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Table of contents

Energie & Mines

No. 10 March 2009



Commissioning of Pagoreni


24 February: The President of the Republic

visits Oran

International OPEC special

Special 151st Extraordinary Meeting of the OPEC

Conference in Oran

LPG: Sonatrach in 2nd place in 2012
Mr Chakib Khelil in Skikda, In Amenas and
Hassi Messaoud: Deposit development plan
Sonelgaz to invest 29 billion dollars
Gas distribution: 57% objective
Mines: Pick-up in pace
Mines: ANGCM, objectives achieved
Finance Act 2009: New provisions

Human resources



Working towards a new Bretton Woods

LNG 16 - Oran: The Convention Centre on the



Art and ecology


5th Training Conference of the Energy and

Mines sector
IAP: Graduation of the first year
of 420 Venezuelan technicians

Women's forum


Two young women on building sites

Energie & Mines

Revue du secteur de lEnergie et des Mines ISSN 1112-4873 Dpt lgal : 1094-2004
No. 10 - March 2009

Head of publication Sid Ali Hattabi

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Design and production Alpha Design Photo credits : Sonelgaz, Alpha Design
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The articles published in Energy and Mines only commit their authors. Reproduction authorised provided the source is indicated.

Superb accomplishments

In the last five years, international-scale

projects and a continuing of the household
gas and electricity connection efforts

The energy and mines sector has undergone major development in the
last five years particularly with the launch of international-scale projects and the continuing of the efforts to connect the most remote places of the country to town gas and electric power, organised by an
overhaul of the sector's regulatory framework.

Algeria, which benefited from the

increase in oil prices which hit 150 dollars a barrel last July, was determined
to invest a large amount of its revenue
almost 80 billion dollars 2008 to
carry out projects enabling it to ensure
a stable source of revenue that is less
dependent on the fluctuations in the
price of hydrocarbons on the global
Medgaz, Galsi and TSGP are the most
performing projects through which
Algeria has been able to confirm itself
as a reliable energy partner in the EuroMediterranean region. With a total cost
of more than one billion dollars, the
Medgaz gas pipeline, which will
connect Algeria directly to Spain, is
designed to increase Algerian gas
exports by 8 billion cubic metres and
secure Europe's supply of natural gas.
Another mega-project of the same size
the Galsi gas pipeline will also go
into production in 2009 to route an
annual volume of 8 billion cubic metres
of gas directly to Italy.
1,470km long, this mega-project will
reinforce the capacities of the EnricoMattei gas pipeline, which crosses
Tunisia, and will increase Algerian gas
exports to Italy to 40 billion cubic metres.
Still on the subject of major gas projects which will change the region's
energy landscape, the Trans-Saharan
Gas Pipeline (TSGP) should route gas
to the European markets from the
south of Nigeria via Niger and Algeria,
then the Mediterranean.
Approximately 4,300km long, it should
supply from 20 to 30 billion cubic metres to the European market by the year

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march 2009

A record number of 75 hydrocarbons

discoveries have, furthermore, been
recorded since 2004, 37 of which by
Sonatrach itself and 38 in partnership
with foreign companies.
The peak was reached in 2007
with twenty discovers, 8 by Sonatrach
itself and 12 in association with foreign
These discoveries were made at a time
when the production of several potential deposits in the world was in massive decline, whereas some countries
such as Indonesia became energy
importers due to the drying up of their
own resources. Furthermore, major
investments, totalling around a hundred billion dollars, were made in the

medium and long term in the energy

Out of this total, a package worth 63
billion dollars for the period 20082012 is designed to develop the
Sonatrach Group's domestic and international activities.
The purpose of these investments is to
diversity the partnerships with the
international oil companies and to
encourage cooperation in the technological domain as well as to promote
partnerships based on financial and
managerial investments.
The Sonatrach Group has, on the other
hand, developed a new tendency
towards sectors outside the hydrocarbons industry.

These investments particularly relate to the construction of ammonia and urea production plants in Oran
(7,000 tonnes a day of urea and 4,000 t/day of ammonia) and in Arzew (4,400 t/day of ammonia and 3,450
t/day of urea). Seawater desalination has also been
invested into by this Group which controls the Algerian
Energy Company (AEC) entrusted with the programme for constructing 13 desalination plants across the
entire Algerian coastline in order to produce 2.2
million cubic metres/d of water.
Two of these plants (Algiers and Oran) are already
operational whereas the delivery of the 11 others will
take place throughout this year which will also record
the receipt of the first million cubic metres of desalinated water. With regards the effort being put in by the
public authorities to supply town gas and electricity to
all regions of the country, an investment of 29 billion
dollars for the period 2007-2017 has been made by the
Sonelgaz Group for this purpose. The average gas
penetration rate is 41% in 2008, at a time when the
average national electricity connection rate has increased to 98%. In parallel, structural reform has been
initiated by the public authorities to adapt the national
energy policy by putting in place frameworks and institutions designed to respond to the challenges related to
the constant growth in domestic and international
energy requirements.
Several laws have been promulgated, including the
Hydrocarbons Act in 2005 before being amended one
year later.
Tools and programme have, on the other hand, been
implemented, such as the National Agency for the promotion and rationalisation of the use of energy
(Aprue) in order to control energy and also the company New Energy Algeria (Neal) for the development
of renewable energies in Algeria. With regards renewable energies, Algeria has set itself an objective of
increasing the percentage of these energies in total
electric production by 5% in 2015.
To do this, several projects have been launched, particularly the Hassi R'mel hybrid (gas-solar power) plant
of a capacity of 150MW which will be delivered in
2010, and a study for the construction of a 10MW
wind power plant.
As for the peaceful use of nuclear energy, a bill prepared by the Ministry of Energy will be submitted shortly to the government's Council whereas the first civilian
nuclear plant in Algeria will be commissioned in 2020,
once again according to Mr Khelil.
The mining sector, for its part, has experienced a new
boost thanks to the Mining Act adopted in 2001 defining the legal framework for this sector in Algeria. In
addition, several partnership agreements have been
entered into with world leaders in the mining sector,
whilst foreign direct investment is estimated at over
300 million dollars.
Furthermore, over a thousand mining permits have
been granted in the last five years enabling the State to
garner revenue of more than 7.5 billion dinars.

Sonatrach announces
4 gas discoveries
The national hydrocarbons
company Sonatrach has
announced four gas discoveries, one of which on its
own and the other three in
association with foreign
partners. The discovery
made by Sonatrach on its
own was made in the Illizi
basin further to the drilling
of IKNO-1 (In Akamil
Nord Ordovicien-1) located
in the Tinhert acreage
(block 239a), specified the
company in a press release.
These wells have produced,
from the Ordovician reser3
voir, 11,852m /h of gas
with pressure of 2,500 Psi
on a 32/64 choke.
The second discovery was
made in association with
the consortium Repsol
Exploration Algeria
SA/RWEDEA in the
Reggane basin further to
the drilling of KLS-1
(Kahlouch Sud-1), located
in the Reggane Nord acreage (blocks 351c, 352c).
The test performed on this
exploration well produced
26,208m /h of gas with
head pressure of 3,551 Psi
on a 32/64 choke.
The consortium did the
profiling works to get an
accurate reading of the
extent of the discovery, specifies the same source. The
third deposit discovered in
the l'Ahnet basin, in the
M'sari Akabli basin (blocks
341a3, 339a1, 337a1), in
association with the consortium Repsol Exploration
AG/Edison International
produced gas from two
Devonian reservoirs
(Emsian and Siegenian)

which respectively produced

10,375m /h with pressure
of 1,519 Psi (32/64
choke) and 4,583m3/h
with pressure of 812 psi
(32/64 choke), according
to Sonatrach.
The company further indicates that it made its fourth
discovery in the Berkine
basin in association with
the consortium Repsol
Exploration Algeria SA/Gas
Natural SDG.
This deposit, discovered
further to the drilling of the
AL-2 (Azzel-2) well in the
Gassi Chergui Ouest acreage (blocks 214a, 216a.b)
produced gas from the
Silurian reservoir with pressure of 1,035 Psi (32/64
choke), further specifies the
Sonatrach press release.
These four discoveries are
the first ones this year. In
2008, the Sonatrach Group
made 16 discoveries of
hydrocarbons, 9 of which
on its own and 7 in association with its partners.
Five of the discoveries were
made by Sonatrach in the
Illizi basin and the other
four in the Amguid
Messaoud, Ahnet and Oued
Mya basins. The 7 discoveries were made in association with its partners
Medex and Statoil Hydro,
with two discoveries each,
and the other three by BP,
BG/Gulf Keystone and
Three discoveries were
made in the Illizi basin,
two in the Gourara basin
and the other two in
Bchar, Oued Namous and
Oued Mya.

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march 2009

53rd anniversary of the creation of the UGTA and 38th anniversary
of the nationalisation of hydrocarbons

The President of the Republic

alongside workers

Arzew will be one of the world's largest LNG and ammonia producers.

Arzew, on this double commemorative

day of the nationalisation of hydrocarbons and the creation of the UGTA,
gave the President of the Republic a
welcome worthy of the great events.
A compact crowd, boosted by the
playing of numerous folkloric troops,
accompanied the President on his walk
followed by a speech given by him in
the city's multi-sports centre on the
occasion of the 53 anniversary of the
creation of the UGTA and the 38th
anniversary of the nationalisation of
In his speech, the President paid tribute to the working world dating back to
the very creation of the UGTA, a workers organisation, a crucible of nationalism which, due to the dedication of
its members, strengthened the freedom
of action of the FLN then fully committed to the freedom fight.
These members include men such as
Assat Idir, in the midst of colonialism,
and Abdelhak Benhamouda, during the
black decade, who, through their
utmost sacrifice, enabled Algeria to
The working world, yesterday committed to the freedom fight and, recently,
standing up to the terrorist attacks
aimed at destroying its productivity, is
today a cardinal element in this vast
reconstruction of the socio-economic
fabric. This tribute which the President
of the Republic paid at length in the
Arzew multi-sports centre was, on
several occasions, interrupted by
applauds from the audience carried
away by the event.

Energie & Mines


march 2009

A second runway for

Es-Senia airport
Beforehand, the President of the
Republic upon his arrival at Es Senia
airport, inspected and then inaugurated
the second runway of the airport which
has seen its importance grow in the last
few years to the extent of requiring its
extension and its upgrading by the putting in place of different equipment and
zones which international traffic
This is particularly the case given that
Oran, which has just played host to the
meeting of the petroleum exporting
countries (OPEC), is already preparing
for another major energy meeting,
namely the World Gas Conference
planned for 2010. This event will see
the arrival of thousands of experts and
petroleum and gas companies from
throughout the world.
The second runway which the
President of the Republic inaugurated
was entrusted to the PortugueseBrazilian consortium, Zagob-Andrade.
This is a type A, 3,000m long runway
with four taxiways which will reinforce
the current runway of the same length.

LNG 3/Z:
4.3 million/tonnes/year
From Es-Senia, the President of the
Republic went onto Arzew, more specifically to Bthioua where he placed
down the first stone of the future LNG
3 plant. The consortium Snam-Projetti
(Italy), Chyoda (Japan) was awarded
this mega-project whose construction
cost is more than 280 billion dinars, i.e.
4.55 billion dollars.

This new LNG train is expected to start

production in 2012 and will employ no
less than 2,000 workers. It will enable
Algeria to remain the world no. 1 in
LNG trade, if we take into account the
similar project started in the east of the
country, in Skikda, in this second
petroleum plain the country has. The
project will see the construction of two
propane and butane storage tanks, a
pier with breakwaters and a dock for
the loading of LNG tankers of a capaci3
ty ranging from 40,000 to 220,000m .
Two companies were successively
selected initially, then rejected, before
the project was awarded to the consortium Snam-Projetti (Italy), Chyoda
Initially, in 2005, 80% of the project in
question was awarded to the Spanish
Group Repsol and Gaz Natural whereas the remaining 20% was awarded to
the company Sonatrach. The contract
was terminated in 2005 due to a delay
by the Spanish in the completion of the
Then, due (inter alia) to certain equipment (General Electric/Nuovo Pignone
cycle turbomachines) which did not
meet Sonatrach's requirements, the
consortium Petrofac/IKPT was awarded the project.
With this new Arzew liquefied natural
gas train (LNG 3Z), Sonatrach hopes
to produce some 30 million tonnes of
LNG by 2012. This large scale project
is part of the very ambitious programme initiated by Sonatrach to develop
LNG with the objective of exporting 85
billion cubic metres/year of gas by


Financed by Sonatrach, the new LNG

train will have a production capacity of
more than 4 million tonnes of
LNG/year and will be constructed
within a maximum period of 50
months. This LNG train will be powered by the natural gas coming from the
Gassi Touil and Rhourd Nouss fields.
The dry construction of this LNG train
will be accompanied by the storage of
end products comprised of two LNG
storage tanks of a capacity of
160,000m3 each, a propane storage
tank of 56,000m3, a butane storage
tank of a capacity of 12,000m and
finally a gasoline storage tank of a
capacity of 1,800m .
Once the projects for the third liquefied
gas train in Arzew and Skikda have
been completed, Sonatrach will be the
world's no. 2 in exporting liquefied gas
(LPG) by 2012.

Ammonia: one of the

world's top producers
The third stage of the presidential visit
entailed the placing down of the first
stone for the construction of an ammonia (4,000 tonnes/day) and urea
(7,000 tonnes/day) plant. The construction of this plant was entrusted, in
April 2008, to a consortium comprised
of the companies Mitsubishi Heavy
Industries (Japan) and Daewoo
Engineering Construction (South
Once started, this plant, which will
cover an area of 90ha, must be completed within a 43-month period. Its final
acceptance is expected for August 2013
and will generate revenue estimated at
1 billion dollars a year. This project has
been financed using the "project finance" system and has been put together
between the company El Djazairia El
Omania Lil Asmida, joint subsidiary of
the Sonatrach Group and the Omani
Group Suhail Bahwan, and a consortium of public banks comprised of
CPA, leader, BEA, BNB, BDL and
The latter will have to finance 75% of
the project, i.e. a contribution of over

2.06 billion dollars out of a total cost

estimated at 2.7 billion dollars. The
remaining financing (25% of the total
cost) will come from Sonatrach's and
Suhail Bahwan's own funds. Arzew will
thus become a strategic fertiliser production centre with the construction of
three ammonia plants in partnership
respectively with Orascom (Egypt),
Suhail Bahwan (Oman) and Fertiberia
(Spain), ethane cracking and alkene
production plants with Total (France)
and the methanol plant with the international consortium Almer. Remember
that the President of the Republic also
launched the worksite, in December
last year, for the future plant in partnership with Orascom.

Modernising the living

Each time he has visited Oran (11 times
already!), the President of the Republic
has never failed to put improving the
living environment of Oran dwellers on
his working agenda, whether by launching housing building sites, inaugurating housing blocks and property complexes or by inaugurating or launching
desalination plant worksites.
This time, the renovation of the buildings was the focus of his afternoon
visit. In the wilaya's capital, he particularly listened to explanations on the
measures planned to renovate a hundred homes. Indeed, Oran has, unfortunately, suffered the treacherous attacks
of time. Numerous districts, both in its
original part, Sidi El Houari, and in the
relatively new city centre are seeing buildings collapse, particularly in winter.
After years of half-measures or one-off
actions taken in emergency to house
families thrown out on the street after
the collapse of their homes, the public
authorities have decided to work at the
root of the problem and start a widescale action to attack this wound which
is destroying the city's image from
several angles.
600 buildings are concerned initially by
this renovation. Tenders for an initial
quota of 200 buildings will be opened

to select the companies which will be

responsible for this renovation operation which will cost around 70 billion
This renovation, which has been talked
about for at least ten years, has only
been made possible by financing from
the complementary presidential programme. Initially, the renovation will
concern the buildings whose state of
wear and tear is deemed low and recoverable. From this point of view, the
city centre will be a priority. The works
will be based on treating the communal
areas, the seals and the faades whilst
keeping their architectural cachet.
According to the preliminary results
given to the President of the Republic,
four operations on old buildings are
underway and are comprised of three
parts (technical construction diagnosis,
putting in place of a GIS, socio-economic survey) and have concerned three
communes (Oran, Mers El Kebir and
Arzew) on a basis of 54,000 homes and
950 pieces of equipment.
As an illustration, the renovation of the
Sidi El Houari district will concern
30,000 inhabitants. At present, 1,326
homes have been diagnosed and the
work is far from complete, such as in El
Hamri (another priority district) where
the diagnostic operations are still being
carried out.
Afterwards, the President of the
Republic went to the dara of Bir El
Djir where he inaugurated a block of
590 social housing which cost
DZD1,412,645,318.54 and inaugurated 6,000 education places at the university centre. This will enable the pressure to be taken off the University of
Es-Senia by fitting out three faculties,
particularly the faculties of science,
Islamic sciences and commercial

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march 2009

liquefied gas

Sonatrach may be the world's

no. 2 by 2012
Once the third liquefied gas train projects in Arzew and Skikda are completed, the Sonatrach Group will be the
world's no. 2 in exporting liquefied gas
(LPG by 2012), indicated, in Oran, the
head of the Group's Downstream activity's research and development department, Henni Mekki.
Speaking on Oran radio's "Forum" programme, Henni Mekki confirmed that
"the total production capacity of these
two trains is 9.2 million tonnes annually, which will enable the Sonatrach
Group to earn this place at world
The same department head noted that
Sonatrach had, in the past years, lost
its place in the world market in terms of
LPG exporting. The annual production
capacity of the Skikda train is around
4.5 million tonnes and the Arzew train,
constructed using self-financing, produces 4.7 million tonnes. This latter is

contributing to the creation of 6,000 to

8,000 temporary jobs during its construction phase and another 500 permanent ones after it starts production,
according to the same department
head. Among the projects planned in
partnership with other foreign firms,
the speaker mentioned the project to
construct the ammonia and urea plant
in Arzew's industrial zone which is
being constructed with a partner from
the Sultanate of Oman.
This plant, which is employing 4,000
temporary workers in its construction
phase and will offer 700 permanent
jobs after it goes into production, will
produce 4,000 tonnes of ammonia/day
and 3,700 tonnes of urea/day, according to Mr Henni which specified that
this plant is comprised of two ammonia
factories and two urea factories.
This project, which is being completed
as we speak and the ammonia and urea

project in partnership with Orascom,

for which the President of the Republic
placed down the first stone during his
visit to the wilaya of Oran last
December, will enable Algeria to climb
a major place at world level in terms of
importing these two products, with a
5% contribution to the global market,
according to the same official.
The guest of the "Forum" programme
also spoke about the projects for three
LPG separation plants currently being
formalised for an annual production of
one million tonnes each, adding to the
6 million tonnes annually produced by
GPZ, i.e. total annual production of 9
million tonnes.
He further indicated, on this same subject, that the studies and resources
offered will enable Algeria to construct
the most important and largest LPG
separation plant in the world.

Natural gas

Objective to connect 57% of households

by the end of 2009
Launched in 1999 by the government, the national gas programme is designed to deal with the growing demand for
natural gas and to implement the national energy consumption model recommended in the new Energy Savings Act.
This option will be favourable to the progressive, priority
and maximum use of gaseous hydrocarbons, namely natural gas and liquefied propane gas.
The programme in question enabled the gas penetration
rate to go from 30 to 37% in the 2000 to 2006 period.
The Sonelgaz Group's forecasts indicate that national
demand for gas will reach 19.7 billion cubic metres for the
year 2009, 5.2 billion cubic metres of which are designed
for public distribution, 3.2 billion cubic metres for the
consumption of industrial clients and 11.3 billion cubic
metres for the electric power plants. The volume of demand
will increase from 22.4 billion cubic metres in 2012 to 67.1

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march 2009

billion cubic metres by 2017 according to the "strong scenario" drawn up by the Electricity and Gas Regulation
On the other hand, the total number of customers subscribed to natural gas, which increased from approximately 2.2
million in 2002 to 2.4 million in 2007, will have to reach
4.5 million in 2017 with an average annual evolution estimated at 7.4% and a penetration rate evaluated at 57% for
the current year. The Sonelgaz group, resolutely committed to the natural gas usage optimisation plan, has made
promising performances for the future of this clean and
cheaper energy. In fact, the company is counting on a
connection rate of 57% of Algerian households by the end
of 2009, in parallel with the development of other alternative energies from solar power, particularly, for which
Algeria has great opportunities.


Signature of 4 oil acreage

exploration and mining
It is important to note
that new corporates
have increased
Sonatrach's circle of
foreign partners.
These are the Italian
ENI, British Gas (BG),
the Russian group
Gazprom, which has
just marked its entry
on the Algerian hydrocarbons' landscape
and, finally the
German giant Eon

The National agency for the promotion

of hydrocarbons resources (ALNAFT)
and four international oil companies
have signed 4 contracts for the exploration and mining of the hydrocarbons of
four oil acreages to the south of the
Worth a total amount of 272 million
dollars, the contracts concern two
acreages located in the Gourara basin
(Kerzaz and Guern El Guessa) and
two others in the Berkine basin (El
Assel and Rhourde Bouyakoub).
The first contract signed with the
Italian company ENI concerns the
exploration and mining of the Kerzaz
acreage, of a surface area of
16,042km . The second contract
concerning the Guern Guessa acreage
(12,166km2 in the Gourara basin) has
been signed with British Gas (BG).
In addition, the exploration and mining
contract for the El Assel (Berkine
basin) oil acreage, covering 3,083m ,

has been signed with the German company EON Rhurghaz. The Minister of
Energy and Mines, Chakib Khelil, and
the Chairman & CEO of Sonatrach,
Mohamed Meziane, attended the
signature ceremony.
As a reminder, these four acreages, out
of a total of 16, were awarded during
the public tender opening session related to the first national and international appeal for tenders for hydrocarbons
exploration and mining opportunities
These acreages are all located in the
south and received nine tenders.
Furthermore, 52 pre-qualified companies attended the data rooms organised
by the agency to enable participants to
look at the acreages proposed totalling
307 briefs withdrawn, he specified.
According to it, the relatively low result
of this appeal for tenders "is more a
reflection of the international economic
and financial climate marked by a
freefall in the price of oil combined
with a reduction in petroleum investments on the international scale whose
economic recession has been affecting
the industrialised countries for several
The 12 remaining acreages should be
re-launched in 2009 during a second
national and international appeal for
tenders, he explained.
For his part, Mr Khelil confirmed in a
short speech that this appeal for tenders is the first important action
within the framework of the application
of the new Hydrocarbons Act.
He also assured Algeria's readiness,
through the Sonatrach Group with the
assistance of its partners, to make its
contribution to the effort being put in
by the international community into
research in order to deal with the world's increasing energy requirements.

