 11.7% of total, for the Algerian domestic market. Sonatrach operates the largest oil field in Algeria, Hassi Messaoud, which produced around of crude in 2006. Sonatrach also operates the Hassi R'Mel field, which produces around of crude. Other major fields operated by Sonatrach include Tin Fouye Tabankort Ordo, Zarzaitine, Haoud Berkaoui/Ben Kahla, and Ait Kheir.
Sonatrach operates over of crude oil pipelines in the country. The most important pipelines carry crude oil from the Hassi Messaoud field to export terminals. Sonatrach also operates oil condensate and LPG pipeline networks that link Hassi R'mel and other fields to Arzew. Sonatrach is expanding the Hassi Messaoud-Azrew pipeline, the longest in the country. The project entails a second, parallel line that will more than double the capacity of the existing line.
Sonatrach has some concessions in Libya, Mauritania, Peru, Yemen and Venezuela. The company has also diversified into petrochemistry and the desalination of seawater.

Selected Fields

FieldBasinAnnual ProductionReservesDiscoveryOperator
Hassi Messaoud field Sonatrach
Hassi R'Mel gas field Sonatrach
Zarzautine field Sonatrach
Ait Kheir Sonatrach
Haoud Berkaoui/Ben Kahla Sonatrach
Tin Fouye Tabankort Ordo Sonatrach

Notes:
1.EIA 2007.

History

Sonatrach was founded on December 31, 1963. At the time, however, the Algerian state held only 4.5% of the exploration perimeters, while French interests were as high as 67.5%.
After the Arab-Israeli War in June 1967, Algeria decided to nationalize the refining and distribution activities of Mobil and Esso, and Sonatrach signed an agreement with Getty Oil on October 19, 1968 receiving 51% of Getty Oil's interests.
Sonatrach gained control over all Algerian petrochemical resources following President Houari Boumedienne's nationalisation of all French oil and gas holdings beginning on February 24, 1971. The old concession system was replaced by a seizure of a 51% share of French petroleum companies. Only Total agreed to continue its activities; the other companies left Algeria.
Beginning on December 10, 1979, a conference on the exploitation of petroleum recommended increasing participation in the research efforts by foreign companies and countries. By a decree published in the Journal Officiel on May 17, 1980, Sonatrach was divided into four enterprises.
From 1986, it became possible for foreign hydrocarbon companies to do business in Algeria within a partnership with Sonatrach. The Sonatrach-Gaz de France accord, signed on January 12, 1989, allowed the state to set a compromise price of about $2.30 per million BTUs. A total of 9.5 billion cubic meters of natural gas were delivered annually until 1990, and Sonatrach recovered 850 million francs in arrears, since the accord applied retroactively beginning on November 1, 1987.
In March 2005, the Algerian parliament adopted the hydrocarbon reform bill, encouraging international oil company investment in the hydrocarbon sector, which Sonatrach previously dominated. However, 2006 amendments to the hydrocarbon bill created a windfall tax on IOC profits when oil prices top $30 per barrel. This tax reached up to 50% on some contracts. In addition, the amendments gave Sonatrach rights to a 51% or higher participation option on each newly discovered project.
In April 2019, media reports revealed that Lord Energy SA, a controversial Swiss energy trading company linked to the Muslim Brotherhood and Al-Qaeda, had been involved in a corruption scandal within Sonatrach. Sonatrach PDG Abdelmoumen Ould Kaddour was let go a few days after Algerian Vice Minister of Defence Ahmed Gaïd Salah announced the launch of an investigation into the links between executives of Sonatrach and Lord Energy founder, Hazim Nada, who is the son of Youssef Nada, a high-level executive of the Muslim Brotherhood, whose companies have been accused by Bush the younger of financing Al-Qaeda.
On 22 July 2019, the Sonatrach-controlled oil tanker Mesdar was briefly detained as it transited the Straits of Hormuz by the Islamic Republic of Iran. This was a case of mistaken identities because Sonatrach contracted a UK-based operator for the vessel, and the government of Iran was at odds with the government of the UK over the seizure of the oil tanker Grace 1. When they realised their error and released the Mesdar, the seizure of the Stena Impero fulfilled the needs of the government of Iran.

Subsidiaries and Joint Ventures

Sonatrach owns 50% of Numhyd, a joint venture with Tunisia's ETAP, and ALEPCO, a joint venture with Libya's National Oil Corporation. In 1998, Sonatrach acquired Naftal, which is the principal company selling petroleum-based fuels for domestic consumption with about 10,000 gas stations. Naftec, a subsidiary of Sonatrach, operates Algeria's four refineries, which have combined capacity of. The Skikda refinery provides the bulk of Algeria's refined products production. The Hassi Messaoud refinery supplies products to southern Algeria, while the Algiers refinery processes crude from Hassi Messaoud for consumption in the capital. Finally, the coastal Arzew refinery produces products for domestic consumption and export. In July 2006, Sonatrach and the China National Petroleum Corporation brought online the small-13,000 bpd Adrar refinery, which is located near the village of Sbaa north of Adrar.
On July 1, 2018, Sonatrach appointed Youcef Ghazli to head the Foreign Investment Division, which oversees all investments in Europe.

Algerian Hydrocarbon Sector

Hydrocarbons play a crucial role in Algeria's economy, accounting for roughly 60% of budget revenues and over 95% of export earnings. The country ranks fourteenth in petroleum reserves, containing of proven oil reserves with estimates suggesting that the actual amount is even more. The U.S. Energy Information Administration reported that in 2005, Algeria had 160 trillion cubic feet of proven natural gas reserves, the eighth largest in the world. As a result, Sonatrach is very important politically. Most Energy Ministers of Algeria have come from a Sonatrach background.

Tassili Airlines

A joint venture between Air Algérie and Sonatrach in 1998 established the passenger airline company Tassili Airlines. Commercial services were launched on 8 April 1999 with a flight from Hassi Messaoud to Algiers. In 2005, Air Algérie withdrew its funds in the airline, which thus became wholly owned by Sonatrach. In 2006, Sonatrach gave Tassili Airlines permission to expand its domestic destinations and for the future opening of international routes.

Corruption scandals

Sonatrach suspended all of its senior management after two of the company's vice-presidents were imprisoned for corruption. Algeria's Energy Minister, Chakib Khelil announced the president of the company and several executives have been placed under judicial supervision. In 2013, Khelil was also accused of receiving a bribe from a subsidiary of the Italian energy company Eni.
In May 2020, an arrest warrant was issued against a representative of Sonatrach in Lebanon, as part of a greater operation against embezzlement of public funds in contribution with Lebanese officials.

Presidents