Furthermore, Mr Khelil explained that

his department is developing an
approach which enables every serious
investor to find the appropriate opportunity for investment and to expect an
honourable return on investment, he
said, adding in this context that, within
the framework of stable and clear legislation, they will benefit from the
cooperation of our structures and our
experts which will enable them to gain
a certain amount of experience and
expertise and unequalled knowledge of
the field and of the sector".
It is useful to recall that this is also the
first time that new corporates have
added to Sonatrach's circle of foreign
These are the Italian ENI, British Gas
(BG), the Russian group Gazprom,
which has just officially marked, by
doing this, its entry on the Algerian
hydrocarbons' landscape and, finally,
the German giant Eon Rhurghaz,
whose representatives all underscored
their eagerness to make their presence
in Algeria more stable through the multiplication of partnership opportunities
and through the opening up, for some,
of regional offices in Algiers in order to
strengthen our professional relationships, as a Gazprom official said.
This first national and international
appeal for tenders was launched last
July and led to the pre-qualification of
74 companies out of the 79 who showed an interest.
Amel Zemouri

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march 2009

Financing of the Mers El Hadjadj ammonia and urea plant

Local loan of 2.06 billion dollars

The plant will be one of the largest in the world with a production capacity of 4,000 metric tonnes per day of ammonia and 7,000 metric tonnes
per day of granulated urea.
Sonatrach and the Omani Group
Suhail Bahwan Group Holding
(SBGH), through their joint subsidiary, the company El Djazairia El
Omania Lil Asmida (AOA SPA) and a
consortium of Algerian national banks
have signed, at Sonatrach's headquarters, the financial agreement related to
the 2.06 billion US dollar loan for the
project financing of the Mers El
Hadjadj urea & ammonia plant, located
in the Arzew industrial zone in Mers El
The consortium of public banks led by
Crdit populaire d'Algrie (CPA), as
lead underwriter, account holding
agent and surety agent, includes
Banque extrieure d'Algrie (BEA),
Banque nationale d'Algrie (BNA),
Banque de dveloppement local (BDL)
and Cnep-Banque. The company El
Djazaria El Omania Lil Asmida SPA,
49% owned by Sonatrach and 51% by
the Omani group Suhail Bahwan
Group Holding LLC (SBGH), was
created on 9 March. It has capital of
200 million dollars.
The construction contract (EPC),
which was signed in April 2008, was
won by the consortium comprised of
the companies Mitsubishi Heavy
Industries LTD (MHI) and Daewoo
Engineering Construction (DEC) Ltd
ahead of the Italian Snamprogetti.
Mitsubishi Heavy was awarded the project in the month of February worth
approximately 2.4 billion dollars. The
construction timeframe has been set at
42 months from the start date of the
construction contract.
The plant will cover an area of 90ha
and will be located in the Arzew industrial zone. It will be powered by natural

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march 2009

gas of up to 2 billion cubic metres a

year, according to Sonatrach.
The total cost of the project is 2.7
billion dollars and the consortium's
financing covers 75% of the total cost
of the project. The rest of the financing
will come from the two shareholders.
According to the Chairman & CEO of
Sonatrach, the project is part of the
resolute implementation of our
downstream development strategy,
clearing showing Sonatrach's will to
forge ahead with the realisation of its
petrochemical programme", adding
that "the so-called "Project Finance"
financing technique which we can
consider as still new on the Algerian
banking landscape has become an
essential financing method in a great
many projects of Sonatrach and of the
energy sector and, particularly, when
related to financing of this size and in
which our Group is a shareholder.
The head of Sonatrach also indicated
that this plant, equipped with the latest
technology, will be one of the world's
largest urea & ammonia plants with a
production capacity of 4,000 metric
tonnes per day of ammonia and 7,000
metric tonnes per day of granulated
urea designed, particularly, for exporting. It will also be equipped with its
own facilities with its electric power
plant and its seawater desalination

The Chairman & CEO of Lil Asmida,

Sad Suhail Bahwan, indicated to the
press that this project placed the company Suhail Bahwan on the Algerian
market at least for the next 25 years.
He also specified that his Group was
examining the possibility of developing
other investment projects in Algeria,
particularly in the domain of promoting
natural resources.
Sonatrach has committed in partnership to three other projects in the petrochemical domain.
The project with the Omanis is one of
the four projects which were concluded
on the basis of 49% and 51% stakes.
The three others respectively are the
ammonia and urea project with the
Egyptian group Orascom, the ethane
cracking and alkene production project
with the French petroleum group Total
and the methanol plant with the international consortium Almet which also
includes an Algerian private company.
Since the month of July last, the authorities have decided to negotiate the
other projects which have not yet been
approved on the basis of a majority
stake in the capital for the national
company (51%-49%).
Lies Sahar

Message from Cherif Rahmani to Chakib Khelil
Minister of Energy and Mines,
It is with great pleasure that I confirm receipt of the seventh edition of the Downstream
Review which provides an incredible insight into the latest news in the LNG and refining
industry. Please accept my congratulations on this success.


A performance which
calls for others
By Dr Abdelhafid Feghouli (*)

The Downstream
Activity has just
achieved a new feat in
the domain of the LNG
industry. Indeed, the
accumulated LNG production exceeded the
1 billion cubic metres
cap on 13 September

iven the achievement of

this wonderful performance, which will remain a
highlight in the history of
LNG production and development, I
feel this is the right time to take this
opportunity to pay great tribute to the
entire Downstream Activity collective
for all the effort put in at all levels of
intervention and responsibility.
I feel this significant feat is such a
crowning point of our policies implemented in terms of managing, operating, renovating and overhauling our
facilities and also in terms of developing our human resources the real
driving force of our success.
I also want to pay great tribute to all
these men and women, visionaries, pioneers and builders, full of conviction
and anticipations, who have taken up
the torch of the industry since 1964,
the key date of the start-up of the first
GL4Z plant and who have been able to
pass it on to generations entrusted with
taking over in the future.
This feat is likely to be renewed in light
of the projects concerning the two
LNG mega-trains planned in Skikda
and Arzew which will increase our production capacity by 30% and will
contribute to achieving the objectives

fixed by Sonatrach in terms of exporting natural gas.

This performance must therefore push
our determination to advance resolutely towards our priority targets and give
us the boost necessary to the success of
these great projects which we have
initiated. And this is the question of the
new crucial effort to be put in so that
our vast portfolio of projects will succeed as quickly as possible and with the
expected results.
By doing so, we fully commit to the
boost given by the energy and mines
sector and to the Sonatrach Group's
global strategy, through our development plan; this plan which is attracting
the full attention of leaders of the sector, led by the Minister of Energy and
Mines, Dr Chakib Khelil, and which
has just been supported by the guidelines of His Excellency the President of
the Republic, Abdelaziz Bouteflika,
given during the meeting devoted to the
situation and the outlooks of the hydrocarbons sector.
Indeed, these guidelines, which recall
that hydrocarbons still remain the
essential source of the country's financial income, go in the sense of accelerating the promotion of the refining
and petrochemical industry to even
increasing the capital gains from
hydrocarbons, the constant look out for
greater promotion of this exhaustible
resource and to prolong its lifecycle
and its usage as a real driving force of
national development.
The medium term outlooks confirm the
continuation of the growth in the national production of hydrocarbons, the
fruit of the investments made both by
Sonatrach on its own and with its
foreign partners.
Hence, with the construction of the
ammonia plans planned respectively in
Arzew, Mers El Hadjadj and Bni Saf,
the methanol plant, the ethane steam
cracking plant, the propane dehydroge-

nation plant, the fuel-oil cracking plant,

the alkene production plant, etc. we will
put in place a real petrochemical industrial fabric and will have contributed to
the creation of a multitude of SMEs
working in this domain.
As for the refining industry, this will
undergo a real re-launch in the coming
years, thanks to the imminent commissioning of the Skikda condensate topping factory and the launch of the
Tiaret refinery project as well as thanks
to the renovation programme for our
four refineries. This ambitious plan
could not be achieved without the
mobilisation of all the human resources
required and without being supported
by the necessary technological mastery.
It is in this perspective that the new
organisation of the Downstream
Activity is seeing the creation of a new
Research and Technology division
whose specific mission will be formalising the place of technology for the
Downstream activity, developing areas
of research & technology, detecting
potentials and developing skills in order
to build the future.
To conclude, I am still convinced that
the performances we are achieving are
heightening our ability to take up the
challenges of the future. We are therefore invited to an exceptional mobilisation with the aim of reinforcing and
preparing the new teams of builders
who will revive the great traditions of
the first generation of gas producers
who built the solid industrial foundation on which we have learnt our jobs
and built the power of Sonatrach.
A. F.
* Vice-president
Downstream activity - Sonatrach

Energie & Mines


march 2009

Chakib Khelil's visit to Skikda

The wilayas mega-projects

are in construction phase
The construction of
the LNG plant will
mobilise between
6,000 and 8,000
employees and, once
complete, will enable
some 2 billion dollars
to be made annually in

Algeria is assured of making 80 billion

dollars in revenue from hydrocarbons
in 2008", indicated the Minister of
Energy and Mines, Dr Chakib Khelil,
on the fringes of a working visit to the
wilaya of Skikda.
Indeed, according to him, this result
will be achieved "regardless of the circumstances" and of the price of the
barrel, which is continuing to fluctuate
between 100 and 110 dollars.
Nevertheless, as he specified, it's 2009
we should be worried about, reference
made to the financial crisis in the
United States and its impact on the
outlooks for world oil consumption.
Questioned on the reason for a series
of electricity power failures which have
occurred in several regions of the country, the Minister stated that they were
due to bad weather conditions which
caused damage to numerous pylons.
This situation led to the use of load
shedding to power the defective plants,
in order to balance the supply of electricity throughout the country.
It is very rare to record a series of incidents of this kind at the same time, and
this is what required the load shedding, he indicated before specifying
that the three projects concerning
plants each with a capacity of
1,200MW (Terga, Koudiet Edraouch
and Hadjret Enouss), and which
should be handed over shortly, will be

Energie & Mines


march 2009

connected to the national system and

in parallel about twenty plants each of
50MW will soon contribute to the supply in different regions of the country.
In this respect, Mr Khelil added that,
every year, Algeria has to construct a
new electric power plant to deal with
the economy's development and the
resulting growing requirements in
terms of energy: if growth increases by
6% annually, we have to do the same
for electric energy. Indeed, the work we
are currently doing is for the next ten
years", he stated.
Before this, the Minister had started his
visit to the wilaya of Skikda by going to
the industrial zone where an entire
series of projects are underway for his
sector, as is the case for the seawater
desalination plant where the Minister
commissioned one of its factories awaiting the start up of the four other factories in the coming days.
With capacity of 100,000m /day, this
plant will be able to satisfy the drinking
water requirements of the city of
Skikda, of its industrial zone where
large projects have been initiated and
its surroundings, which will definitely
relieve the drinking water rationing
efforts of this region.
The Minister then inspected the
reconstruction works of the liquefied
natural gas (LNG) liquefaction plant's
facilities, damaged by the explosion
that occurred in 2004. Mr Khelil
emphasised that these facilities will
enter into production in 2013 with a
total capacity of 4.5 million
tonnes/year, with the project completion rate having to reach 85% in 2011,
he specified.
Chakib Khelil then went to the construction site of the giant LNG train,
launched in June 2008, for production
capacity of 4.5 million tonnes/year
a project of a total cost of 2.9 billion

The construction of such a site will

mobilise between 6,000 and 8,000
employees and, once complete, will
enable some 2 billion dollars to be
made annually in Algeria.
The Minister and his accompanying
delegation also visited the condensate
topping factory which has mobilised a
financial package of more than
39 billion dinars and 313 million US
dollars to be handed over as of
December 2008, with production capacity of 300,000 tonnes/year of diesel.
This huge project was described as
very important by Chakib Khelil who
was keen to remind people of the fact
that, at present, Algeria is still importing diesel, in this way we will supply
the market and even export once all the
projects are complete.
Indeed, this refinery will be the second
of its kind, in capacity, after the Adrar
one, underscored Mr Khelil, indicating
that a refinery "three times larger" is
planned in Tiaret.
The incident management room of the
industrial zone's management company
was also one of the stages of Chakib
Khelil's visit. This structure, fitted with
the most sophisticated electronic
resources and hardware in terms of
safety, including the famous truck
scanner, was highly praised by the
members of the delegation.
Nevertheless, the Minister stressed the
need to reinforce the surveillance system given that accidents in this particular sector are often serious.
Amel Zemouri


Mr Khelil on an inspection
visit to In Amenas
The Minister of Energy and Mines, Chakib Khelil, made an
inspection visit to the main projects and infrastructures of
his sector in In Amenas, in the wilaya of Illizi, including the
one related to the development of the Alrar electric power
plant. The extension project of the Alrar power plant, located about a hundred kilometres to the east of In Amenas,
close to the Algerian-Libyan borders, is designed to overcome the electric energy shortages being experienced by
the petroleum infrastructures and to power the future projects in this region.
The current electric production capacity of the Alrar plant
is estimated at 33MW for requirements up to 45MW, i.e. a
shortage of 12MW, whereas the extension project, once
complete, should provide additional production of 54MW,
stated the same source.
The realisation of this project, whose commissioning is
planned for the first quarter of 2011, has been entrusted to
the Italian consortium for an amount of more than 3 billion
dinars. Talking to the managers of this project, Mr Khelil
called for greater involvement by Algerian executives in the
operating of the plant, particularly in terms of engineering,
in order to ensure a better transfer of know-how and technology. Mr Khelil briefly stopped at the gas treatment centre, also located in Alrar and comprised of 4 gas production

trains with a total capacity of 24.8 million cubic metres per

day. This production is broken down into 23.4 million
cubic metres/day of dry gas, 2.9 million tonnes/day of
condensate and 2.5 million tonnes/day of LPG, as indicated to the managers of this infrastructure built by an
American company and commissioned in 1984.
The Minister furthermore attended a presentation on the
progress of the project to develop the Zarzatine field,
about thirty kilometres from In Amenas.
The objectives assigned to this project would concern, inter
alia, the increase in the water injection capacity to
25,000m3/d before May 2007, and of the produced water
treatment capacity (decanting) of 11,000m3/d before May
2007. This project was awarded to Sinopec in 2002 at the
end of an appeal for tenders, recalls the same source. In a
statement to the press at the end of this presentation, Mr
Khelil confirmed that "the situation of the project has been
examined adding, without giving further details, that he
will make the right decision on this investment in light of
the results obtained. The Stah (30km from In Amenas)
living base project was also visited by the Minister.
This project, aiming to improve the living conditions of
Sonatrach employees in the region, has capacity for 302

Chakib Khelil inspects several projects in Tamanrasset

Science in the middle of the desert

The Minister of Energy and Mines,
Chakib Khelil, devoted most of his
working visit to the wilaya of
Tamanrasset to inspecting several projects that are underway.
The Minister visited the site which will
be the location of the new headquarters
of the Algerian Institute of Mines
(IAM), which will be built over an area
of 10ha and will have capacity for 200
pedagogic places.
This new headquarters will be equipped with the necessary pedagogic
infrastructures: lesson rooms, workshops, laboratories with the most effective analytical techniques, media library, accommodation for engineers, etc.
Mr Khelil then inspected the works
transferring the Institut national sp-

cialis de la formation professionnelle

(INSFP - National institute specialised
in professional development) into the
IAM (Algerian Institute of Mines) for a
period of three years which is the planned timeframe for the construction of
the permanent headquarters of the
The first training course of the IAM
launched by Mr Khelil will be hosted by
the wilaya's university centre.
The other project inspected by the
Minister is the assembly of the
Tamanrasset electric plant, comprised
of five diesel units with power of
8.9MW. Costing 3.4 billion dinars, the
plant will be operational in August
2009 and will supply the population of
Tamanrasset with electricity.

The Minister also visited the

Tamanrasset nuclear research centre,
whose boosting operation will cost 160
million dinars.
This centre, like the Berine (Djelfa) and
Draria (Algiers) centres should help to
produce nuclear energy for peaceful
reasons, he further underscored. Mr
Khelil ended his visit by inspecting the
Entreprise d'exploitation des mines d'or
(Enor - Gold Mining Company), 52%
owned by the Australian Gold Mining
Algeria (GMA) and 48% by Sonatrach.
On the fringes of this visit, the Minister
indicated that gold production should
reach 700kg this year instead of the
3,000 initially expected due to the lack
of explosives this year.

Energie & Mines


march 2009

Launch of the Tamanrasset Algerian Institute of Mines
By Chakib Khelil:

From recession
to unprecedented development
I am particularly delighted to attend with you in Tamanrasset the
launch of the first training course initiated by the Ministry of Energy
and Mines which is part of the framework of the project to create the
Algerian Institute of Mines, whose operational organisation has been
entrusted for this session to the El-Abed Mining School.
The reforms put in place in the sector
and notably in mining with the promulgation of the Mining Act and texts
taken for its application have enabled
the creation of a transparent, competitive and encouraging environment
favourable to investment in mining
Hence the mining sector, from the
recession and the closing of mines
which characterised it in the 1990s, has
seen, since the arrival of the Mining
Act, the unprecedented development of
mining activities. This new expansion
can be illustrated by the following nonexhaustive results: the growth in the
number of mining permits awarded
throughout the national territory, more
than 2,879 mining permits have been
awarded from 2000 to present; the
imminent reopening of the El Abed
zinc-lead mine in the wilaya of
Tlemcen; the commissioning of new
mines such as the Amesmessa mine
which I had the pleasure of inaugurating in January 2008; the upcoming
opening of the Oued-Amizour zinclead mine in the wilaya of Bjaa; the
growth in the production of mineral
substances designed both for industry
such as iron, phosphate, feldspar, etc.
and for the manufacturing of construction materials required for the realisation of many of the government's development programmes.
These reforms have also encouraged
foreign investors to get interested more
in the Algerian mining potential.
Currently more than 30 mining projects are recorded for foreign mining

Energie & Mines


march 2009

companies of different nationalities

(Australian, Canadian, Chinese) and
11 of the projects are located in the
wilaya of Tamanrasset alone.
The developed strategy and the policy
of the mining sector are based on the
promotion and the sustainable development of mineral resources throughout
the country with a specific interest for
employment and training.
This perspective particular aims to
improve the performance of the company or of the structure, to encourage
its economic efficiency, to enhance the
responsibilities of the personnel and to
take up the technical or technological
challenges encountered.
It is in order to respond to these growing needs for highly qualified person-

nel that the Ministry of Energy and

Mines decided to create the Algerian
Institute of Mines in Tamanrasset
which will be a centre of excellence,
where high level training courses will
be given covering all the domains of
mining activities: exploration, the development of deposits, mining, processing, mining economics, the management of mining projects, not forgetting
the protection of the environment linked to the extractive industry.
The Institute will give specialised and
operational training courses to senior
technicians and engineers from the sector working in the mining activities'
domain which corresponds to the
needs of institutions or public and private operators.

As for training on mining jobs, such as blasters,
quarry mangers, drillers, etc. these courses will
be given by the El Abed Mining School which we
created and which was opened in 2003 in the
wilaya of Tlemcen.
The Algerian Institute of Mines of Tamanrasset
will be built over an area of 10ha granted by the
Wali, who I thank very much, and will have a
capacity for 200 pedagogic places along with all
the necessary infrastructures: lesson rooms,
workshops, laboratories with the most effective
analytical techniques, media library, accommodation for engineers, teachers and managers as
well as all the commodities required for the
development of the residents of the Institute:
sports and medical facilities, rest areas, etc.
In parallel to its main training mission, the
Algerian Institute of Mines is called upon to hold
and organise international technical and scientific events in the domains of geology, mining and
earth sciences in general, since it will be equipped and provided with the appropriate modern
Whilst awaiting the construction of the Algerian
Institute of Mines opposite the university centre
of Tamanrasset, the Ministry of Energy and
Mines felt it necessary to start to respond to the
growing demand for training in increasingly
highly specialised domains and to organise, in
the meantime, training sessions in the premises
of the university centre, whose managers I thank
for their agreement to hold this operation whilst
awaiting the renovation of the Institut national
spcialis de la Formation professionnelle
(INSFP) made available to us graciously by the
Ministry of Professional Development and
Education. This first training course, whose
theme is linear geostatistics applied to the estimating of mining resources and reserves, shall
be held over a period of three weeks and shall be
taught by high quality teachers.
The sending of engineers to this first session by
the mining companies and institutions, for
example Enor, ENG, Ferphos, SH-Aval, Enof,
ORGM, the Comena of the ANPM and
ANGCM, supports us in this decision and
encourages us to persevere on this course.
Finally, I would like to congratulate all parties
who contributed to the implementation of this
operation for this wonderful initiative and wish
them great success at the start of the first training session scheduled by the project of the
Algerian Institute of Mines in the domain of
geostatistics and which, I am convinced, will be
very beneficial to the engineers present here
during their professional careers.
C. K.

Natural gas

Signature of a contract
for the sale and purchase
of natural gas between
Sonatrach and Sorfert Algrie

To supply energy to one of the first

Algerian second generation petrochemical plants, the Sonatrach
Group and the joint venture
Sorfert Algrie, owned by
Sonatrach and the Egyptian
Orascom Construction Industrie
(OCI), have signed, in Algiers, a
contract for the sale and purpose
of natural gas for a period of 20
years. The contract concerns the
supply, as of 2011, of 1.75 billion
cubic metres of natural gas per
annum for the power supply of the
petrochemical plant located in
Arzew which will have a production capacity of 4,400 tonnes/day
of ammonia and 3,450 tonnes/day
of granulated urea.
The agreement has been signed by
Chawki Mohamed Rahal, vice-president of Sonatrach and Head of
the Sales and Marketing activity,
and Oussama Anwar Bishai,
Chairman & CEO of Sorfert, in
the presence of the Minister of
Energy and Mines, Chakib Khelil,
and Egypt's ambassador to Algiers.
Sorfert Algrie is a joint venture
production company of Algerian
law owned by Sonatrach, which

owns 49% of the shares, and the

Egyptian group OCI, which owns
the remaining 51%, and is responsible for the construction and operating of a large ammonia and granulated urea production plant
which must be built in Arzew in the
wilaya of Oran.
In his opening speech, the
Chairman & CEO of the international oil and gas group Mohamed
Sonatrach's mission is to give itself
the means for an optimal promotion of hydrocarbons by seizing
the real added value opportunities
offered by the national economy,
downstream transformation, the
most advanced of our primary
energy, and by proposing to national and international investors
mutually beneficial partnerships
and undisputed comparative
For his part, the Chairman & CEO
of Sorfert was quick to talk of his
company's huge satisfaction in
being able to formalise this "exceptional partnership, with a huge
global oil group.

Energie & Mines


march 2009


Development plan
for the Hassi Messaoud field
The major energy projects underway in the
region of Hassi
Messaoud are working
towards reinforcing
both the oil and
electric production
In this sense, considerable effort has
been made to improve the parts inherent in the management of energy facilities by the use of the latest technologies throughout the hydrocarbons
mining chain.
The main objective targeted within the
framework of the development plan for
the Hassi Messaoud field is to increase
production to 600,000 barrels a day.
In this perspective, and in order to have
a better quality of crude oil and a better
price, two major projects have been
launched, namely the Crude Desalting
Plant and the Crude Oil Treatment and
Stabilisation Plant (UTBS).
The crude oil desalting plant is experiencing a very high rate of progress. It
will treat 225,000 barrels per day and
will reduce the salinity of the crude oil
to 40ppm as a maximum. The handing
over of the plant is expected in
September 2010. The realisation of this
project is assured by the Sonatrach
subsidiary, ENGTP and the Norwegian
group Aker Kvaerner.
Another large project is underway: the
Hassi Messaoud Crude Oil Treatment
and Stabilisation Plant.
The project, whose realisation is
entrusted to the Italian company
Saipem, became effective on 1 August
2007 and will be handed over in
September 2009. The project is comprised of one stabilisation plant comprised of three trains with production
capacity of 100,000 barrels/day each,
one maintenance plant for four storage
tanks of 50,000m3 each, one off-spec
tank of 20,000m3 and one 45km oil,
water and gas dispatch pipeline.

Energie & Mines


march 2009

The purpose of this plant is to improve

the quality of the crude oil, to secure
the facilities and to increase the production
Furthermore, and taking account of the
considerable volume of its reserves, the
UTBS will also enable the Hassi
Messaoud deposit to be optimised and

Presentation of the Hassi

Messaoud deposit
The Hassi Messaoud field is located
900km to the south of Algiers. It was
discovered in 1956 and started production in 1958. The field covers an area
of 2,500km with annual production of
around 19 million tonnes/year.

The Hassi Messaoud field has been
developed in several stages, responding
to the economic development of the
country and to the technological development of the hydrocarbons market.
1964: Start of the gas injection
1973: Start of the water injection
1976: Introduction of the Gas lift
1993: First horizontal drilling
2006: Acquisition of the 3D seismic
2007: Realisation of the WAG Pilot
2007: Discovery of the Upside North
potential, discovery of the potential of
the structures of the HMD boundary.
2008: Confirmation of the Upside
North potential by the drilling.
2008: Discovery of the extension of the
deposits to the east and west of Hassi

The Hassi Messaoud field contains the
following major facilities:
2 mega-centres for the treatment
(CIS, CINA), compression, stabilisation, refining and extraction of LPG.
15 satellites treatment plans
(9 North, 9 South)
1,400 wells drilled (31/8/08)
4,000 km of pipelines
59 oil manifolds

Saipem SA/Saipem CA
Project for the extraction
of liquids from gases in Hassi
Messaoud 2nd milestone after
the UTBS
On 12 November 2008, at the general
headquarters in Algiers, the Algerian
petroleum group Sonatrach and the
Italian consortium Saipem SA/Saipem
CA signed a contract on extracting
liquids from the associated gases in
Hassi Messaoud and on separating the
direct line high pressure (DLHP) oil
from the Naili Abdelhamid plant's
industrial zone (ZCINA).
The purpose of this contract, worth
almost 1.3 billion, i.e. 177 billion
dinars, is the construction of the facilities required for the extraction of
liquids from the associated gases of the
Hassi Messaoud north field which is
mainly comprised of three gas treatment plants. These facilities will be
modular and designed so they can be
extended as the production of the associated gases increases.
Furthermore, the same contract provides for the collection and separation of
the direct line high pressure oil in the
new zone called ZCINA, mainly comprised of an oil collection network, oil
separators, as well as oil routing pipelines. The equalisation period of the
facilities in question is 42 months.

Purpose of the project

Initially, it is planned to extract the
LGN (LPG and condensate) from the
surplus associated gases of the CINA
Centre and gases from OMP53 as well
as the residual gases of the LPG extraction plant of the CINA zone. The number of similar trains will be two in this
initial phase but extendable to three.
The facilities will be used to separate
the LGN into LPG and stabilised
condensate that meet with the specifications of the project manager, to produce residual gas that has as few heavy
carbons as possible to be returned into

the 40 inches to be sent to the CIS for
the purpose of being re-injected into the

Facility installation plan

To do this, the future facilities will include
(on the site):
The load gas lines, the input manifold(s)
with the stations
The scrapers
Input load compression in order to guarantee sufficient expansion to condense
the LGN
An expansion system to condense the
The separators and columns required to
separate, produce products to Sonatrach

The product evacuation lines: gas, LPG,

condensate, calculated on the basis of
three trains
One oily water treatment unit
One waste water treatment unit
The units required for operating: gas
fuel, chemical products, methanol, service
water, instrument air, nitrogen, drinking
water and their treatment, distribution system and storage. These facilities must
cover the needs of three trains
The security building, the hangar and the
security workshop, the electric sub-station(s), the watch room(s),
The fire water tank (calculated taking
account of the extension to three trains)
and the pumping station

data sheet
Description of the site

Three (03) LPG trains of

8 MM Sm3/d extendable
to 4 trains
One (01) HVDC line, triphasic separation of the
high voltage oil of the
Hassi Messaoud north
One (01) oil collection
network and oil and water
evacuation lines to the
CINA as well as the
connection with the LPG
for the routing of the separation gas
Presentation of the project

The facility's gas treatment capacity:

24 million SM3/d
Average production of
LPG: 4,600t/day
Average production of on
spec condensate:
Construction period:
42 months
Expected commissioning
September 2012
Process schedule

A product storage area including :

two (02) floating cover tanks for the
production of condensate;
one fixed cover tank for the off-spec
condensate for autonomy of one day's production
Three spheres of 500m3 each for the onspec LPG
One sphere of 500m3 for the off-spec
The LPG and condensate product retreatment system
A total bypass of the LPG factory in
order to be able to send the gas directly to
the CIS during operations from the LGN
extraction factory
The LPG and condensate product
dispatch pumps which must be calculated
on the basis of three similar trains

Fixed fire detection and protection systems,

An equipped laboratory for controlling
the product quality
A control system: DCS/ESD/F/G and
A back-up diesel generator on the basis
of three trains
A torch network
A mud pit, a sealed evaporation pond
An industrial base (offices and workshops) for the maintenance as well as a
store for spare parts.
In L'Amont Express

FEED contract: ENC 07

416 Z
Effective date:
2 July 2007
Contract term:
39 weeks
Contractor: Saipem
Contract amount:
5,911,307 (GBP)
Integration of the HVDC in
the SCOPE of the LPG
ZCINA project: February
Technical tender submission date: 31 May 2008
Commercial tender
submission date:
18 October 2008

Energie & Mines


march 2009

New city of Hassi Messaoud

Inauguration of the headquarters

of the project establishment
The Minister of Energy and Mines, Mr
Chakib Khelil, inaugurated the headquarters of the Etablissement de la ville
nouvelle de Hassi Messaoud (EVNH)
in the wilaya of Ouargla, thus marking
the actual launch of the works to construct this new urban energy centre.
With this new headquarters, the
EVNH, comprised of experts in different sectors, could accomplish its mission to study, monitor and control the
project of the new town of Hassi
Messaoud "really close to the site,
confirmed Mr Khelil to the press on the
fringes of the inauguration ceremony.
The new town of Algeria's largest oil
field should be ready within eight years,
i.e. in 2016, added the Minister, specifying that this date will not mark the
end of the construction works of the
project which is planning future extensions.
The headquarters of the EVNH, located outside the heart of the old town of
Hassi Messaoud, houses about fifty
employees. It is comprised particularly
of an administrative block, an accommodation block and a restaurant.
Mr Khelil who was accompanied
during this visit by the Minister of

Finance, Mr Karim Djoudi, and by the

Governor of the Bank of Algeria, Mr
Mohamed Laksaci, also participated in
a palm tree planting operation in the
southern region of the project in order
to protect the new town against the
winds. We have started the wooding
of the southern region of the project in
order to form a forest which could protect the town, once completed, against
the southerly winds, he indicated on
this point. This future green strip
should include some 60,000 palm trees
over a total area of 312 hectares, the
EVNH specified.
The inauguration of the new headquarters of the EVNH and the start of the
wooding of the southern region of the
future Hassi Messaoud mark the effective launch of the construction works of
this centre, emphasised the Minister,
continuing that the State "will use all
the resources necessary to ensure the
success of the project. Mr Khelil, furthermore, presided over the board meeting of EVNH. Held in private, this
meeting was devoted to the adoption of
the budget for 2009 and to the examination and approval of the establishment's remuneration system, according

to the managing director of the EVNH,

Mr Mourad Zeriati.
The contract for the carrying out of
studies and the monitoring, control and
coordination of the construction project of the new town of Hassi
Messaoud (wilaya of Ouargla) has been
provisionally awarded to the consortium SNC Lavalin International-SNC
Lavalin Maghreb. Of a total cost of 6
billion dollars, this town's project will
be completed within a period of 96
months, 16 of which for the engineering works. Covering an area of 4,483
hectares, the project is designed for a
population of 80,000 inhabitants and
includes an energy island which will
be the general district of the oil companies operating on the neighbouring oil
It is also planned to construct administrative buildings, academic institutes,
training, research and development
centres, places of worship, infrastructures, equipment and sports and youth
establishments. The new town of the
country's largest oil field will also have
activity areas designed for the production of goods and services linked to the
energy and academic activities.

Commissioning of an Arzew-Tlemcen
multi-product pipeline
The Energy and Mines sector of the wilaya of Tlemcen has
just seen its infrastructural potential reinforced by a high
level work aiming to assure that the wilaya has its entire
regular supply of fuel. This, in fact, concerns the completion
of the multi-product pipeline which has just been completed
recently and which will have a considerable impact on the
region. With a total cost of 322 billion, this pipeline, which
in the past has suffered a delay in its construction due to certain technical type constraints, will enable the Remchi Naftal
racking centre to have fuel products daily, particularly petrol
(fuel oil, car petrol) and other hydrocarbon derivatives.
168km long, this huge scale work has a control room for the
storage tank collectors, an electrification plant as well as two

Energie & Mines


march 2009

pumps designed to respond daily to the wilaya's fuel requirements. The Minister of Energy and Mines, Mr Chakib Khelil,
who commissioned it, feels that the wilaya of Tlemcen,
thanks to this equipment, will no longer need the rolling
stock to get supplies, particularly the tanker trucks and the
goods train, resources which have most often been the cause
of frequent traffic accidents. Furthermore it is fitting to note
that several communities will be supplied with fuel, particularly those which will be located along the track of this work.
As a reminder, this pipeline, which has suffered major technical constraints since its launch due to the relief and to the
typology of the terrains, connects the Arzew refining plant to
Remchi, i.e. a distance of 168km.

A clear vision of sustainable development

13 desalination plants
under construction
In Tipasa, Chakib
Khelil launched the
works of the Oued
Sebt plant. The Fouka
(dara of Douaouda)
and Oued Sebt
(Gouraya) seawater
desalination plants'
projects were the centre of the visit to the
wilaya of Tipasa by
the Minister of Energy
and Mines, Chakib
The works of the Fouka plant are on
track, stated the Minister whereas
those of Oued Sebt, still at the impact
study phase will be launched this year.
The Minister indicated that with the
acceptance of these two seawater desalination plants, the energy sector will
have 13 structures including the one in
Tarf which will be launched shortly and
will produce 2.25 million cubic metres/day of desalinated water. In the
dara of Douaouda, the works of the
Fouka plant have been at 31.5% since
their launch in February 2008. This
plant, based on an 8ha site, whose
prime contractor is Myah Tipasa, in
partnership with the Canadian SNC
Lavalin and a Spanish company Accina
Agua, will have a daily treatment capa3
city of 270,000m with emissions esti3
mated at 150,000m /day. The amount
of the investment is 180.17 million dollars shared between Algeria Water
Investment Inc (100% SNC Lavalin)
which owns 51% of the shares and
Algerian Energy Company (49%).
The Fouka plant which will be commissioned in April 2009, according to the
commitments of the constructors, will
be powered with electric energy from
two source posts, the one in Ahmer

El An and the one in Mazafran each

with a capacity of 30MW.
The water desalinated by this plant,
which will use the reverse osmosis
treatment process, will be sold to the
national petroleum company Sonatrach
and Algrienne des Eaux (ADE) which
will supply their respective clients of
Algiers and Tipasa. The Canadian
company will have a 25-year operating
contract. In the coastal commune in
the western region of the wilaya, the
Minister visited the site which, in Oued
Sebt (Gouraya), will be the base of a
seawater desalination plant with treatment capacity of 100,000m3/day.
Covering an area of 6ha, this plant,
registered in 2004 as a small single
block plant, was built into a large structure further to the visit of the Minister
of Hydraulics, in the perspective of a
long term view in this region that is called upon to be developed and host tourist expansion projects and which, up
until now, has suffered a water shortage.
Of a total cost of 115 million US dollars, the works of this plant, entrusted
to a Bahraini company, Biwater
Consortium, have not yet started, awaiting the finalisation of the impact study

and the signature of the agreement between the services of the domains and
the prime contractor, Myah Oued Sebt.
The heads of the company announced
the launch of the works in January
2009 whilst committing to the commissioning in December 2011 with the
same formula, i.e. the sale of water to
Sonatrach and ADE for 25 years. The
plant will be powered with electricity
from two source posts located in El
Khemis and Kherba, in the wilaya of
An Defla.
On site, the Minister asked questions
about the connection modes with
Algrienne des Eaux which will be
connected to the Cherchell network,
according to the explanations of the
director of hydraulics, as well as the
output, even the water pressure planned as soon as the unit is commissioned. With the acceptance of these two
projects, the wilaya of Tipasa will have
three desalination plants, the first of
which with seawater treatment capacity
of 5,000m /day was commissioned in
July 2007 in the commune of Bou
Ismal and constructed by the German
company Linde.

Energie & Mines


march 2009

Hyproc Shipping Cie

A new policy
Our company's restructuring plan has entered its implementation phase.
The resolution to transform into a form of organisation that complies
with international standards is starting to become a reality in the field
through different improvement actions.
By Mostepha Mohammedi (*)

Hence, several projects related to

"Quickwins short term actions have
been launched. Among these we can
mention the Pilot Team related to the
personnel loyalty system which, eventually, must prefigure the business unit
model in the management of the fleet
and will concern, initially, four vessels.
In accordance with the TMSA guide,
this action is part of our company's new
policy on managing personnel and
relief plans.
Also to show our will to continue the
project to transform our company,
which will be done, let me recall, with
everyone by observing the rules of
transparency and equity, an appeal for
applications, within the framework of
the job exchange has just been published for an initial batch of job vacancies.
In fact, this action aims to provide,
already, the new organisational entities,

with managers who will become the

main players in the change.
Hence, the processing of the action
plan related to quickwins, the completion of the governance actions, the
definition of the company's main policies, the alignment of the first organisations (procurement structure) and the
drawing up of briefs related to the
information systems are already
demonstrating an irreversible commitment to the evolution of the project.
The company's future organisation is
being put in place slowly but surely
thanks to everyone's efforts: Process
leaders, operational managers, executives and social partners.
The achievement of the objectives our
company has fixed by launching this
project remains a major imperative for
its future. At the current state of progress of this project it is fitting, for eve-

ryone, to contribute their brick to the

building of the company Hyproc. There
are times in the life of a company where
it is less risky to advance, by confronting the changes in its management
methods and in its strategic vision than
to get complacent in an organisational
status quo, reassuring in the immediate
future, but very harmful in the long
On the opportunity given to me in this
space, I would particularly like to thank
and encourage all those who are working for this project, making their
contribution each day, not without difficulty, whilst assuming their functions
within the framework of their initial
tasks and missions.
M. M.
* Chairman & CEO
Of Hyproc Shipping. Cie

Progress of the project

These past months have already enabled us to get the
first things underway, preparing for the putting in place
of a new form of management which, as a priority, will
be recognising and developing workers whilst supporting the development of our company.
The different workshops bringing together the Hyproc
and Ernst & Young teams have enabled us initially to:
o approach the "best practices" and the representation of
processes ready to be incorporated within target information systems.
o define service and management contracts whose
approval is an essential prerequisite to the implementation of the organisation chosen and a major change in
the internal operating of Hyproc.

Energie & Mines


march 2009

On the basis of these works, an initial step has been

overcome with the drafting of briefs, documents containing, in particular, a description of the different functions and needs to which the future information must
In parallel, short term actions have been initiated on the
different sites in order to implement actions that have a
palpable impact on the day-to-day activities. They are
taken in charge by the Hyproc personnel and led by operational managers. These actions are preparing for the
transformation of the company and the arrival of the
future information system.


Sonatrach Downstream hopes to achieve

a volume of 85 billion cubic metres in 2015
Since the start-up of the four
Sonatrach Downstream LNG plants,
with total capacity of 44 million cubic
metres/year, liquefied natural gas production achieved a record level of 1
billion cubic metres in September
This volume will be increased to 85
billion cubic metres by 2015, i.e. a 30%
increase, according to the statements of
the company's Vice President,
Abdelhafid Feghouli. This performance
Sonatrach's position as a leading oil
and gas company in Africa and one of
the major exporters of LNG in the
world. In fact, Algeria currently exports
some 62 billion cubic metres of gas,

specified the official on the waves of

Channel III. Mr Feghouli confirmed
that the company intends to double the
transportation-by-gas-pipeline capacities, particularly to Spain and Italy with
this ambition to explore other markets,
mentioning the United States and Asia.
Hence, within the framework of its
Downstream plans to create an LNG
distribution company in France. With
regards a potential partnership with
Gazprom, he replied that his company's
approach which "does not necessarily
depend on Gazprom" consists of diversifying its partnerships.
"Other LNG producers are also very
important such as the company Statoil

with which Algeria is linked by a strategic partnership, he stressed. In the

same context, Mr Feghouil added that
Algeria's refining capacities will reach
26 million tonnes in 2009 thanks to the
contribution of the new refinery, indicating that our country has 4 refineries
with a total production capacity evaluated at 20 million tonnes. This capacity
will be increased to close to 30 million
tonnes in 2012, he added. With the
commissioning of the Tiaret refinery,
the total volume will be 45 million tonnes in 2014. These forecasts will enable
the domestic requirements to be covered and half the production to be devoted to exporting.

Sonatrach takes a stake in a gas project

at the Rotterdam terminal
The company Sonatrach is negotiating a stake in the
Rotterdam gas terminal (Netherlands), with regasification
capacity of 12 billion cubic metres/year, indicated in Algiers
the Dutch Minister of Economic Affairs, Mrs Maria Van Der
Hoeven, on a working visit to Algeria. There are discussions
between the Sonatrach Group and the Dutch company (4
gas) on this regasification project with a capacity of 12 billion
cubic metres", indicated Mrs Hoeven during a press conference jointly led with the Minister of Energy and Mines,
Chakib Khelil, after their meetings at the Ministry of Energy.
This project will contribute, she added, to the creation of a
gas market for all of Western Europe and, hence, to the
diversification of the supply sources of the European continent. Our objective in Holland is to build a gas crossroads
for all of Western Europe to assure the gas and LNG supply
of this region, she said.
For his part, Mr Khelil specified that these were negotiations
on Sonatrach taking a stake in the regasification plants
which Holland intends to develop in the Rotterdam terminal.
The Minister also made it known that the Algerian party has
expressed its desire to develop LPG trade between the two
countries, adding that Sonatrach has shown its interest in
participating in this fuel's storage and distribution plants in
the Netherlands.

Cooperation at the international level in the gas domain was

also at the centre of the meetings between Mr Khelil and Mrs
Hoeven. In this respect, the Minister of Energy indicated that
the two parties covered the possibility of a partnership between Sonatrach, the Nigerian hydrocarbons company
NNPC and the Anglo-Dutch group Shell to develop the
Trans-Saharan Gas Pipeline (TSGP) mega project, which
should connect Nigeria to Europe via Algeria. Of an amount
of more than 10 billion dollars, the TSGP will route 20 to 30
billion cubic metres of natural gas from Nigeria to Europe via
Algeria and Niger from 2015.
This project should increase Europe's gas supply and also
develop the LNG deliveries to the Netherlands, underscored
the Minister.
Both parties also discussed cooperation possibilities in renewable energies, further stated Mr Khelil who also specified
that Algeria was looking for strategic cooperation in this
domain, given that it represents a large future market in this
Holland has a presence in Algeria through the Anglo-Dutch
company Shell which works in the exploration and production of hydrocarbons and also assists the national company
Sonatrach in the domain of storing LNG and petroleum

Energie & Mines


march 2009


Sonatrach confirms its

growth dynamic
Sonatrach achieved new performances during the year 2007 financially
and in terms of projects to develop the reserves' potential and hydrocarbon production.
Nationally, Sonatrach SPA recorded an
increase in the consumption of liquid
and gaseous hydrocarbons of more
than 3% compared to 2006, which
confirms the country's economic
growth trend. In this context, the
domestic market's supply reached 30.8
million TOE, up by 5% compared to
Internationally, the oil market is characterised by great volatility in the price
of crude oil which fluctuated between
$50 and $96/barrel for Brent. Balances
were exacerbated by geopolitical factors, aggravated by the world's refining
capacity limits. The average price of
Brent also reached $72.5 /barrel over
the year, i.e. an increase of $7/barrel
(11%) compared to 2006.
The upsurge in the prices of oil and gas
caused a very tense situation in the
goods and services market.
This situation has had a significant
impact on the costs of equipment, engineering and construction with knockon effects on the project completion
It is in this particularly complex and
unstable environment that Sonatrach
recorded significant results in the
financial year 2007.
The development of the reserves'
potential and hydrocarbons production
with the twenty (20) new discoveries.
Primary hydrocarbons' production of
233.3 million tonnes of oil equivalent
(TOE), up compared to the previous
This means that total production for
Sonatrach was 224.9 million TOE and
production made by partner companies
was 8.4 million TOE. By products, the

Energie & Mines


march 2009

report shows productions of 63.8

million tonnes of crude oil, 152.8
billion cubic metres of natural gas, 13.7
million tonnes of condensate, 8.6
million tonnes of LPG and 40 million
cubic metres of LNG.

Volume of hydrocarbons sold of

164.9 million TEO, 134.1 of which
exported and 31 for the domestic
Hence, even though the volumes of
hydrocarbons exported by Sonatrach

slightly lowered, the total turnover
made of 4,287.6 billion dinars records
an 11% increase compared to 2006.
The exporting turnover is 4,118.6
billion dinars, i.e. USD59.5 billion.
This turnover also includes USD2.2
billion corresponding to the volumes
sold by Sonatrach through TPE. Its
partners made USD4 billion which is
down by 26% compared to 2006.
For the domestic market, Sonatrach
made turnover of 174.8 billion dinars.
In terms of investments in Algeria,
major effort, of around 30% compared
to 2006, has been recorded with a realisation level in terms of physical programmes valued at 6.4 billion dollars
In order to consolidate its position on
the international oil and gas markets,
Sonatrach is continuing with the
modernisation of its sales and trading
activities and also reinforcing its hydrocarbons' maritime transport fleet with
the acquisition of new vessels.
Furthermore, the partnership policy
developed by Sonatrach has opened up
the international markets for it and
enabled the selling of hydrocarbons in
Europe, particularly by the reinforcement of its presence on the Italian and
Iberian market, in America with a prospect to enter the Brazilian market and
in Asia.

gaseous hydrocarbons
65.9 million TOE of gaseous hydrocarbons exported in 2007 for record turnover of USD19.9 billion (partners
included). It corresponds to an increase of close to 6% compared to 2006 linked to the increase in the prices of
crude oil and petroleum products on
which the gas prices are indexed.
Natural gas (NG)
35.5 billion m3 of natural gas exported
in 2007. This volume is down by 6%
compared to 2006 with turnover of 595
billion dinars, i.e. USD8.2 billion.
Liquefied natural gas (LNG)
39.6 million cubic metres exported in
2007. This volume is up by 2% compared to 2006 with turnover of 457

billion dinars, i.e. USD6.3 billion.

Liquefied petroleum gas (LPG)
7.4 million MT of LPG exported, 57%
of which of propane and 43% of butane. This volume is up by more than 6%
compared to 2006 with turnover of 314
billion dinars, i.e. USD4.5 billion.

Hydrocarbons exports
68.5 million TOE of liquid hydrocarbons exported in 2007 with record turnover of USD40 billion. This volume is
up by 15% compared to 2006 whose
growth is mainly due to the persistence
of a favourable economic climate in
terms of the market prices of the different petroleum products.
Crude oil
43.248 million MT with turnover of
1,759.648 billion dinars, i.e. USD25.4
billion. Crude oil exports are broken
down per geographic region as follows:
America: 67.6%; Europe: 24%; Asia:
7.8%; Oceania: 0.51%. Exports per
region show an 11% increase in the
volume exported to the United States
to the detriment of volumes exported to
Europe. Furthermore, exports to Asia
recorded a 35% volume increase, going
from 2.5 million tonnes, in 2006, to 3.4
million tonnes in 2007.
Refined products
9.877 million MT were exported for a
value of 403.626 billion dinars, i.e.
USD5.8 billion.
The breakdown in exports is as follows:
38% for America; 14% for Asia.
By destination, the year 2007 was characterised particularly by a slight 6%
drop in the volumes exported to
America compared to 2006, thanks to
an increase in volumes exported to
Europe and Asia.
12.9 million TM of condensate exported in 2007 (partners' share included)
with turnover of 588.7 billion dinars,
i.e. USD8.5 billion. This volume is
down by 3.5% compared to 2006.
These exports are mainly designed for
the European and American markets in
equal amounts.

Domestic market
The recovery in the country's economic
activity, initiated in the past few years,
continued in 2007, leading to a 4%
increase in national consumption compared to 2006.
Sales were around 36.3 million TOE of
oil and gas products. This volume is up
by 4% compared to 2006.
19.8 million MT of crude oil delivered to the refineries, 10.2 million MT
of which were for national consumption with a value of 125.6 billion dinars
(including the Adrar refinery)
25.5 billion m3 of natural gas with
turnover of 27.6 billion dinars.
o 1.3 million MT of LPG with turnover
of 4.3 billion dinars. Almost 15% of
LPG sales were for private clients.
o 335 billion MT of bitumen all grades
included ("oxidised and road") from
national production, for an amount of
9.4 million dinars. This represents 26%
growth compared to 2006.
The domestic market absorbed a volume (all products included) of 1.1
million TM, up by 36% compared to
2006 (807,000 MT) and broken down
as follows:
BRI 358 MT (+8.3%)
Bunker C 266,121 MT (+5%)
Bitumen 313,497 MT (+45%)
Diesel 217,597 MT
Ethylene 200 MT (-96.7%)
The value of these imports is evaluated
at USD486 million, up by more than
92% compared to 2006 (USD252
The breakdown is as follows:
BRI USD127 million (+29%)
Bunker C USD100 million
Bitumen USD115 million (+74%)
Diesel USD143 million
Ethylene USD0.13 million
In Market News

Energie & Mines


march 2009


First conference
on internal audit
The first Sonelgaz
Group internal audit
conference on the
theme of Internal
audit to support performance was held in
the Djediani-Mohamed
conference room in
the Ben Aknoun
training centre.
The Sonelgaz Group, which is the first
Algerian economic group to have set up
this internal audit system in 2004, and
is today practically the only one to have
it, considers internal audit key to good
governance. Within the Group, it is
defined as being an independent and
objective activity which gives Sonelgaz
reasonable assurance on the degree of
control of its operations, provides it
with advice to improve them and helps
to create added value.

Given its many relationships with its

different partners, the Sonelgaz group
feels internal audit to be an obligation
to its clients, but also to its economic
partners, the mass of bondholders and
the Electricity and Gas Regulation

Commission (CREG). This type of

audit is in fact used in all the economies
of the most developed countries.
Furthermore, the completion of the
Sonatrach Group's transformation into
a holding company, comprised of

50 audit missions started in 2008

Fifty audit missions were started by the Sonelgaz Group
during the year 2008 and about sixty will be started in
2009, indicated, in Algiers, the director of the Sonelgaz
Audit department, Mr Malik-Salim Mazri, during a press
conference on this theme organised by the Group.
These missions have generated 300 recommendations particularly dealing with improving the cash flow (45%),
improving efficiency (30%) or the risks incurred in terms of
The audit operations within the Group have also enabled it
to build up a database which will be put into practice, revealed Mr Mazri, specifying that the Group decided, a few
years ago, to start audits with the purpose of managing the
Sonelgaz infrastructures and satisfying the 9 million subscribers. The problem which the company faced is the lack
of availability of quality audit specialists, which made it
necessary for them to be trained in 2004-2005.

Energie & Mines


march 2009

Today, Sonelgaz can count on a total workforce of 48

audit executives", specified Mr Maazri who gave a report on
the operations carried out by the Group since 2005. For his
part, the Chairman & CEO of Sonelgaz, Mr Noureddine
Boutarfa, mentioned the audit committee set up within
Sonelgaz and the "creation" of skills in this domain, out of
the main things gained by this company.
"If I had to talk about the main things we've gained to date,
I would mention the creation of skills and the audit committee whose emergence and establishment are an asset of
credibility, said this leader who opened the works of this
conference. This meeting, on the theme of Audit to support performance saw the participation of numerous
national and foreign experts who jumped at the issue. Audit
is an independent body and an analysis tool whose role is to
control and supervise the management by coordinating the
actions between the different structures.

Signature of agreements
between the distribution
companies and Algrie Poste
These agreements relate to the paying of low
voltage/high voltage energy bills in post
offices. To facilitate the life of part of their
users, the electricity distribution companies
have signed several agreements with Algrie
Poste on the project for paying low
voltage/high voltage energy bills in the offices
of Algrie Poste.
These agreements in fact concern a new
form of partnership between the distribution
companies (DC) and Algrie Poste.
These entities have put in place a new
method of payment which enables low
voltage/high voltage customers to pay their
energy bills in the 3,500 offices of Algrie
Poste located on the national territory and
connected to the computer network.
This project falls within the framework of the
development of the partnership relationships
between Sonelgaz and Algrie Poste, which
is no longer only at its first operation.
This measure will enable the four distribution
companies to reduce the customer credit
timeframe, to relieve the paying points and
the help desks and avoid the risk incurred
by transporting funds. Likewise, the community relationships with the customers will
be improved and their concerns taken into
account. Our subscribers will thus be able to
diversify their payment methods. The works
of this project started in June 2007 and the
following outline explains the mechanism :
a customer wishing to use this method of
payment must go to a personalised post
office to pay his bills.
The Algrie Poste post office worker than
enters the information contained in the bill
presented by the customer. After paying the
bill amount, a payment receipt (bearing the
post office stamp and the signature of the teller) will be given to the subscriber.
At the end of the day, all the amounts paid at
Algrie Poste post offices will be processed
by the national calculation centre which will
then assign different amounts to the business
services accounts opened for this purpose.
Mock tests have been carried out on the
following pilot sites: Belouizdad, Bologhine,
Gu de Constantine and El Harrach.
An information campaign has been launched
since in these sites and those of Laghouat,
Mila and Mostaganem. From 3 to 18 January
2009, real time tests carried out in these
seven sights covered 1,057 payment

33 subsidiaries, has required the

establishment of a reliable tool
which internal audit is. Hence,
this is a device which supports the
decentralisation so as to improve
the reactivity and optimise the
efficiency of the Group.
To assure this important function,
which is even more important
now that a major investment plan
is underway, good governance
references have been put in place.
Hence, the Chairman & CEO of
the Sonelgaz Group, Mr
Noureddine Boutarfa, has not failed to emphasise the importance,
but also the necessity of such a
system, particularly in the internal
management of the company and
particularly with regards its efficiency, competitiveness and performance aspects.
In this way of thinking, he revealed in his opening speech, before
a large audience of financial
experts and accountants, that two
principles have been acquired on
account of this new policy which
has been in place since 2005.
On this subject he stated: If I
were to talk about the principles
acquired to date, I would mention
two, starting with what I feel the
most important and the most
strategic, i.e. the creation of skills
in this domain. We have resolutely committed to an approach
where the human potential of this
function is the subject of constant
investment with regards develo-

ping skills and making the tools

and mechanisms for developing
these skills long-lasting. Today,
this approach has made our subsidiary IFEG, which is based on a
privileged partnership which is
IFACI, whose renown is unquestionable, greatly sought after.
The second principle acquired is
the audit committee whose emergence and establishment are, for
us, an asset of the credibility of
our approach. This is explained,
added the Chairman & CEO of
the Sonelgaz Group, by two
essential reasons. The first is linked to the body to which this
Audit Committee is attached,
namely the Board of Directors of
Sonelgaz SPA and the second
reason, he noted, is due to the
fact of its composition insofar as
two members of this committee
come from outside the group and
outside the Board and have been
chosen from their competence
and their reputation in the
domains of improving the management and governance models
of companies.
Their freedom of opinion and
the responsibility they have shown
through their commitment to the
audit charter are, for us, a strong
guarantee for the credibility of the
approach and the constant evaluation of the milestones placed
down over time, underscored
Mr Boutarfa.
Amel Z.

Sonelgaz to invest 29 billion

dollars over the period 2007-2017
The national electricity and gas company Sonelgaz will invest some 29 billion dollars over the period 2007-2017 to develop its capacities in terms of the production and distribution of gas, announced its Chairman & CEO, Noureddine
This amount will be designed to finance the investment programmes of the seven
subsidiaries of the parent company, particularly for electricity production, with
5 billion dollars, electricity transportation with 8 billion dollars, gas transportation
with 3 billion dollars and distribution with more than 6 billion dollars, specified
Mr Boutarfa. During the 6th International Strategic Conference on investment
opportunities in the field of energy, Mr Boutarfa underscored that Sonelgaz can
play a major role in the regional energy integration, the constitution of the North
African electricity market and its extension to the European market as well as the
development of renewable energies and electro-nuclear energy. With regards
renewable energies, the director of transformation and distribution at the Ministry
of Energy and Mines, Lakhdar Benmazouz, revealed that by 2050 almost 30%
of electricity will come from alternative energies, particularly solar.

Energie & Mines


march 2009


Mr Boutarfa reveals the sectors

major projects
We plan to invest 210 billion dinars in 2009, 125 billion dinars of which
in the production and transportation of electricity, i.e. a 23% increase
compared to 2008. This also represents 145% of our turnover, announced the Chairman & CEO of the Electricity and Gas distribution and
production group.
Making our engineering and information systems subsidiaries in this new
year 2009 is going to be the start of a
fruitful adventure in terms of innovation. It is with this observation that
Noureddine Boutarfa, Chairman &
CEO of the Sonelgaz Group, recently
revealed the main points of the 2009
programme imposed on the public
Indeed, according to him, the question
of energy supply is a burning issue,
even more so today given that oil prices
are going down which is good neither
for the producers, forced to reduce
their production and sell at very low
prices a non-renewable fossil resource,
nor for the consumer countries being
hit hard by the recession, heralding an
era of austerity. Hence, Mr Boutarfa
explained that the market has not been
able to find solutions to the problem of
investments in renewable energies, thus
revealing with insistence the decisive
role of the State as a regulator, a planner and policy maker.
With regards investments, our needs
are increasingly great not only to renew
our aging production tools but to reinforce it more in order to cope with
demand which is increasing annually by
close to 7% per annum, he stated.
Also, according to Mr Boutarfa, reinforcing the production of electricity
goes hand in hand with reinforcing the
transportation networks, interconnections and distribution networks.
By 2017, the Sonelgaz Group will
invest close to 20 billion dollars, 7.5
billion dollars of which for the construction of gas power stations and no
less than 12.5 billion dollars for the
transportation and distribution of electricity and gas.

Energie & Mines


march 2009

Furthermore, in his opinion, the peaktime demand in our country is increasing faster than general demand. This
is why we will be commissioning, as of
2009, no less than 2,000MW gas turbine plants to cover demand which only
lasts, on average, three hours.
Basic demand will be reinforced by the
1,200MW combined cycle type plant in
Hadjeret En Nouss whose commissioning is expected in May 2009.
Major investments are also granted for
compensation measures. In 2009, we
plan to install 300 MVAR in addition
to the 800 MVAR installed in 2008 in
order to improve the voltage holding
and stabilise the network which is weakened by poor quality air conditioning
units, he announced.

To summarise, and despite the Group's

self-financing difficulties generated by
the freezing of tariffs, Mr Boutarfa
confirmed that the forecasts are good:
We plan to invest 210 billion dinars in
2009, 125 billion dinars of which into
the production and transportation of
electricity, i.e. a 23% increase compared to 2008. This also represents 145%
of our turnover.
The Chairman & CEO also announced
the imminent commissioning of the
400kV electric backbone (connecting
Chafia, wilaya of El Tarf, to Spain via
Morocco) and the start of production
of the new plants.
Throughout the year 2009, we will
finally move away from managing the
direct logistics flow production and the

spectre of load shedding and this will benefit our country. In terms of the public electrification and public
natural gas distribution programmes, an investment of
37.5 billion dinars is planned for the putting in place of
close to 3,000km of electric lines and 5,400km of gas
The year 2009 must achieve an unequalled number of
commissionings of new public gas distributions (more
than 200 compared to an average of 80 in the past
years) and thus enable more citizens to benefit from the
facilities offered by this form of natural gas delivery.
In this context, Mr Boutarfa mentioned the fact that
his greatest wish is to find the best ways of improving
our investment in human resources. These resources
will enable us to rebuild our engineering strength, on
the one hand, and on the other, to consolidate the
development of our information systems by pooling all
the intelligence of our engineers and technicians, he
specified, explaining that, making our engineering
and information systems subsidiaries in this new year
2009 will be the start of a fruitful adventure in terms of
According to Mr Boutarfa, without performing and
mastered information systems both in their development and in their operating phase, there is no great
future, hence the creation, on 1 January 2009, of a
subsidiary which will be in charge of offering within
5 to 7 years Enterprise Resource Planning (ERP) type
information systems developed by an Algerian resource which will be our greatest pride and the demonstration that we can enter with force in domains up until
now closed to us. Furthermore, this subsidiary will also
have the task of managing all the information systems
of all the companies of the Sonelgaz Group (33),
which will enable it in an initial phase to gain all the
know-how required for the construction of our information systems and, secondly, enable the national
community to benefit from its progress. As for
Sonelgaz engineering, which will be responsible for the
structuring projects, it currently assures the project
management of over 600 of these projects. It must also
succeed in very short timeframes in the commissioning
of more than 6,500MW in electricity production
In parallel, the engineers and technicians will monitor
the putting in place of about 100 VHV/HV transformation posts.
More than 4,500km of VHV and HV lines are underway, to which should be added 4,500km of telecommunication network. In terms of gas pipelines,
9,400km of transportation network and public gas distribution network are currently underway.
Finally, Mr Boutarfa reported that the engineering
teams are responsible for completing, by 2013, a programme whose financing requires over 800 billion

Three new subsidiaries transform

the Group into a holding company
The three long-awaited subsidiaries in the electricity sector have now
been created. The company Sonelgaz announced, in fact, via a press
release, that the signature ceremony of the articles of association of three
new subsidiaries of the Group took place on 24 December 2008. Hence,
the engineering companies, information systems and property management mark the completion of Sonelgaz's transformation into a holding
company in accordance with law no. 02-01 of 5 February 2002 on electricity and the distribution of gas by pipelines, notably its article 165. The
Algerian electricity and gas company, which keeps the name Sonelgaz
SPA, has been transformed into a holding company.
As of now, the holding company will mainly perform the tasks of managing
the portfolio of shares owned in the subsidiaries, that of internal audit and
control as well as the drawing up and implementation of the Group's overall development strategy. By signing these articles of association, the
engineering subsidiary, called the Electric and gas infrastructures' engineering company, will have the task of assuring, as the instructing party,
for the business subsidiaries and the companies in which the Sonelgaz
Group holds a stake, the project management of the projects related to
the electricity and gas production and transportation works such as the
plants, the posts and the lines; gas transportation works, including the
LPG plans, telecommunications works, property infrastructures and seawater desalination works. It is understood that the project management
covers the design, studies, conduct and control, acceptance and commissioning operations.
These project management services will be offered fully or partially to
other operators though business agreements, indicated the press release,
which further specified that, other than these activities, this subsidiary also
assures the support for the choice of the process and construction companies, the conclusion, the signature and the management on behalf of the
prime contractor, agreements necessary for the perfect completion of its
works. It also has other missions of providing assistance to lenders within
the framework of putting together project finance projects, as well as
assisting the project management and prime contractor for accounts,
management and maintenance of the computer networks and within the
framework of complex operations and, finally, general support in terms of
administrative, legal, financial or technical operational matters.
With regards the information systems' subsidiary, called El Djazar
Information Technology, its business sector is the domain of information
and communication technologies. Its missions can be summarised in four
o the design, the development, the integration, the administration, the
maintenance and the hosting of the internet and intranet applications'
management software (facilities management);
o the installation and the maintenance of IT and telephone networks, the
purchasing, the sale, the rental, the maintenance and the repairing of
computer equipment;
o the support, the training, the advice, the support and audit in the domain
of information and communication technologies;
o finally, the third subsidiary, which is the property management and development company of Algiers, called Socit des infrastructures immobilires, has the main purpose of managing and developing the property and
land portfolio.
This subsidiary provides the Group's companies with administrative or
industrial spaces (offices, meeting rooms, conference rooms, workshops
and storage areas, etc.) and corporate accommodation for their personnel
in consideration of payment (rental agreement). It is also responsible for
the maintenance and renovation of the property (all trades included), the
maintenance of the equipment and the development of property infrastructures. Furthermore, it may perform any operation related to its company
purpose or which may help to achieve this and generally any financial or
commercial operations related to the company purpose, finally indicated
the press release.

Amel Zemouri

Energie & Mines


march 2009


Etterkib, a company
of timeframes
By Mohamed Arkab (*)

The huge involvement

of Etterkib in the realisation of the Sonelgaz
investment programme
makes it a fully working company involved
in one of the most
important realisation

Energie & Mines


march 2009

All the electric posts and plants projects are now open and are seeing a
peak in terms of mobilising human
and physical resources. In parallel,
Etterkib is continuing the realisation of
a large project related to the renovation and extension of the fire-fighting
network of the Skikda refinery as well
as the maintenance works with
Sonatrach in Hassi R'mel.
We are right in the middle of the production phase where all Etterkib personnel is mobilised, with a reinforcement of our human resources and our
competences by new recruits who are,
in turn, involved directly and trained:
old and new personnel for better
handling of the projects and maximum
In addition, Etterkib is more involved
than ever in a marketing approach
according to a quality approach based
on satisfying and getting repeat business from our clients and partners
with whom we are participating from
the start of their projects and to whom
we commit to give all the help and
assistance necessary. The example of
the projects to renovate and construct
the Sonelgaz Distribution Ouest
(SDO) electric posts is a perfect
example of this client (win-win)
approach, where Etterkib has spared
no effort in order to satisfy all explicit
requirements, but has also gone
beyond briefs, convening meetings,
audits and expert reports on site to
bring out the implicit needs of the
client and satisfy them more.
This experience with SDO opens us
up to major projects regardless of their
nature and for which Etterkib commits
to participate in before, during and up
to the commissioning.
All these management actions are done
in permanent collaboration with our
social partners, taking account both of
the success of the company and also

the social condition of our workers.

This tacit agreement is perfectly illustrated by the general meetings held in
the different sites and worksites of the
company throughout the national territory in order to take stock of all the
needs and problems encountered by
our workers and their transformation
into action plans in order to be dealt
with quickly.
At present, Etterkib has succeeded in
having a significant load plan for
which we implore all personnel at all
levels to put in the effort necessary for
the achievement of the objectives on
performance, timeframes and profitability.
To end, we would like to congratulate
all supervisory staff and all workers in
the sites and on current the worksites
who have excelled in handling the projects, taking account of the quality of
the services provided, respecting the
timeframes and the satisfaction of our
clients. Furthermore, we would like to
pay tribute to all personnel assigned to
the sites for transferring from the
Bchar plant to Tamanrasset, whose
workers have proved their ability to
handle the disassembly and re-assembly activities of the plant's equipment
whilst ensuring their protection and by
achieving encouraging performances
in terms of keeping to deadlines and
adhering to HSE standards, without
there being the slightest accident or
incident despite the difficulty and delicacy of their mission.
So let's all continue to maintain these
keys to success which make Etterkib a
performing company which is accelerating in its works, respects timeframes and ensures the loyalty of its
clients and partners.
M. A.
* Chairman & CEO
of Etterkib


75% natural gas coverage

in 2009
50,000 households connected since 2005 and 41,000 others in the
process of being connected.
We expect a natural gas coverage rate
of around 75% in 2009, in 2010 we will
get to 85% and we will continue our
approach with the same will and determination to translate the objectives of
the President's programme in the field
and, by 2012, reach all communes in
our wilaya.
Making such statements at the end of
the signature ceremony for the gas
connection of several rural communities in the wilaya, Mr Bedoui
Noureddine, the wali of Stif, whilst
reporting revealing numbers which
attest to the particularly important
dynamic which this wilaya has experienced in the past few years, did not
forget to emphasise all the challenges
which will also be raised such as the
programmes initiated by the President
and the Republic and will thus enable
all records to be broken in a domain as
sensitive and strategic as that of natural
By visiting numerous communities of
the two South and North regions of the
wilaya, accompanied by Mr Belguebli
Lemnouar, president of the subsidiary
Sonelgaz Distribution Est (SDE), the
president of the APW, elected officials
and authorities from the wilaya as well
as Sonelgaz officials, the wali of Stif in
fact merely assigned the cruise speed to
a strong element of development which
is one of the major concerns of citizens.
The axial strategy implemented throughout the wilaya and which today has
connected numerous communities and
brought the coverage rate from 36%, in
1999, to more than 75%, in 2009,
thanks to the encouragement, the guidelines and the instructions of the
President of the Republic, as emphasised by the wali during this marathon
visit to the populations, abounds today
in the sense of the densification to
reach all these rural communities.
This approach has been forged by the

immense effort put in by the State

added to which is this contribution of
the wilaya budget which will, nevertheless, have obtained an amount of 300
billion. These thus attest to the will of
the authorities and the local elected
officials to pitch in and finance the
natural gas connection of more than 10
Bouhira, An Messaoud, Maouane,
Kherba, Takouka and Batha in the
dara of An Arnat are part of this lot
with no less than 3,000 households
which will be connected in the coming
days for an amount of 40 billion centimes. In the dara of Hammam
Guergour, the populations of Ouled
Ayad and Oued Sebt who also attended
the signature of the agreements between the wilaya and Sonelgaz for the
connection of 7,000 households and an

amount of 10 billion centimes did not

fail to express a deep feeling of satisfaction and paid great tribute to the
President of the Republic.
In the mountainous commune of Tizin
Bchar, on the edge of the wilaya of
Bjaa, this joy was expressed loudly
and an extraordinary welcome was
reserved for the head of the wilaya. "It's
a dream which has finally become reality", said a representative of civilian
society who understood the impact of
such an operation designed to connect,
eventually, over 2,500 households for
an amount of 35 billion centimes.
In An Lahdjar, the inhabitants of the
rural communities of R'mada, R'mada
Ledjnene and M'zara were no exception to this rule of intense joy announcing the imminent arrival of natural gas
and its efforts on boosting a new agricultural dynamic.
Everywhere he went to preside over
these signature ceremonies for agreements between the wilaya and
Sonelgaz, the wali did not fail to recall
the immense effort put in by the State
with the effect of setting firmly in place
the progress in all these areas in a
balanced context which is included in
the first instructions in the formalisation of the programme of the President
of the Republic from the support plan
for economic recovery to the complementary programme designed for the
northern region, including that of the
High Plateaus which affects 14 communes from the south of this wilaya.
He emphasised this growing complementarity which prevails between the
APW and the wilaya council and stressed the effort put in by Sonelgaz in efficiently supporting this approach which
has led to the connection of 50,000
households since 2005 whereas 41,000
others are in the progress of being

Energie & Mines


march 2009

Focus on

The electricity transportation

The electricity transportation
network connects the large,
geographically dispersed, production centres to satisfy the
demand generally localised in
the industrial zones and
towns. It assures the interconnection of the electric
system and is, to this end, its
backbone which connects
together all the nerve centres. The transportation network enables line losses to
be reduced through the use of
high voltage for the transfer
over long distances of large
amounts of energy.
Its key role in the dynamic balance between production and consumption
determines its meshed structure in
which each post of the network is secured by all others to palliate a potential
system failure.
The transportation network has gained
particular importance in the new regulatory context as a driving force for
developing the competition and a meeting point for those involved in this
market, users of this network.
The increase in its capacity, as well as
the development of system interconnections through the transportation
networks, both inside and outside the
borders, should open the way to the
regional or international electricity
In addition to the link it assures in the
chain, the transportation networks
1 - Pools the production of electricity:
In fact, building an electric line between two consumption sites each with
its own electricity generation plant is an
excellent way of providing mutual
back-up in case one of their production
machines breaks down.

Energie & Mines


march 2009

2 - Locates, geographically, the production of electricity in sites where

conditions are favourable: Existence of
primary energy and possibility of
cooling. The ideal thing, at least from
the economic standpoint, would be to
produce energy where it would be
consumed but this is not always the
case and the production sites are often
far away from the consumption centres, hence the need to transport and
distribute the electric energy.
3 - Palliates the shortages of indirect
storage (in the form of primary energy)
to help the general interconnection of
the multitude of production and
consumption centres. This is done in
order to organise between them a certain amount of compensation of their
unknowns or variations and thus to
regulate both the overall consumption
and the production possibilities. The
interconnection of two previously isolated networks reduces the surplus
equipment that each of them have to
keep in order to ensure the coverage of
peak-time consumption with a given
4 - Reduces the power losses and
reduces the voltage drops thanks to the
construction of a high and very high
voltage transportation network.
In the electric industry, the network is
a natural monopoly: it is more efficient,
in terms of cost or impact on the environment, to manage the transportation
activities by developing a single network rather than several to serve the
same region.
In fact, it is easy to conceive a market
where several suppliers (producers and
salespeople) meet several bidders
(industrialists and miscellaneous
buyers). But we cannot conceive several transportation networks.
Hence, it is easy to conceive that competition in the electricity sector can
only be effective in the domain of production and marketing.

The transportation jobs have to be

separated from the production jobs in
order to enable the latter to compete
alongside others in a market where they
all use the same network.
This is particularly the case given that
the new information technologies
(measuring and control) make this
separation possible (unbundling). This
means that competition can be envisaged in the production, without questioning the natural monopolistic nature of
transportation and distribution networks. The transportation of electricity
is regulated.
The network's manager must assure
the transit capacities with the required
reserve and develop the network for the
provisional capacities and it is remunerated consequently according to regulated tariffs. This manager must also
assure non-discriminatory access for
third parties to the network which is
then open to everyone. Remember that
access to the network is the recognised
right of every client, distributor or producer to have the electric or gas energy
bought or sold transit using the
transportation and/or distribution network, thus enabling competition in the
energy production and supply activities. It is therefore, in most situations,
the only realistic way of accessing this
The transportation network's manager
is independent of the historic producer and plays its role of assuring the
capacity, the continuity and the transit
quality for everyone in totally neutrality
and equity. These obligations in an
open and competitive system are all
challenges encouraging the network
managers to seek network and organisation development capable of providing the maximum efficiency.
Performing information and measuring
systems using the latest technology
make the difference. Indeed, even if the
production of electricity, where several
competitors compete against each
other, is totally separate from the

transportation or electricity what
remains is a natural monopoly; we talk
of a transportation production system
due to the physical link from sharing
the production of electricity indicated
in the introduction.
The transportation network's manager
which must ensure that the capacity
required for the different users is available at all times performs two essential
the operating of the transportation
infrastructures (connections, maintenance and development of the network);
the managing of energy flows (calls
from plants, control of the flows, stability of the electric system).
These two functions essential to energy
exchanges are entrusted to the same
company or to two different entities.
However, it is important to point out
that the reliability of the system is
increased by the fact that the network's
operator is both the owner of the
transportation lines and the manager of
the electricity flows.
Indeed, its generalisation, particularly
in Europe, is observed. There are even
a few countries which, after testing out
the separate Network Manager and
System Operator system, abandoned
it to return to that of the integrated
Network Manager and System
For the reasons already given, it is
essential that the network manager is
completely neutral with regards the
user for whom the network is the natural way of accessing the market. This
neutrality is so necessary that it should
be guaranteed by structural measures
and precise obligations. This is particularly the case given that, as indicated
above, following the deregulation of the
electric sector, the network also aims to
fulfil a role in the facilitation of the
electricity market and to ensure that a
maximum of business transactions can
take place.
The network managers continually
manage and exchange a large volume
of information with the different partners. This information concerns the
planning, the operating and the maintenance of the network as well as the
transit and the measuring of energy
flows and load profiles.

This implies the putting in place and

updating of huge databases. In Algeria,
in the 1950s and 1960s, electricity production was mainly located in the
north: group from Darguinah (hydraulics), to Algiers-Port, Ravin Blanc and
Annaba (thermal) and the transportation network was reduced to a few
150KV lines connecting these centres
and a few 60KV lines powering the big
towns and cities.
When Algeria gained independence,
the vast electricity power generalisation
programme to all households led to a
rapid development of the network. The
need to build a network to respond to
market requirements, to have a larger
capacity and to assure better network
safety led to developing the 400kV centre for the international interconnection and north-south inter-regional
transit. With the publication in 2002 of
law 02-01 on electricity and gas,
Algeria, just like what is done in various
countries, initiated the reorganisation
of the electricity sector. It is important
to recall that this is a highly integrated
sector in one and the same business
which falls under public service and
whose investments were 100% owned
by the subsidiaries of Sonelgaz.
We have explained above the reasons
for separating the production,
transportation and distribution of electricity since it is desirable for competition to be established.
These same reasons prevailed in the
Algerian case:
confirmation of the free access for
third parties to the transportation network,
construction of a reliable network,
independent electric system operator.
In Algeria, neutrality was conceived by
the separation within transportation
itself of the Network Management
function (operating, maintenance and
development) and that coming under
the planning and running of the network; the right of access is based on a
postage-stamp type toll which is the
same across the entire Algerian territory. The first is the responsibility of the
Electricity Transportation Network
Manager (GTRE) and the second of
the Electric System Operator (SO).
The relationships between the GTRE
and the SO are managed by an agree-

ment which is submitted to the

Regulation Commission.
The SO is a company whose officers
are subject to a strict duty of confidentiality and no shareholder of which has
a stake of more than 10%.
The reference document for the planning, the connection and the operating
of the network commonly called the
Grid Code was published in the form
of an order on 21 February 2008.
It sets down the technical rules of
connection to the electricity transportation network and the operating rules
of the electric system.
The management of the electric network is regulated and the transportation network user tariffs are fixed by
the CREG which ensures that the
GTRE's service is assured and remunerated whilst respecting the rules and
user satisfaction.
The national transportation network's
development plan which covers a ten
year period (2007-2017) was drawn
up in view of upgrading for better use.
It recommends the commissioning of
400kV south-north and east-west
backbones which, in addition to
making available a back-up capacity,
reinforce the evacuations of energy and
facilitate the inter-regional transits.
This, eventually, would enable the elimination of the technical constraints
(congestion) which may generate discrimination in the access and the
connection of users. The renovation of
the transit centres as well as the reflection on the organisation of the network's management and the efficiency of
the corresponding information system
should lead to the modernisation of the
electric system whilst assuring the
objectives of transparency and non-discrimination.
In Equilibres
Henri Persoz, J.-C. Lemoine, P. Sapet, G.
Santucci La planification des rseaux lectriques Systmes dnergie lectrique Guide de rfrence - Elments conomiques
& planification pour les rseaux de
transport et distribution dlectricit.
J.-L. Lilien Transport et rseaux de distribution, 2006
Documentation Ecole de Rgulation de
Florence (FSR).

Energie & Mines


march 2009

GRTG-Sonelgaz 2008-2017 development programme

9,500km to be put in place

Designed to satisfy household demand
for natural gas and supply the electric
power plants, the programme decreed
by GTRG, the Sonelgaz subsidiary
entrusted with the transportation of
gas, plans, for the period 2008-2013,
the carrying out of works of a total
length of 9,500m. This programme
includes the construction of a 509km
East-West gas highway connecting the
wilayas of Khenchela and Sidi Bel

Abbs, with this work then having to

follow the entire track of the High
Plateaus beltway. This gas highway project is designed to guarantee and secure
the natural gas supply of about twenty
wilayas of the High Plateaus. The works
scheduled by GRTG also aim to assure
the routing of gas to the electric power
plants whose consumption alone represents the majority of the volumes transiting via the transportation network. For

the public distribution of natural gas

alone, the consumption estimated at 4.7
billion cubic metres a year in 2008
should increase to 10.6 billion cubic
metres in 2017, consumption of industrial clients from 3.2 to 5.2 billion cubic
metres, and that of the electric power
plants from 11.1 to 15.4 billion cubic
metres in the same period.

Bordj Bou Arrridj

17,000 connected
to natural gas
Almost 17,000 households were connected between 2005 and
2008 to the natural gas network in the northern region of the
wilaya of Bordj Bou Arrridj, we learn from the Department
of Mining and Industry (DMI).
This operation concerned a third of the inhabitants of the daras of Mansourah, Djafra and Zemmourah, i.e. a population
estimated at 119,000 people, added the same source. 70,459
households are currently connected to the natural gas network in the wilaya of Bordj Bou Arrridj "including all the
capitals of the daras and the largest communes", it also specified. These natural gas connections will, this winter, imme-

diately reduce the pressure on gas carboys which are today

widely available, unlike in previous years. According to the
officials from the company Naftal, the daily delivery from the
mini racking centre of Bordj Bou Arrridj, which is around
7,500 carboys a day to the 34 communes, is enough to
respond to the needs of the populations. The 11 commune
capitals which do not yet have natural gas connections, in the
mountainous regions of the daras of Bordj Ghedir,
Mansourah, Djafra and Zemmourah, are "scheduled for the
year 2009 as the works placing down the main pipeline progress, indicated the services of the DMI.


Nine towns connected to natural gas

Nine towns of the wilaya of M'sila
containing 20,000 households have
been connected to the natural gas network between 1999 and 2009, we learn
from the Department of Industry and
Mining (DIM). The gas network extension projects, currently in progress,
should enable this energy to be supplied
to 10,000 other households located in
five towns in the first half of 2009, it
indicated. Seventeen other gas network

Energie & Mines


march 2009

extension projects, whose works are

also underway, will be completed in
2010, estimated the DIM.
The wilaya of M'sila has also benefited
from the major rural electrification projects including those covering the construction of 115km of lines in 23 communes and 505 other kilometres in 33
communes as well as the electric power
lines of Salah Bey (Stif) and
Birghbalou (Bouira) of a capacity of

400 megawatts. The largest electric

project is the Dhra El Haja (500
megawatts) plant one whose completion is expected at the end of 2009 and
the first half of 2010, the DIM was told.
One hundred (100) households from
the community of An Fars were, furthermore, in 2008 given solar electricity production kits, reported the same

Tizi Ouzou

71,136 households connected

to gas in three years
To catch up with the delay suffered by
the wilaya of Tizi Ouzou in terms of
town gas penetration, whose current
rate is no more than 22% which is far
from the national average, the relevant
Ministry has awarded, since the year
2005, three large town gas connection
operations for all the communities of
the wilaya with a total amount of almost
950 billion centimes, i.e. 60% of the
President of the Republic's national programme which is around 14 billion
Hence, in these three years, no less than
71,163 households were connected to
the natural gas networks, of which
3,192 households were connected this

year. The wilaya of Tizi Ouzou, note,

will have its own gas supply loop for this
source of energy by the construction of
the gas pipeline which will connect the
(Boumerds) to that of Azzazga, crossing the communities of Sidi Namane
and Boudjima.
The works on this gas pipeline started a
few months ago in the region of
Makouda, whereas the finalisation of
the studies for the rest of the pipeline is
underway. For the time being, this project has seen 25km constructed out of
the 62km planned. The connection will
initially concern the capitals of the communes of Makouda, Boudjima, Sidi

Namane and Tadmat, before reaching

all the villages located on this route. The
objective of the Department of Mining
and Energy of the wilaya of Tizi Ouzou
is to achieve a household connection
rate to town gas of 60% once these
three operations are complete.
The villagers residing along this gas
pipeline say they are ready to give up
their plots of land to see this project
come to fruition and benefit from the
gas which the population of Tizi Ouzou
needs so much, particularly during the
winter period when the routing of butane gas to the villages is often disrupted
during the severe weather conditions
which cut them off sometimes for days.

Sidi Bel Abbs

3,000 households connected

to town gas in Ras El Ma
Within the framework of the National Gas Programme
(NGP), 3,000 households from the town of Ras El Ma,
100km to the south-west of the capital of the wilaya of Sidi
Bel Abbs, have just been connected to the town gas network.
The realisation of this project which covers 54km took 12
months after its launch in 2007 and required a financial package estimated at 117 billion centimes, covering the energy
transportation works from Telagh, 42km away, and the construction of the distribution network as well as the connecting
up of the households, i.e. a population of 15,000 people. Now
it remains for the implication of the elements of the technical
services of the Regional Division of Sonelgaz in the prevention of domestic accidents due to gas to give out all the preventative advice dealing with handling the equipment, their
compliance and on safety methods. Furthermore, other than
the connection of the town of Ras El Ma, the NGP also plans
the commissioning of the town gas network through five
other communes, namely Belarbi, Tilmouni, Mostla-BenBrahim, Belbouche and Sfisef, i.e. a total of 10,663 households for a total financial package of 2,162 million dinars. On
the other hand, within the framework of the High Plateaus

programme, the wilaya of Sidi Bel Abbs recorded, in 2007,

the start of an operation to connect up 23 communes, i.e.
12,917 households and the launch at the start of this year of
the connecting up to the town gas network of six communities, namely Mezaourou, An Tandamine, Dhaya, Oued
Seba, Hassi Dahou and Mrine, all of which for an amount
of 8,456 million dinars.
However, within the framework of the social subdivisions and
districts programme (PQLS), the wilaya of Sidi Bel Abbs
was awarded a package of 157 million dinars for the realisation of a programme of 45 linear km dedicated to the connection of 4,800 households. At the end of the year 2007, this
project saw the realisation of 20km, i.e. the connection to the
town gas network of 2,836 households. After the realisation
of these projects, the coverage rate for this energy, aimed at
2010, will go from 70% compared to 44% currently. Finally
note that thanks to the considerable effort made by the State
through the execution of the different programmes awarded
to the wilaya in these past years, the number of subscribers
throughout the wilaya has reached 60,675 households.

Energie & Mines


march 2009


A 50% coverage rate

in gas distribution
This is the objective of the Department of Energy and Mines, according
to the director in charge of the sector during the 2nd ordinary session
of the APW, which was restricted to the topics of youth, gas supply and
rural electrification as well as to the presentation of the report on the
start of the academic year (schools and universities).
We have set ourselves a challenge but
one which is still dependent on the
combined efforts of all stakeholders,
particularly the APW whose proposals
are the very foundation of our work,
he said.
The speaker boasted about the launch
of the four PD (Public distribution of
gas) over these last four years, when I
started this role, there was only the PD
in the region of Filfila being launched.
Now, counting that one, we have five
PD in operating phase, Bni Bchir,
Menzel Bendiche, Bouchtata and
Djendel. The PQLS, the social subdivisions and districts programme, is also
making considerable progress despite
constraints encountered in the field.
Often, the plans given to us by the
communal services are not up to date.
For example, we launched the brickworks programme over a distance of
11km instead of the 5 initially planned", he added. He also admitted that
there are gaps, more particularly those
raised by the elected officials during the
in-room discussion.
Among them, it is fitting to point out
the regional imbalance in the distribution of gas. An Bouziane, Oum Toub
and Tamalous are the regions which
would be the most penalised as confirmed by the elected representatives. The
last one mentioned is usually the worst
divided, given its large population.
The coverage remains disproportionate
to the potentials it has. As a forecast,
the end of 2008, it is planned to achieve 87,935km of gas network. The
number of subscribers, according to
the statistics published on 31
December 2007, is 42,956 families,

Energie & Mines


march 2009

970 individuals, 785 authorities and 42

companies from the industrial sector.
The dara of Skikda takes the lions
share with 23,513 subscribers, followed by Harrouche, with 5,291 subscribers and Collo with 3,603. At the back
of the queue are three daras:
Tamalous, Ouled Attia and An Kechra,
which have absolutely no natural gas
connection whatsoever.
Household consumption was revised
downward in 2007 compared to 2006,
According to a Sonelgaz document, 21
of the 38 communes in the wilaya have
had no natural gas consumption.
Within the framework of the PQLS, the

wilaya has benefited from an 11km

extension, reaching 625 families residing in 8 subdivisions in three communes, Skikda, Sidi Mezghiche and
Ramdane Djamel. Currently, as already
reported, the coverage rate has reached
The PDN, public distribution of natural gas, for its part, reached four communes mentioned above. The number
of connections is 3,558. The distribution network is 101,318km, the
transportation one is around 2,265km.
The natural gas coverage rate is 38%.
The challenge laid down by the sector
is not unachievable.
Zad Zoheir


79,000 households connected

to the natural gas network
Within the framework of its programme
to develop its natural gas connection
network, the services of the Division of
Sonelgaz of the wilaya of Tlemcen have
recently carried out two large operations aiming to connect the deprived
regions to the natural gas network and
to participate actively with the wilaya in
improving the living environment of
citizens. The first operation carried out
on this concerns the connection of
1,058 households of the commune of
An Youcef to natural gas. This is a private undertaking and it was the
Kanagaz Group which carried out this
programme which enabled a deprived
region of the wilaya to benefit from this
energy and which, in the past, used
butane gas in the harsh winter seasons.
"We would like to thank all the authorities of the country, led by the President
of the Republic, for this accomplishment which warms our hearts, noted
with a great deal of satisfaction an old
In parallel to this large operation,
Sonelgaz has also completed a natural
gas connection operation for 8,000

households located on the border strip,

particularly in El Betaim, Bab El Assa,
Marsat Ben M'hidi, M'ssamda, Sidi
Boudjnane and a dozen communities
which in the past had used butane gas.
Within this framework, it is also appropriate to emphasise that a similar programme was carried out in Sebra
where, also, this rural region located in

the far west of the wilaya capital has just

benefited from this energy which has
become vital for the regions which have,
in the past, experienced very difficult
times particularly in winter when the
butane gas supply barely satisfied the
needs of these remote regions of the


1,700 households to be connected

shortly to the electricity network
Some 1,700 households of Bordj El Hous and Bordj Omar
Idriss, in the dara of In Amenas (Illizi), will be connected in
2009 to the electric network, we learn from the Department
of Energy and Mines (DEM).
More than 270 million dinars have been mobilised for the
connection operation and the construction of a new electric
power plant (5 x 400 KWT) in Bordj Omar Idriss, whose
works were launched last January by a foreign company, specified the same source. A similar project was launched in the
community of Bordj El Hous. With a capacity of 6 x 250

KWT, its cost is estimated as 234 million dinars. These works

have also been entrusted to a foreign company, according to
the same source. This connection operation as well as supplying electricity for the public equipment in these two sparse
communities will improve the living conditions of the populations of this deprived region, it is hoped.
The electrification rate in the wilaya of Illizi is, according to
DEM statistics, 96% whereas the national average is 97%
reported the same source.

Energie & Mines


march 2009

Mining investments

Pick-up in pace
For a long time almost
entirely escheated,
despite the immense
potentials it contains,
the mining sector has,
since the promulgation of the Mining Act
2000, experienced a
complete and in-depth
overhaul of its legal
and organisational frameworks which today
enable it to be experiencing a new lease
of life.
Fruit of this reform, the Agence nationale du patrimoine minier (ANPM) has
just, in this respect presented an eloquent report on the progress it has
made since then in terms of performances.
Acting as a body of the State with
public authority prerogatives in the
management of mining assets, up until
then devolved upon the administration
of the Ministry of Energy and Mines,
the Agency has legal entity status and
financial autonomy, and articles of
association guaranteeing it the independence of its operating with regards
the sector's operators in particular.
Its main mission is to put in place and
manage the mining register, to issue
mining permits and to rule on their
withdrawal, to monitor the execution of
the mining permits, to organise the
putting in place of an awarding system
of its permits, to set up and manage the
database on mining activities, to
demarcate the mining permits and to
promote the potential mining areas as
well as the deposits, to provide support
and assistance to investors and, finally,
to promote small and medium sized
mining as well as the artisan mining

Energie & Mines


march 2009

After a three-year transition period, the

launch of the ANPM enables it to
report promising results.
The number of mining permits and
authorisations awarded has thus
increased from 445 in 2005 to 553 in
2007 after a slight drop in 2006 due to
external administrative constraints
which continue to generate difficulties
without however harming the dynamic
triggered, but provided that they are
removed quickly. The awarding operations have covered mineral deposits
containing various substances, mainly
limestone and rocks for aggregates,
limestone for cement, limestone for
lime, clay for red products, sand, decorative stone, gypsum and tuff.
Spread throughout almost all the country's wilayas, the sites awarded have
enabled the Agency to make, for the
year 2007 alone, revenue exceeding a
billion dinars, entirely reserved for the

Public Treasury. Added to this is the

launch in January of the same year of
the first awarding operation for exploration of mining sites containing substances such as gold, zinc, lead, copper, etc. The operation has reported
some 3.5 million dollars. Two major
facts should be revealed in 2007: the
ANPM introduced the awarding of
mining sites for the production of sharp
sand (quarry sand) in order to cope
with the strong demand introduced by
the launch of large national infrastructure (East-West motorway) and construction projects.
Finally, a right of preference has been
introduced in favour of the landowner
interested by the mining activity which
means he can operate for himself, provided his quote is in line with the lowest
responsible bidder.
Samia Kahina Bouzid

Almost 190 mining permits

The Agence nationale du patrimoine minier (ANPM) awarded 188 mining permits at the end of six mining permit awarding operations in 2008, compared to
146 permits in 2007, for an amount of 65.75 million dollars (approximately 4.6
billion dinars), the APS learned from this agency.
These awards concern 167 permits awarded at the end of 4 awarding sessions
for industrial substances designed for construction and public works, 150
of which for exploration and 17 for mining generating 3.68 billion dinars in
In addition, 21 permits for metallic mineral substances were issued at the end of
two awarding operations for an amount of 914.29 million dinars, according the
annual report of the ANPM.
As a reminder, for 2007, 133 permits for industrial substances, 118 of which for
exploration and 15 for mining, were awarded enabling revenue of 713.78 million
dinars to be generated, whereas 13 permits for mineral substances were issued
for an amount of 238.88 million dinars (3.41 million dollars).
In total, 30 awarding operations carried out since 2000, 27 of which linked to
the awarding of sites for industrial substances and 3 for mineral substances have
led to the granting of 1,013 mining permits for a total amount of 8.29 billion
dinars (approximately 118.5 million dollars). With regards industrial substances,
578 mining permits have been awarded for exploration and 401 for mining.

According to the MD of Enor

Gold production
has reached 720kg
The Entreprise nationale d'or (Enor National Gold Company) recorded for
the year 2008 gold production of round
720kg, of a total financial value of 1
billion dinars, indicated its Managing
Director, Mustapha Benzerga, during
his speech on the waves of Channel III.
The latter revealed that only 4kg have
been sold on the domestic market whereas the rest is exported abroad, particularly to Switzerland. He explained
this by the fact that last year the level of
business slump on the domestic market
was high, which caused financial deficits in Enor.
According to him, this was the reason
behind the decision to favour exporting.
He emphasised in this context that
Enor has had a very bad experience

with the local market. The company

was unable to sell the amount put up for
sale. This business slump caused a
serious crisis within the company. It
goes without saying, however, that the
company is able to cover the needs of
the domestic market.
According to him, Enor is in the process
of studying the ways and means of selling and satisfying the domestic market
with gold. To return to what he said, the
national production recorded during
this financial year was meagre.
However, for the year 2009, it is expected for this to be better since a significant increase in production is expected,
i.e. to a volume of one tonne from the
Amessmessa coast of a value of 4 billion
dinars. He also remarked that, with the

investment of several foreign firms,

Enor could increase its production to
reach three tonnes a year.
If we stay with his statements, other
deposits will soon be added to the
Amessmessa and Tirak mines in the
great Hoggar and they are in the process of being explored by foreign companies or towards being awarding by
the Agence nationale du patrimoine
Benzerga revealed that these were currently around 550 dollars an ounce,
adding, in the same breath, that we are
forced to go through a period of
adjustment and of upgrading procedures before the local market stabilises

awarded in 2008, over 65 million dollars in revenue

The revenue made at the end of these operations is 7.14
billion dinars.
These sites cover several wilayas across the entire national
territory and relate, among others, to limestone and rock for
aggregates, clay, gypsum, tuff, sand and sharp sand as well
as decorative stones, according to the ANPM.
Remember that their awarding is designed to improve the
supply of construction materials and respond to the high
demand from the domestic market.
The sites for the metallic mineral substances also cover different regions of the country and relate, mainly, to gold, iron,
zinc, lead, copper and tungsten. Their awarding generated
revenue of around 1.15 billion dinars.
According to the explanations of the ANPM, the total revenue made from all these operations, which particularly come
from granting permits, selling briefs and superficial tax, is
distributed to the operating budget of the mining agencies,
the local authorities' fund and for financing geological

The appeals for tenders for the promotion of small and

medium sized mining are launched by the ANPM every three
months, whereas those related to metallic mineral substances
are launched once every six months.
Furthermore, the mining land portfolio, managed by the
ANPM, includes 2,219 sites, 2,151 of which for industrial
substances designed for construction and public works and
68 for metallic mineral substances, it was indicated.
Their geographic breakdown shows that these sites are
concentrated in the regions of the High Plateaus such as
Tlemcen with 118 sites, Stif (106), Constantine (97), Batna
(80), Tiaret (72), Mda (63), Guelma (60) and Mascara
Furthermore, the investments made in 2007 in the mining
sector by Algerian and foreign companies reached 51.43
million dollars and are broken down between 41.08 million
dollars for mining, 9.59 million dollars for exploration and
757.12 dollars for prospecting, according to recent data
from the Ministry of Energy and Mines.

Energie & Mines


march 2009

2005-2007 ANGCM Business Report

The objectives have been achieved

By Chakib Khelil (*)

he reforms initiated in the mining

sector have been formalised efficiently in the field by the putting in place
of mining agencies (ANPM and
ANGCM), created by the Mining Act which have made
the effort necessary for their implementation.
Hence, since it was set up, the ANPM has played its
role of promoter of the mining domain and continues to
boost the activity by the awarding operations organised
periodically in total transparency.
For its part, the ANGCM has continued to play the
role devolved upon it by the Mining Act.
Its mission to put in place a geological service capable of making available to the public the country's soil
and sub-soil geological information is fundamental and
Within this framework, the National Geological
Service, set up by the ANGCM, launched a national
geological cartography and mineral inventory programme supported by the putting in place of the Banque
nationale de donnes gologiques (BNDG National
geological data bank) which is being set up, in order to
respond to demand from mining operators, scientific
operations and State institutions.
Alongside this, the publication of its periodical
newsletters which we have committed to distribute to
State institutions and diplomatic representatives have
aroused interest from the latter who have expressed
their congratulations for the quality of work and the
scientific interest given.
Thus, the actions undertaken by the National
Geologic Service since the setting up of the ANGCM
will soon give it a considerable national and continental
public service character.
The other mission, which is no less important, that
we have entrusted to the ANGCM pursuant to the
Mining Act is the administrative and technical supervision of mining activities.
This supervisory mission is assured by the mining
police corps, set up by the Mining Act, and is carried
out in close collaboration with the local authorities, the

Energie & Mines


march 2009

wilaya's services, the domains, taxes, justice and the

National Gendarmerie. Their support is highly sought
after so that our teams can accomplish their mission in
the field as required. The intervention of this corps,
which has become operational throughout the national
territory, has enabled a large number of anarchic operations lacking in terms of security, the environment and
others to be ascertained. This is the type of situation
which we will not accept and which we have to fight by
all the legal means provided for by the legislative and
statutory texts.
Other than the administrative and technical supervision of mining activities, the mining police corps is solicited by the local and national institutions. I am delighted with the contribution of these services in settling
problems related to the mining activity.
The mining activity undisputedly contributes to the
accomplishment of the development programme initiated particularly in terms of the supply of aggregates for
the construction of roads, housing, railways and other
important projects. However, we do not have the right
to develop this activity without being concerned about
protecting the environment and the health of our citizens, or to permit the anarchic mining of our mineral
This is also why I am giving a message to the
ANGCM teams in charge of mining supervision to
ensure the strict application of the mining regulations
and to be firm in the decisions they take in this respect.
To do this, they have to adhere to the Mining Act and its
applicable texts. I would like to confirm to them my full
support for their mission which they have to accomplish
Through this report outlining the ANGCM activity
for the period 2005 to 2007, one is able to appreciate
the efforts made by the ANGCM to assure the missions
for which it has been set up. I consider that the objectives fixed for it for these three years have been achieved.
The working conditions are now in place and other
results are expected for the coming years.
C. K.
* Minister of Energy
and Mines


2.2% increase in public

industrial production
The industrial production of the national public sector increased by 2.2% in
the first nine months of 2008, according to the latest data from the National
Statistics Office (ONS), which specify
that this increase was 3.8% excluding
hydrocarbons. As for the manufacturing
industries, they recorded a moderate
increase of 0.8% with a downwards
trend in the 3rd quarter (-2.4%) and
good performance during the 1st and
2nd quarters with, respectively, +2.7%
and +2%.
This increase was also drawn, mostly,
by the agro-food industry with 12.8%,
the energy industry (9.1%), the chemical, rubber and plastic industry (+8%)
and finally the mining and quarries
industry with 7.9%. These branches,
which experienced the most difficulties
in the first nine months of 2008, include the miscellaneous industry with
-18.9% and wood, cork and paper

industry (-10.6%), state the official

experts. The decline also concerned the
steel, metallic, mechanical, electric and
electronic industries (SIMMEE -5.2%),
the leather and shoe industries (-3.2%),
textiles (-1.9%) and ceramic and glass
construction materials (-1.1%) as well
as hydrocarbons with -0.6%.
The industrial production of the national public sector recorded a 0.3%
increase in 2007 compared to 2006.
This variation is particularly due to the
increase recorded by the mining and
quarries and energy sectors. The new
index on which the industrial production of these first nine months of 2008
has been calculated was set up further
to the changes which were introduced
in the industrial sector, indicated the
ONS experts. Hence, the number
of companies and subsidiaries no longer
included in the ONS survey on
industrial production (privatised or dis-

solved) is 90 companies. The list of products has been reduced by 54 products

and three branches of activities have
been removed, namely the non-ferrous
metallic ore extraction branch, the solid
fat manufacturing branch and the
branch for the manufacturing of other
food products, specify the Office's
The main purpose of the industrial production index set up by the ONS is to
measure the change in production volume, which explains why physical quantities by products, basic monitoring
parameters of industrial production, are
taken into account. On the basis of the
industry's in-depth survey elements in
1989, almost 480 companies and subsidiaries of the public sector were included for the quarterly survey. The production of these companies and subsidiaries has been monitored quarterly
since the base year.

Over 42% increase in exports

excluding hydrocarbons
Algeria's exports excluding hydrocarbons recorded a 42.12%
increase in 2008, going to 1.89 billion dollars compared to
1.33 billion dollars in 2007, according to the figures published by the National Computer and Statistics Centre (Cnis)
for customs. Despite this relatively major" increase, exports
excluding hydrocarbons remain "marginal" and represent only
2.42% of the total volume of exports.
The products excluding hydrocarbons exported are mainly
comprised of by-products of hydrocarbons. These are, in particular, cyclic hydrocarbons which increased by more than
210%, going from USD17.9 million to USD55.7 million and
oils and other products coming from the distillation of tar up
by 51.9%, i.e. a value of USD534.8 million compared to
USD351.9 million.
With the exception of flat laminated iron products and zinc in
crude form which recorded respective decreases of -40.28%,
i.e. USD92.8 million and -17.81%, i.e. USD50.9 million, the
other products recorded remarkable increases.

The largest increase was recorded by hydraulic cement products (+633.13%), going from 6.5 million dollars to 48
million dollars in 2008, followed by calcium phosphate products (+140.3%), going from USD57 million to USD137.2
million, cast iron shavings and waste (+115.42%), i.e.
USD189.7 million compared to USD88 million. Increases
were also recorded by anhydrous ammoniac (+81.03%),
going from USD164.8 million to USD298.4 million, mineral
and gaseous waters (+70.79%), totalling USD28.8 million,
hydrogens (argon) +54.36%, i.e. USD46.7 million and finally copper shavings and waste up by 5.37%, i.e. USD85.5
Algeria's exports last year reached 78.23 billion dollars, up by
30.04% compared to 2007. Hydrocarbons' exports counted
for the majority of these sales abroad with 97.58% of the total
value, a 29.76% increase compared to 2007.

Energie & Mines


march 2009

President Bouteflika inaugurates the National Employment Fair

3.5 million jobs created between

1999 and 2008
Organised by the
Ministry of Labour,
Employment and
Social Security, this
Trade Fair brought
together some 800
exhibitors representing several business
sectors and different
job creation mechanisms, including 500
created within the framework of the Ansej
and 150 other created
within the framework
of the National
Insurance Fund
The President of the Republic,
Abdelaziz Bouteflika, inaugurated the
National Employment Fair (Salem
2009) at the Palais des Expositions des
Pins Maritimes in Algiers.
Before starting to inspect the stands, the
Head of State, accompanied by the
Prime Minister, Ahmed Ouyahia, his
personal representative, Abdelaziz
Belkhadem, and members of the
government, read the employment
report (1999-2008) and outlooks for its
promotion, presented by an official
from the National Youth Employment
Support Agency (Ansej).
To this end, the same official explained
to the President of the Republic that 3.5
million jobs were created between 1999
and 2008, thanks particularly to the different job creation mechanisms created
by the State. With regards the outlooks
for employment for 2009-2013, he
forecasted the creation of 3 million jobs

Energie & Mines


march 2009

during this period, it was specified.

President Bouteflika then visited several
stands of young promoters who had
benefited from the different job promotion mechanisms. Organised by the
Minister of Labour, Employment and
Social Security, this Trade Fair brought
together some 800 exhibitors representing several business sectors and different job creation mechanisms, including
500 micro-companies created by the
Ansej and 150 others created within the
framework of the National unemployment Insurance Fund (Cnac).
Eleven ministries and several others
involved in creating jobs and supporting
employment also took part in this Fair
which ran until 27 February. This event
wishes to be an area of information on
employment, encouraging contacts with
partners in the job creation domain
(banks, customs, chambers of commerce), explained the organisers.

It also represents an area for exchanges

between young company leaders, the
economic operators and the young
aspiring to set up their own micro-companies, and will enable the young promoters to exhibit the products and services they offer. Several conferences
were organised during this trade fair
and covered themes such as opportunities for investing in and creating microcompanies. The performances of the
company and the role of the SME
Credit Guarantee Fund were also included in the themes of these conferences.
The unemployment rate in Algeria
reduced to 11.3% in 2008, compared to
13.8% in 2007, according to the statistical data from a survey carried out by
the departments of the National
Statistics Office (ONS).

According to the ONS

4.3% inflation in 2008 in Algeria

The average inflation rate in Algeria
reached 4.3% during the first eleven
months of the year 2009, whereas forecasts were for a rate of 4.2% for the
entire year 2008, according to the
National Statistics Office (ONS).
The variation recorded from 1 January
to November is mainly due to a 7.3%
increase in the price of food, with
11.9% for industrial food products and
2.9% for fresh agricultural products,
specifies the Office. As for the prices of
manufactured goods, these increased by
1.1% whereas those of services increased by 2.4% in the first eleven months
of the year, specified the same source.
With the exception of the fall in potato
prices (-25.3%), all other products in
the food group recorded an increase,
essentially including oils and fats
(+40.5%), coffee, tea and infusions
(+28.5%), fresh fish (+18.8%), chicken, rabbit and eggs (+14.4%), fruit
(+14%), vegetables (+9.2%), milk,

cheese and derivatives (+7.1%), bread

and grains (+3.6%). The increase in
the group's products also includes preserved fish and meat (+2.5%), lamb
and refuse from slaughterhouses
(+0.5%) and sugars and sugar products (+0.4%).
With regards the inflation rate recorded
in the month of November 2008, this
increased by +2.5% compared to the
month of October (-0.5%), i.e. a
monthly variation significantly higher
than the one recorded in the same
month in 2007 (+1%). According to
the Office, this increase is explained by
a 4.5% increase in the prices of food
goods, standing out by a 10.1% increase for fresh farming products.
Substantial price increases were observed in the month of November for some
products, particularly include lamb and
refuse from slaughterhouses (+8%),
chicken (+11.3%), eggs (+21.8%) and
vegetables (18.8%). However, the ONS

revealed a 1.1% fall in the prices of

industrial food products in November
compared to the previous month, due to
a reduction in the prices of oils and fats
(-4.4%) and sugars and sugar products
(-2.9%). The annual inflation rate went
from 29.04% in 1994 to 3.5% in 2007,
it was reported. It should be recalled
that the government's action plan,
adopted by the APN, is forecasting an
inflation rate of 4% for the entire year
2008 due to imported inflation, whereas the year 2009 should see a reduction in the inflation rate to 3.5%, i.e. the
same rate recorded in 2007. The ONS
postponed the use of a new consumer
price index, planned for last October, to
January 2009 to measure the average
inflation rate, set up on the base year
2001 after being validated by the
National Statistics Council (CNS)
which has not yet finalised the new calculation method.


Increase in the minimum capital of banks

The Monetary and Credit Committee
has examined and adopted a settlement
plan related to the minimum capital of
banks and financial institutions working
in Algeria, indicated a Committee press
release. Hence, the minimum capital of
banks and bank branches has been raised from 2.5 billion dinars to 10 billion
dinars whereas the minimum capital of
financial institutions and branches of
financial institutions has been raised
from 500 million dinars to 3.5 billion
The Monetary and Credit Committee
met in an ordinary session under the
presidency of Mohamed Laksaci,
Governor of the Bank of Algeria. The
Committee specifies that the banks,
financial institutions and bank branches
in operation have a period of twelve
months to comply with these new regulatory provisions.

This increase in the minimum capital of

banks and financial institutions working
in Algeria, added the press release,
aims to reinforce further their financial
solidity as well as the stability of the
banking system in Algeria and contributes also to the protection of depositors".
Furthermore, the Committee also examined the requests from three banks
and one bank branch working in Algeria
which requested, pursuant to the provisions of order no. 03-11 of 26 August
2003 on money and credit, the
Monetary and Credit Committee's
approval in view of increasing their
capital. Hence the Monetary and Credit
Committee authorised the increases
introduced beforehand of:
Banque de l'agriculture et du dveloppement rural authorised within the framework of reinforcing its own equity to
decrease then increase its capital by

15,000,000,000 dinars which will then

become 33,000,000,000 dinars.
Gulf Bank Algrie is authorised to
increase its capital by 4,000,000,000
dinars to bring it to 6,500,000,000
BNP Paribas El Djazair is authorised
to increase its capital by 1,000,000,000
dinars to bring it to 4,500,000,000
The branch of HSBC Bank Algeria is
authorised to increase its capital contribution by 800,000,000 dinars to bring
it to 3,300,000,000.
Finally, the press release specifies that
this reinforcement of basic capital is
part of the process of continually
improving the financial health indicators of the banking system in Algeria, as
a firm foundation in its resilience.

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march 2009

Finance Act 2009

The new legislative provisions

Here are the main provisions proposed by the Finance Bill 2009 adopted
by the National People's Assembly (APN).

A - Measures to enlarge the

scope of taxation and reinforce the fight against tax fraud
1 - Assimilation of the transferable
profits of branches and other bodies to
the parent companies abroad to dividends. Thus, the benefits which will be
transferred by the branch or any other
professional body to the headquarters
of the foreign company, located outside
Algeria, will have to incur tax by virtue
of dividends at the rate of 15%.
2 - Creation within the General Tax
Directorate of a department of tax
investigations responsible, at the national level, for carrying out investigations
in order to identify the sources of tax
evasion and fraud. This department
will have to have regional branches
which will report to it.
3 - Limitation of the benefit of reductions in terms of TAP (tax on professional activities) to only invoices paid by
methods of payment other than cash.
4 - Non-accounting of the amounts of
VAT deductible on invoices paid in cash
when their amount exceeds DZD
5 - Establishment of the obligation to
pay taxes by methods other than cash
when the sums due exceed an amount
defined by order of the Minister of
6 - Establishment of specific taxation
on capital gains from the sale of stocks
or shares carried out by non-residents.
These will give rise to taxation by virtue
of IRG (income tax) or IBS (corporation tax), depending on the case, at the

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rate of 20%, discharged of the tax and

must be the subject of the obligation to
pay out, via a notary, one fifth (1/5) of
the amount of the sale.
7 - Updating of the sentence and order
enforcement premiums, handing down
fines and monetary sentences, whose
recovery is entrusted to the tax authority.

B - Measures for encouraging

1 - Extension of the periods of exemptions in terms of IRG (income tax) and
IBS (corporation tax) in favour of
Stock Exchange transactions; the measure proposes its extension for a period
of 5 years whereas the initial exemption
period should have expired in
December 2008.
2 - Extension in favour of promoters
eligible for the National Micro-credit
Support Fund, of the exemption from
IRG (income tax), already granted to
investors benefiting from the CNAC
and ANSEJ systems. This exemption is
granted for a period of 5 years.
3 - Coverage of the financing risks of
investment credits to SME. This measure aims to grant guarantees given by
the Investment Credit Guarantee Fund
(CGCI-PME) the nature of a State

C - Measures aiming
to simplify the tax system
1 - Establishment of the quarterly
method of payment in terms of IRG
(income tax), TAP (tax on professional
activities) and VAT for the taxpayer following the simplified system. This
method of payment will enable tax-

payers to declare and pay, quarterly

instead of monthly, different duties in
cash due by them.
2 - Simplification of the IBS (corporation tax) payment code (removal of
rolls) which will facilitate the management of legal matters in view of the
time-savings induced by the removal of
enrolment which will enable the latter
to focus its activity on tax inspection
and the tax base.
3 - Exclusion from the scope of the
IRG (corporation tax) of capital gains
from the cash sale of buildings built or
not built.

D - Measures to reinforce the

guarantees of taxpayers
1 - Establishment of the corrective
declaration for some professions and
activities such as banks. For companies
with a general meeting which has to
approve the accounts, the tax return
made (report) must be provisional.
These companies may, at the most 2
weeks following the expiry of the period of the holding of the general meeting, submit a final tax return.
2 - Establishment of the obligation to
notify final rectifications decreed by the
tax authorities after an inspection, in
view of guaranteeing further taxpayers
their rights.
3 - Limitation of account checking
operations to officers with at least the
grade of tax inspector. Extension from
2 to 4 months of the recourse commissions referral period.

Induction system

The induction programme

scheduled for our new recruits
By Mrs Malika Belkahla (*)

s you are aware, since 2006, the Sonatrach Group has had an updated human
resources policy. This policy, which is part of the modernisation of our management systems, responds to a purpose: better management and development
of our human capital; the stake today being to continue to evolve with the required competitiveness among our partners and competitors.
Hence, if the objective for our Group is to give itself the means of attracting talent,
and therefore of employing the best, how can it put in place a more effective induction
and training programme for new recruits?
As MCD-HR, we have made immense effort to re-engineer the entire human resources development and management process. The induction process, which is operational
today, is one example of this and will concern hundreds of new recruits. Its objective is
to have a potential of operational executives through better support through putting them
in professional situations and giving them specific training in this context.
Obviously, in the field of induction, our Group has capitalised on rich experience for
a long time. Given the changes we are experiencing, updates and improvements have
been made to the educational contents of the programme which all of the Group's training centres are responsible for implementing today.
Finally, we cannot talk about the induction process without talking about the passing
on of culture and history. We have therefore ensured that this process carries our values
and our collective memory. This will be the first experience of our new recruits within the
Group. It will enable them, we hope, to become aware of the opportunities to develop
their careers and the potential they have insofar as being the future leaders of our Group.
M. B.
* Director HR-HS

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march 2009

HUMAN resources
Occupational medicine

A nutritional programme
for Sonatrach workers
A healthy and balanced nutritional programme designed for protecting
the health of workers.
At the end of the experience of
Sonatrach's occupational physicians
during their medical visits on the
Group's sites, a significant increase has
been noted in some serious illnesses
within the collective of workers such as
cardiovascular diseases (CVD), hypertension (HTA), diabetes and dyslipemia
(related to problems of the lipid metabolism).
Concerned about the well-being and
protection of the health of workers,
Sonatrach has carried out a study in
the Production Division, region of
Hassi Messaoud, selected as a pilot
unit as it presents all the human and
technical characteristics in order to
complete this project in the South. This
survey was finalised by the drawing up
of a nutritional programme based on
the resulting nutritional diagnosis.
This nutritional programme, designed
to be used as a reference on the living
bases of the company in the South
initially, will then be rolled out to all
entities and structures of the Sonatrach
Out of a total population subject to
relief (SR) of 1,385 persons, all socioprofessional categories included, 982
people, i.e. 71% (average age: 41) were
surveyed on the basis of the following
The characteristics of the population
subject to relief (SR) that took part in
the nutritional survey (breakdown by
age and years of service in the company);
The relationship between food
consumption, daily energy output of
the population surveyed and the risk
factors which might result from this;
The analysis of the menus proposed
by the Administration Division in the
different restaurants.

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Objective of the nutritional


Results of the survey

The objectives of this programme is to

ensure that Sonatrach workers have a
healthy, balanced diet both qualitatively
and quantitatively which takes account
of the effort put in at work, its impact
on health and which aims to prevent
any disease linked to an imbalance or
poor balance of foods in the diet.

Medical results

The Production division of the regional site of Hassi Messaoud was selected
as a pilot unit
The study concerned 982 people (all
socio-professional categories included,
subject to relief whose average age is 41).

Serious diseases have been found in

the population subject to relief (SR)
surveyed such as type-1 diabetes, 0.3
and type-2 diabetes 2%. Hypertension
3% and hypertension-type-2 diabetes
0.2%, dyslipemia 4%.
Overweight: Body Mass Index (BMI)
from 25 to 43%
Obesity: Body Mass Index (BMI) 30:

human resources

Food consumption results

The study shows that the total energy
input is high: (2974+-627 versus
recommended daily doses (RDD)
2200, 3200 Kcal).
High protein intake 21+-3% vs RDD
Low carbohydrate intake 35+-6% vs
RDD 52%
High lipid intake 44+-7% vs RDD
The study reveals a high consumption
of animal-based proteins, cholesterol
and saturated fatty acids and a low
consumption of monounsaturated and
polyunsaturated fatty acids; this type of
diet tends to encourage the appearance
of other risk factors for diseases related, partly, to diet such as hypercholesterolemia, diabetes and hypertension.
Nutritional balance

Questionable breakdown of the total

energy input (TEI) in the day, compared to the one proposed by the recommended daily doses (RDD)
Major consumption of red meat and
Satisfactory consumption of bread,
grains, potatoes, starches and fresh
Fibre intake compliant with nutritional recommendations.
The menus proposed to the SR workers, rich in animal proteins and fat,
tend to encourage excess weight and
even obesity, particularly when the
workers are sedentary, i.e. have no
physical or sports exercise.
Doing physical exercise or sports

The energy output related to physical

exercise and sports, an essential component of everyday life, is identified as
a major factor for the maintenance,
improvement and even recovery of
health. The study further reveals that
combined with dietary habits, the usual
activity/inactivity level is involved in the
development and the prevention of the
most frequent chronic diseases. In fact,

is it demonstrated that physical exercise and a balanced diet both contribute

to a healthy life.
The study shows that there is a consideration proportion of workers (44%)
who play sports three times a week on
average. This study explains that even if
the harmful or protecting effects of the
diet are not necessarily felt in the short
term, the fact remains that an imbalanced diet has harmful effects on health.
It is therefore not unusual to give the
hypothesis of a period of latency between the diet of a population and its
consequences in terms of public health.
To prevent problems in the long term
from these dietary imbalances, a nutritional education action is required.
To do this, a training programme has
been given to the medical corps, catering managers and also catering auxiliaries and technicians.
Furthermore, the implementation of a
nutritional programme must be accompanied by a sustained communication
plan. Any weakness in this domain may
have indirect consequences on nutritional and health qualities. The action
must be a priority in terms of:
The direct impact of a lack of quality
(nutritional value) and quantity (volume consumed) is either over-eating or
malnutrition which has more or less
serious effects depending on its state of
Any lack of food hygiene and safety are
direct or indirect contaminations
(equipment, labour and environment)
making, consequently, certain products
unsuitable for consumption.
Awareness-raising work on the interest
of the nutritional programme which
will be carried out within the company
will depend on whether or not the
Group's workers commit to the implementation of this nutritional programme which aims to propose an overall
diet, reconciling balance and variety of
food combined with playing sport regularly - in a word, a diet which keeps the
pleasure of eating intact whilst taking

account of dietary habits, the way of

living and the tastes of the workers.
It is not a question of restricting or prohibiting certain foods but, to the
contrary, of enabling everyone's dietary
behaviour to be guided whilst maintaining the pleasure and conviviality of
(Nutritional Programme Team)
In Synergie

As a reminder
Type-1 diabetes: Diabetes is a disease
characterised by too high a rate of glucose (sugar) in the blood and urine.
Type-1 diabetes results from an insufficient production of insulin, hormone of
the pancreas, which regulates the
amount of glucose in the blood. The
treatment for this type of diabetes,
which is present from infancy, requires
daily injections of insulin for life.
Type-2 diabetes: This type of diabetes is
linked to a resistance to the action of
insulin. It occurs mostly in more elderly, particularly obese, people.
Hypertension: Too high blood pressure. In everyday language it is considered
that an adult has hypertension above
19-9 pressure.
BMI: the Body Mass Index is calculated
by measuring the ratio of weight to size
squared (m).
Obesity: Excess weight due to an excess
of fat. Obesity can be linked to nutritional, metabolic, hormonal, psychological
and social factors.

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march 2009

HUMAN resources
Algerian Petroleum Institute (IAP)

Graduation of the first year

of 420 Venezuelan technicians
The IAP will assure the training of 420 Venezuelan technicians
in four years.
The first year of 420 Venezuelan technicians from the petroleum company
PDVSA has graduated from the Oran
School of the Algerian Petroleum
Institute (IAP). The diploma awarding
ceremony was held in the presence of
the Minister of Energy and Mines,
Chakib Khelil, and the Deputy Minister
of Petroleum of the Bolivarian Republic
of Venezuela, Yvan Orellana, who both
underscored the excellent quality of
the partnership between the two countries, particularly in the field of hydrocarbons. This first graduation year of
420 Venezuelan technicians represents
the first concrete result of this partnership with our Venezuelan friends,
emphasised Chakib Khelil. He recalled
that this course is held within the framework of a contract concluded between the IAP and the company PDVSA.
By virtue of this agreement, signed in

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march 2009

October 2007 in Caracas (Venezuela),

the IAP will assure the training of 420
technicians in the different oil and gas
sectors in four years, specified the
Minister. He mentioned the training in
progress of a group of 80 technicians in
the different oil and gas segments. He
furthermore mentioned the training in
progress of a group of 80 Venezuelan
technicians within the IAP Schools of
Oran and Skikda.
The Minister of Energy and Mines
recalled the mission of the IAP which,
he said, is the main instrument for the
implementation of our cooperation
policy with our partners in the field of
training. The IAP, which has forty-four
years of experience in terms of specialisation and operational training, has
become a corporate university of
international standard, emphasised Mr

The role of the IAP in the development

of human resources was also highlighted by the Chairman & CEO of
Sonatrach, Mohamed Meziane, who
stressed the importance of the investments made by this national company in
terms of managers and human resources. The Chairman & CEO of the IAP,
Salah Khebri, for his part, recalled that
almost 21,000 people have been trained
in the different industrial oil and gas
specialities since the creation of this
institute by Sonatrach in 1964. When
awarding the diplomas, the Ambassador
of Venezuela, Mitchel Mujica, congratulated the high level of this bilateral
cooperation which is likely to be consolidated, he said, counting on the prospect of a growth in trade excluding

HUMAN resources
The sector's 5th training conference

Chakib Khelil: Measuring the results

of the efforts made in the field
Our sector's fifth training conference organised on
2 and 3 December 2008 has enabled the efforts
made by the companies in terms of training to be
These efforts, whilst not negligible, as demonstrated
by the percentage of the budget devoted to training,
must be maintained and orientated even more
towards the qualitative aspects. The reports as well
as the discussions which have been initiated have
demonstrated that training is one of the concerns of
the leaders of the sector's companies.
The clarity and pertinence of the bases for improvement proposed at the end of the conference indicate
increasing knowledge of the stakes posed for our
sector and the necessity for us to work to optimise
our capacities to deal with this. However, whilst
managers at all hierarchical levels must be considered key players in the quality of our training proces-

ses, those responsible for training must be a force

of internal advice-assistance and provide the tools
and methodologies to help put together the plans, to
implement the training actions and to evaluate the
results of these.
Hence, I invite you to accord greater importance to
the implementation of the recommendations of the
fifth training conference and to focus on putting in
place methodologies and evaluation procedures
which will enable us to measure, concretely in the
field, whether the objectives fixed have been achieved and whether the competences sought have
been acquired.
I remind you of the great interest I personally have
in the implementation of these recommendations
and inform you that I will remain attentive to the
efforts which will be made in this context.
Dr Chakib Khelil

Summary and recommendations

of the conference
The fifth Training Conference of the Energy and Mines sector organised on 2 and 3 December 2008 in Algiers achieved
the objectives fixed, namely to evaluate objectively the
practices implemented in terms of training, but also to
recommend solutions to improve them and to find an even
greater correlation between the training policy and strategy
and the business strategy of companies. The exchanges between the training specialists from national and international
companies, those responsible for training in national and
international training institutions and the mangers in their
capacity as users of the trained human resources are
summarised below. These discussions also gave rise to
recommendations which will have to be adopted in each of
the sector's companies.
Conditions of a good integration of the training function
in the company's strategy
The training must be steered by a body close to the strategic level.
The managers must have large involvement.
The training function must place itself in a position of advice-assistance.
The training strategy must be published and shared.

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march 2009

The training must fall within a customer-provider

approach; it must deal with customer expectations.
The approach developed must be encompassing and must
take account of individuals, the organisation, tools and
The implementation must be shared between all persons
The tools for gathering needs, putting together the plan
and budgeting for it must be standardised and made available to the line management.
Our challenges

To make professional development an element of the corporate culture for all persons involved (managers and
To impose training as a key element in the business strategies and HR policies.
As preparing for the future senior management is a constant concern, this must be made an ongoing activity.
To establish partnership, with the best institutions of international renown, as a favoured means to develop the efficiency of training structures.
To use innovative practices more and particularly support
in improvement projects.

human resources

To set up and systematise the practice of post-training evaluation and the return on investment measure.

Training expenses are reaching considerable levels (9% of

the payroll for Sonatrach, 8% for Sonelgaz and 6% for
The average training periods per worker and per year are
up: 19d/year/worker for Sonatrach and 14 for Sonelgaz (the
minimum fixed by the sectoral directive is 7d)
The actions are highly diversified and take account of the
contexts of each company.
Points for improvement

The training requirements identification procedure still has

no obvious link with the operational objectives.
The evaluation systems, particularly skills evaluation, are
not mastered.
The monitoring of the training remains quantitative; the
investment evaluation methodologies have not been sufficiently set up.
The references do not often include measurable objectives.
The process for preparing for the future senior managers
is not planned and implemented according to a structured
The relations with the training institutions come from a
simple training purchase position and not from a real partnership.
Training in the foreign companies
Training enables mobility between different jobs and business units.
Training is a means enabling:
trainers to be found and identified internally,
internal competences to be used for sharing
and passing on knowledge,
flows to be managed and departures to be
The Corporate University of ENI is dedicated to recruitment selection and training development. It perpetuates the
lifecycle of the company's knowledge.
The employee is involved in his development and put in a
situation of success.
The company gives him the necessary support for his development through a partnership.
Training is a legal obligation.
The contribution of the training structures
of the Energy and Mines sector
Training is a source of intellectual enhancement and a factor of development and promotion of our human resources.
Partnership is the best way to gain expertise.
Capitalisation is a necessity which must be incorporated
into our training practices. It must be developed qualitatively and technically tooled (knowledge management process).

The development and modernisation of educational and

physical capacities will enable us to take up the challenges
with assurance.
Several support projects are being drawn up:
technical databases to be used by the sector's
information, watch and communication system;
database for the sector's trainers.
Problem of attracting better trainers, particularly for training in the domain of mining.
The experience of the foreign training structures
A successful training programme is one based on the skills
profile, executed by stage and completed in controlled times.
The training policy is drawn up from the HRM policy.
The competences for each position are codified and noted.
Promotion is done on the basis of specific training courses.
The training-development model enables the compatibility
between the explicit skills profiles and the individual career
The integration of multi-culturality (groups and subsidiaries) around the company's unique values is done by training,
relying on local skills.

To put in place a strategic watch in terms of training to
anticipate and prepare the strategic skills.
To adopt an approach by objectives making the link between the company's business strategy and the training objectives.
To define measurable indicators which facilitate the evaluation of the training objectives.
To define and put in place the methodology and evaluation
tools of the impact of training on the company's performance.
To evaluate the return on investment from training.
To diversify the skills development methods: tutoring,
coaching, mentoring, etc.
To develop professional development as a support to the
career management process.
To improve the attractiveness of specialists as trainers, particularly in the domain of mining.
To involve the managers in the entire training process,
upstream and downstream.
To make available the needs to the training institutions in
the medium term for better planning and better visibility of
the load plan.
To assure the continuous training of trainers.
To use the new information and communication technologies to develop e-learning as another training method.

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march 2009

HUMAN resources

Promoting internal
By Hocine Rizou (*)

ot training by attempting to justify it by the amount of time training requires is

certainly the best way of preventing personnel from developing and, consequently, blocking, in the end, any system which the company has.

Even though human resources requirements could be satisfied, to a large

extent even, by means of external recruitment, a lot of induction and adaptation efforts
are needed on both sides: by the company and by the new recruits.
When the prerequisite conditions are met in internal candidates, the preparation by
training is very effective in responding to the skills requirements at all levels.
Convinced by this theory, we have been working, since the start of this year, on preparing, through internal training actions in particular, the bases to raise the awareness of
supervisory staff on the question of continually improving competences, on the function
of manager, on efficient work, etc. and to consolidate the qualifications of the operational personnel.
By intensifying training actions, there is an objective which is to reassure the personnel as to looking after their concerns expressed many times about feeling prevented
from developing, improving their services and, consequently, going up in the organisation.
This concern is an iterative subject both for the Minister of Energy and Mines who
continually recalls, on every occasion, its importance in the competitiveness of the sector
and for the Chairman of the Sonelgaz Group.
It is fitting to recall the creation of a subsidiary (IFEG) dedicated especially to the promotion of training within the Group. With considerable human resources and infrastructures, it is easy to guess the place occupied by this activity in the Group's strategy.
Training is, quite honestly, this tool which the company has to maintain skills, without
which men are inevitably affected by the obsolescence of their knowledge.
H. R.
* Chairman & CEO
of Inerga

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march 2009

women's forum
Portrayals of Imne Khaldi and Khadra Bengrine

Two young dedicated women

on worksites
What is so striking about a real Algerian woman is that she never stops
demonstrating her knowledge and her fully accomplished role in the
different business sectors by reflecting her determination to succeed in
her mission in equality with men.
By W. Abraz (*) & Chahira Baba-Ameur (**)

This boldness and will of steel are perfectly illustrated by the young women
newly recruited into Etterkib, just like
this lady with great competence in one
of the company's sites. Indeed, Imne
Khaldi is a young engineer full of will
and greatly motivated. She was recruited
into Etterkib in July 2008 as a QA/QC
engineer on the Skikda site.
Her quality control engineer missions,
responsible for monitoring the civil engineering works for the major renovation
project and the project to increase the
capacity of the fire-fighting network of
the Skikda refinery, were assigned to her
according to her already impressive professional background.
Given that she had already worked
within a foreign company, trips to the
site were nothing extraordinary or
impressive for her. She even says she
was very happy to find at Etterkib her
good old habits of a young worksite
woman. On this specific point, she
confirms: My old job required my
constant presence on the worksites, I am
very happy to find these practices again
at Etterkib. I will feel at home here...
Her hard-working nature enabled her to
become quickly and easily a part of the
group of executives on this worksite. As
a qualified State engineer with two years'
experience on worksites, she says she is
developing wonderfully in a team in
which communication and information
are essential, surrounded by fellow workers who know their jobs inside out. She
states: Each manager is important and
their contribution will contribute to everyone's development.
Apart from the fact that she is a native of
Skikda, her seriousness and her commitment were the criteria which encou-

raged Etterkib to put Imne on a project

of strategic importance for the company
and for the client Naftec.
She describes her main missions, which
she performs in an applied and assiduous manner, as follows:
In collaboration with the Etterkib
engineering department, she attentively
prepares the works for the subcontractors whilst drawing up the timetables for
the tasks entrusted to them.
She also works on preparing for the
topographic surveys and also the set-out
plans of the areas to be made available to
the worksite whilst monitoring the progress of the civil engineering works.
She controls the conformity of the different phases of the civil engineering
works and reproduces the as built
modifications on the final construction
Finally, as a responsible and conscientious engineer, she excels in the acceptance of the completed works with the
client, whilst having her word to say in
the different coordination meetings with
the client Naftec.
Imne Khaldi is an accomplished engineer, an executive among so many
others in the Works Division of Etterkib,
for whom the future undoubtedly holds
a lot of moments of joy and twists and
turns and, let's hope, quick and sure
development as well as for all the company's other young female recruits. She
concluded: I hope to succeed in the
task entrusted to me and respond to the
trust that my managers have placed in
me I also would like there to be
more females on the worksites without
any distinction, with mutual respect between everyone, to achieve together our

Imne Khaldi, QA/QC Engineer

Renovation works of the Skikda refinerys fire-fighting network

Khadra Bengrine, Maintenance works

master agreement with Sonatrach LQS

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march 2009


noble objective of continuing to make

Etterkib a performing and prosperous
company, succeeding in all its projects,
as our predecessors have done
These new practices are perfectly illustrated by one of our female employees
on the west site of Etterkib in Arzew,
namely Miss Khadra Bengrine, 31
years old with a postgraduate degree in
University of Mohamed-Boudiaf in
Oran, who joined Etterkib in June
2007 as a personal assistant on the site.
Her seriousness and her dynamism
enabled her to be assigned to the logistics department of the site where an
ardent task awaited her which would

Miss Khadra's very first experience in

the field was therefore at the GP1Z
plant of the Arzew industrial zone to
supervise the sanding and painting
works of the production facilities. Her
work then consisted of monitoring the
undertaking and progress of the works,
drawing up daily reports and supervising the personnel working at the plant:
I have to be efficient and strict in my
work but also flexible, which enables me
to manage my work better and supervise the teams well on the worksite
It is important to say that her qualities
as a woman enable her to let nothing
drag on or fail to notice the slightest
detail in the site's activities.

Given the good results obtained within

the framework of this agreement,
Etterkib has won other contracts with
the same client one of which consists of
painting the production facilities, another project which will also end before
the recommended deadlines since it
started in August and is just about to be
completed whereas it was expected in
five months.
This is in fact a second worksite which
is seeing the involvement of Miss
Khadra Bengrine who, as an SPL technician, in a stimulating professional
environment, must attend all the project's stages and ensure it is making
progress in order to honour its
contract: satisfy the client.

A woman for stock management

By Karima Aribi, stock management technician

A company's strength is measured by its activities

and the method by which it manages its resources
(human and physical). This is what has been
ascertained in these past years since the emergence of globalisation which imposed a new management approach calling for the increasing use of
women in occupying jobs in the different domains
of management in the same way as men.
Known for its peaceful working environment, full
of respect, in 2007, the company Etterkib,
employed for the first time a woman in the stock
management department of the logistics division
where all good working conditions were in place,
enable her to learn the technical
After a few months working as a secretary for this department, where, further, she was able to prove her abilities,
Miss Bengrine obtained the position of
SPL (scheduling, programming and
launching) technician just after the
signature, on 6 January 2008, of the
master agreement on the renovation
and maintenance works of the liquefaction plants of Sonatrach Downstream's
LQS division. Miss Bengrine's involvement in this agreement is proof of the
merit Etterkib had in enabling a young
woman to enter an area of business
until then reserved for men. In this
respect, Miss Khadra Bengrine
confirms to us: My job is exclusively
on the site and the field can only add to
my CV.

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march 2009

which enabled good results to be made with the

involvement of the woman who is also fully involved in the decision-making. As a woman, I had to
excel in two ways: first of all accomplishing the
tasks entrusted to me whilst respecting the procedures and by applying the standards linked to the
position, and secondly always doing more than
required in my functions in order to climb to a
higher level and no longer have to question myself
as to my competences over those of my male colleagues.

In this respect, Miss Khadra told us: I

owe Etterkib and the management of
the west site who gave me my chance
and who had trust in me, as my involvement in the worksite has given me
great well-being and both professional
and human development, which I
would not perhaps have found in another company. I would say that
Etterkib's operating as a large family
leaves no one independent, on the
contrary this enables real progress in
the work done, regardless of the nature
of the activity. Furthermore, the team
spirit firmly rooted in the Arzew site
and the worksite itself has borne its
fruits, from the moment the works
which should have been completed in
six months were completed before the
contractual deadline between April and
August 2008, she continued.

It is important to note that Miss

Khadra Bengrine and her counterparts
are the illustration of the real success of
the company in terms of promoting
women's employment on the worksites,
which speak volumes because, need it
be recalled, the presence of women is
even more essential for the working
team. They contribute to the diversity
of points of view, more respect between
co-workers and to a better ambiance,
more organisation, more performance
and more security.
W. A. et C. B.-A.
* Head of communication
** Communication assistant (Etterkib)
In Le Lien Etterkib


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march 2009


The two countries celebrate the fiftieth

anniversary of their diplomatic relations
Algeria and China have celebrated the 50th anniversary of the start of
their diplomatic relations, with China having recognised the Provisional
Government of the Algerian Republic (GPRA) in September 1958 and
the two countries established diplomatic relations on 20 December
of the same year.
Since then, the relations between the
two countries have developed continually. The bilateral relations have thus
been supported by historic links that
have become the foundation of a dynamic and fruitful cooperation, maintained by the exchange of high level visits
and regular collaboration. In this sense,
the relations between the two countries
date back to a period when Algeria was
fighting for its independence, with this
historic context having contributed to
cementing and structuring the relations
between the two countries over time.
In the aftermath of its independence
and as of 1963 Algeria has been the
number one developing country to
receive Chinese medical teams on the
basis of a regularly revised agreement,
i.e. 3,000 Chinese doctors to work in
the hospital structures.
In the wake of this personal commitment, Algeria actively supported the
legitimacy of the recovery by the
People's Republic of China, in 1971, of
its seat within the United Nations and
its status as a permanent member of the
Security Council.
Algeria has also reiterated its position
on the subject of the question of
Taiwan as well as its support to the territorial unity and integrity of the
People's Republic of China, sole representative of the Chinese people. The
regularity of the very high level political
and diplomatic contacts, including the
official visits made to China by the
President of the Republic Abdelaziz
Bouteflika, in October 2000 and
November 2006 and the one made to
Algeria by its Chinese counterpart, Hu
Jintao, in February 2004, has greatly

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march 2009

contributed to the decisive boost to the

development of the cooperation relations between the two countries. The
second visit of the Head of State to
China (November 2006), like his participation in the first summit of the SinoAfrican Cooperation Forum, sealed the
exceptional level of the relations
between the two countries, with
the signature of the Strategic
Cooperation Declaration, thus making
Algerian-Chinese relations one of trust,
longevity, completeness and a balance
of interests.
This visit led to the signature of nine
agreements in the transport (civil aviation), finance (non-double taxation),
economic and technical cooperation,
commerce, energy and justice sectors.
The year 2008, as in previous years,
was marked by the regularity and the
multiplicity of the official contacts,
marked by several high level visits between the leaders of the two countries in
different domains.
During this same year, the President of
the Republic attended the opening
ceremony of the Beijing Olympic
Games, thus demonstrating Algeria's
friendship and solidarity with the
Chinese people and government. The
year 2008 also saw the setting up of an
Algerian-Chinese friendship group,
combined with a master agreement on
cooperation in the parliamentary
domain. The economic, commercial
and scientific cooperation reflects the
excellent political relations between the
two countries, with trade having reached 3.82 billion dollars in 2007, i.e. a
48% increased compared to 2006,
which enabled China to be in 4 place
on the list of Algeria's trade partners

and 2nd place as supplier of the

domestic market with exports evaluated
at 2.689 billion dollars in 2007. The
numerous construction sites completed
or being completed in Algeria by
Chinese companies represent a total
amount of 8.5 billion dollars, whereas
the East-West motorway mega-project,
part of which is done by Chinese companies, represents 6.2 billion dollars.
The construction of railways for a cost
of 2 billion euros and the investments
in the domain of hydrocarbons and
mines represent, for their part, a total
value of 760 million dollars. The project to transfer the underground waters
from In Salah to Tamanraset (750 km)
was also entrusted to a Chinese company, with a cost of around one billion
dollars. In the domain of public works
and knowledge transfer, a Chinese
company specialised in this domain will
finance the construction in Algeria of a
Higher Institute of Large Project
Management and will assure shortterm training in China on management
and motorway infrastructure construction techniques for 70 Algerian technicians. Furthermore, the statistics reveal
that close to 30,000 Chinese natives
work and reside in Algeria, 120 of
whom are doctors from the medical
mission. The opening of the AlgiersBeijing air route will be another factor
to strengthen bilateral relations between Algeria and China.


President Bouteflika receives

the President of Chinas National
Peoples Assembly
The President of the Republic, Abdelaziz Bouteflika, received in Algiers
the President of the National People's Assembly of the People's Republic
of China, Wu Bangguo, on an official visit to Algeria. The audience took
place in the presence of the President of the National People's Assembly
(APN), Abdelaziz Ziari, and the president of the Algerian-Chinese parliamentary friendship group, Sad Bouhadja.

Wu Bangguo: Algerian-Chinese relations are

going through the best stage in their history
The President of the National
People's Assembly of the People's
Republic of China, Wu Bangguo,
emphasised in Algiers that
Algerian-Chinese relations are
going through the best stage in
their history.
In a statement to the press at the
end of the audience granted to him
by the President of the Republic,
Abdelaziz Bouteflika, Mr Bangguo
specified have raised several questions with President Bouteflika,
adding that both parties had
expressed their satisfaction with the bilateral relations.
Mr Bangguo on an official visit to Algeria upon the invitation of Abdelaziz Ziari, President of the National People's
Assembly (APN), felt that the Algerian-Chinese relations
are becoming a model in terms of inter-state relations,
hailing the contribution of President Bouteflika to the development of the links between the two countries. The
Chinese leader recalled the considerable effort made by
President Bouteflika when he was head of Algerian diplomacy "in the recovery by China of its legitimate position
within the United Nations.
In this respect, he underscored Algeria's support to certain questions inherent in the fundamental interests of
China, for example the questions of Taiwan and Tibet.
Mr Bangguo recalled that the President of the Republic and
his Chinese counterpart, Hu Jintao, had agreed to promote the bilateral relations at a strategic level.
With regards economic cooperation, the President of the
National People's Assembly of the People's Republic of
China indicated having spoken with the President of the

Republic on ways of strengthening this strong cooperation

with a trade volume which,
last year, amounted to 3.8
billion dollars. He confirmed,
on the other hand, the determination of the two countries to
make more effort for the realisation of the East-West motorway project and the SouthNorth hydraulic transfer project. The two countries also
intend, according to the
Chinese official, "to enlarge the
areas of common cooperation, particularly in the energy
and mining resources sectors, in addition to the creation of
a Chinese trade area in Algeria".
He added having covered "in-depth" with President
Bouteflika international issues on the subject of which he
revealed "a compatibility and a rapprochement of the positions" of the two countries.
Mr Bangguo was keen to specify that the Algerian-Chinese
cooperation mainly aims to defend both the interest of the
two countries and those of developing countries".
On the other hand, he recalled the content of the interviews
he had had with Mr Ziari sanctioned by the signature of a
master agreement on parliamentary cooperation between
the APN and the National People's Assembly of the People's
Republic of China, saying that he wished to see the parliamentary exchanges contribute to the enhanced cooperation and friendship between the two countries".
The Chinese official finally indicated having found during
his visit the profound friendship which the Algerian people have for the Chinese people.

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march 2009


President Bouteflika receives the

President of the Polish Senate
The President of the Republic, Abdelaziz Bouteflika, received in Algiers
the President of the Polish Senate, Boris Borusewicz. The audience was
held in the presence of the President of the Council of the Nation,
Abdelkader Bensalah.

Boris Borusewicz, President of the Polish Senate: Algeria

remains a market with enormous prospects
A close collaborator of the Polish
President, the President of the
Senate, Mr Borusewicz, on an official visit to Algeria, replied willingly
in his quarters at the El Mithaq
residence to our questions.
In the presence of His Excellency
the Ambassador of Poland to
MilkaWieczorkiewicz, the President of
the Senate adopted a frank and
optimistic tone. The reforms in
Algeria, his vision of the changes
being experienced by our country,
the future of Polish investments in Algeria as well as the
issue of Western Sahara were the main focuses of this
interview. Let's listen to it.

What do you think about Algeria today ?

My first visit today to Algeria will enable me to understand the different changes happening in this country, particularly in the economic domain. And let me tell you that
these changes are not at all easy. As an example, when we
chose the liberal system after swimming for decades in the
communist system, the standard of living of Polish people,
during this change, fell by more than 40%.
All reforms must be made immediately and not over time.
As an example, I've heard it said that your country has to
pay a huge bill each year for importing basic food products.
We have known this situation too.
But, after the reforms we carried out, Poland is now recording a surplus in different products such as milk, meat,
wheat, etc. Hence, I have to say that Algeria went through
a crucial period in the 1990s and I am happy to see it come
out the other end. Algeria, which is a potential market with
huge resources, has initiated profound reforms, particular-

Energie & Mines


march 2009

ly those related to investment

and privatisation. But Polish
businessmen are still being a bit
The 1990s, full of national
drama, had a huge impact on
Polish entrepreneurs who hesitated somewhat. However, I
must emphasise that among the
members of the delegation
accompanying me are about
thirty Polish businessmen.
These men, and according to
their first impression, are optimistic and determined to conclude contracts and do business in Algeria, as Algeria remains a market with enormous
prospects. However, all this time we have been dedicated to
Poland itself, to our economy and to our membership to
the EU. This also explains our absence from the Algerian
market especially as we have very good relations with your
country and that the time has now come to promote this
relationship more. Furthermore, in these last two years,
several ministers from the Algerian government have visited Poland. On this occasion, I should inform you that
Algerian ministers as well as the head of staff are expected
shortly in Poland.

Concerning the question of Western Sahara,

may we know your country's position on this
latest case of decolonisation in Africa?
My country supports every solution within the framework
of the United Nations. We even have a Polish army officer
in the ranks of the Minurso. And I should add that we also
support the holding of a referendum under the aegis of
the UN.

3rd session of the Algeria-Russian Business Council

Working towards a productive partnership

The Algerian-Russian
Business Council held
in Moscow its third
session under the
joint presidency of
Abdelkader Taeb
Ezzrami, vice-president of the Council for
the Algerian party,
and Sergei
Vinnitchenko, vicepresident of the
Russian party in the
presence of members
of the two delegations.
In the opening speech of the session
which was held within the framework of
the bilateral meetings held at the time of
the meeting of the Arab-Russian
Business Council organised concomitantly with the 1st Arabia-expo Trade
Fair, Mr Vinnitchenko particularly
focused on the importance of strengthening Russia's economic and trade relations with Algeria and the Arab world in
general in a context of multi-polarity.
Algeria's approach concerning the ways
and means of strengthening their bilateral relations in the economic domain is
close to Russia's, he declared before
recalling that the relations between the
two countries have entered a new phase
since 2005, most particularly after
President Vladimir Putin's visit to
Algeria and the visit by the President of
the Republic Abdelaziz Bouteflika to
Russia in February 2008.
These visits as well as that of the
Russian Minister of Energy to Algeria in
2007 have permitted several agreements to be concluded between the two
countries, he recalled.
He underscored that whilst the work of
the Algerian-Russian Business Council

had been successful on several levels, it

is time to give a new boost to this structure's action in order to create synergy
contributing to promoting more the
business relations between the operators of the two countries.
For his part, Taeb Ezzrami particularly focussed on the need for Russian and
Algerian businessmen to measure, at its
fair value, the importance of the role
which they can play in the promotion
of a high quality bilateral economic and
trade cooperation.
This task is even easier given that our
economies have remarkable complementarity whilst having been, up to
now, only slightly affected by the world
economic crisis, he stated.
Mentioning the investment climate in
Algeria, he emphasised that the situation today has changed radically from a
political and security and economic
Given Algeria's attractiveness thanks to
its ambitious fiscal policy to encourage
foreign direct investment, combined
with the (advantageous) costs of labour
and energy and the will of Algerian
businessmen, I can confirm to you that
there is, there, a favourable territory
offering real opportunities, he emphasised. The strategic approach developed by Algeria for more than nine years
has been clear with no contradiction
whatsoever, which reveals huge
opportunities to be seized, on the
Algerian market, extremely interesting
sectors, given the size and the privileged
geostrategic position of Algeria, which
all consider to be the main gateway into
Africa, he continued.
Whilst calling upon Russian operators
to take an interest in the Algerian market, he recalled that the reforming of the
legal texts governing the economic
sphere "is a major sign, capable of reassuring potential Russian investors when
doing business with their Algerian
The representative from Algeria's
Embassy in Moscow for his part high-

lighted the great interest which the

Algerian authorities have in the works
of this forum and their full readiness to
support the action of the AlgerianRussian Business Council as proved by
the presence of the Algerian delegation
of a representative of the National
Agency for Investment Development
The works continued with the presentation of several operators such as Saidal,
the company Anabib, the ANDL,
Aquapark (tourism and leisure complex
project on the coast of Annaba), from
the Algerian side, and Stroitrangaz as
well as a company specialised in public
works' engines and agricultural machinery for the Russian side. The participants agreed on the proposal of the
Russian party to create, as soon as possible, a website dedicated to the
Algerian-Russian Business Council to
enable the operators from both countries to save time by exchanging data
and information in real time which
could help to conclude agreements.
The participants also particularly focused on the need not to restrict themselves to strengthening trade but to work
on promoting investments thanks to a
productive partnership through the
creation of joint ventures in different
business sectors especially given that
the two countries have significant
They also agreed, on the proposal of the
vice-president of the Algerian party, to
hold the 4th session of the Council in
Algeria whose meeting date has not
been fixed.
However, the two parties insisted that
the Council hold a session at least once
a year, whilst stressing the need for the
permanent secretariats to draw up an
annual report on the activities of the
Council which has a very important role
to play since its mission is to get businessmen from both countries in touch
with each other.

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march 2009


More than 200 German companies

present in Algeria
A major delegation of German businessmen representing a dozen companies specialised in the domains of building and public works, transport and
logistics were present at a conference
organised at the Mercure Hotel by the
Commerce and Industry. This conference, supported by the German
Ministry of the Economy and
Technology and dedicated to exploring
potential partnership opportunities in
the sectors indicated, highlighted the
Algerian potential on this matter such as
the four year programme 2005-2009
and the perspectives for developing
bilateral cooperation within the framework of the next four year plan 20102014. In his speech before the representatives of the Algerian Ministries of
Public Works and Transport, the
Managing Director of the AlgerianGerman Chamber of Commerce and
Industry emphasised the interest of his
country's operators in the Algerian market whose economic indicators are
favourable to the promotion of cooperation, particularly in the domain infrastructures as it is the key sector of the
programme for economic recovery.
In this respect, Andras Hergenrther
was keen to recall that several German
companies have already succeeded in
entering into partnership in the building
and public works, transports and logistics sectors with Algerian companies,
quoting the example of the company
Dywidag which concluded a partnership with Cosider for the realisation of
the civil engineering part of the Algiers
metro or even the company KNAUF,
world leader in the plaster industry,
which won 50% of the shares of the
plaster factory in Fleurus and which
hopes to acquire, this year, all the factory's shares within the framework of privatisation. Hence KNAUF is currently
setting up a second plaster pad production line, the largest in North Africa.
The investment in question is estimated

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march 2009

at 40 million euros. Other joint ventures

were quoted by the speaker in the
domains of construction materials
(Siemens-SNTF) in order to illustrate
the density of the bilateral partnership.
The world's largest exporter in 2007
with a volume of almost 969 billion dollars and 1 billion euros in 2008,
Germany, in fact, maintains good economic relations with Algeria given the
increase in trade in these past years.
German exports to our country reached
a volume of 1.6 billion dollars in the
first nine months of 2008, i.e. a 25%
increase, whereas Algeria's imports
were around 2.3 billion dollars, i.e. double what was achieved in 2000.
Mr Hergenrther stated that over 200
German companies currently have a
presence in Algeria. The representative
of the Ministry of Public Works,
Boualem Oumedjber, deputy director of
the Cooperation presented, for his part,
the outlined guidelines of the sector's
development plan to say that the
domain of public works is a driving
force of development which offers a lot
of partnership and investment opportunities. The sector which encompasses
a road network of 111,000km suppor-

ting more than 95% of trade, more than

5,000 works of art, 55 aerodromes,
42 port infrastructures, represents, in
fact, 6.3% of GDP excluding hydrocarbons and a strong contribution to
growth, noted the speaker.
Mr Oumedjber also emphasised the
need to upgrade the infrastructures
given that Algeria's motorway network
should reach, in 2025, 5,500km.
Furthermore, the Director of Planning
at the Ministry of Transport highlighted
the main objectives of the sector in the
wake of the upcoming 2010-2014 four
year plan. This will essentially mean the
creation of new urban transport companies, new telphers and trams in the
wilayas of Annaba, Oran and
Constantine but also the extension of
the railway network, said Salim
The latter who emphasised the interest
in the sector also spoke about the electrification of the railway network, the
intensification of the meshing of the
network, particularly in the south and
west. He announced, on the other hand,
the imminent commissioning of electrified trains in the suburbs of Algiers.

Renewable energies

Germans propose know-how

and technology transfer
German operators wish to contribute to the development of
the renewable energies programme. A group of six companies participated in a seminar held under the aegis of the
Algerian-German Chamber of Commerce at the Mercure
Hotel in Algiers. According to its managing director, Mr
Hergenrother, the mission aims to identify the needs of
Algerian institutions for technologies and know-how, and
to make them proposed solutions assuring the transfer of
technical and technological know-how.
Germans know that Algerians wish to achieve an objective of 5% in renewable energies by 2010 but also observe
that "the programme is experiencing delays, if we trust the
level reached today in this domain which is no more than
0.2%, said Mr Hergenrother. Furthermore, the pursuit of
these objectives requires an updating of the legal framework by the promulgation of a decree on the tariffs' and
subsidisation system which can favour the putting in place
of photovoltaic or solar electricity production projects in
Algeria, stated the Germans.
The meeting made progress with the signature of several
agreements in the domain of photovoltaic and solar energy, stated the MD of the Algerian-German Chamber.
Germans are leaders in the domain of solar energy and the
concern of the Algerians particularly focused on the cost
that "reliability can however offset" in the long term, defended the German businessmen. The later are greatly involved in Algeria in waste management, the environment and
solar energy. Twenty businessmen, in partnership with the
German cooperation organisation GTZ, led prospecting

missions in 2008 in Algiers. Another meeting, held in June

with the German experts and the representatives of the
Ministries of Energy, Territorial Development as well as
those of New Energy Algeria, dealt with the question of
solar development. 70 experts (30 Algerians) participated
in the last trade fair on the environment. All these events which targeted an approach of the Algerian market - have
given rise to a series of partnership agreements. Of the projects most in view, we can mention the supply of a hybrid
solar-gas plant in Hassi R'mel by the companies Schott and
Siemens, the construction of a solar tower in Sidi Abdellah,
as well as other projects realised by X-tern, Phaesum, Solar
23. Vollmer, Conergy, etc.
According to Dr Abderrahmane Hamidat, from the Centre
for Renewable Energies, Germany is one of the partner
countries in the same way as Belgium and Spain with which
Algeria hopes to develop its renewable energies programme
and particularly solar energy. The investment framework
with its incentive measures, i.e. the 2004 law on the production of electricity, means that potential investors can be
encouraged. Several German companies are already present in our country, he said. The German experts, who led
technical conferences, showed the usefulness of the development of solar energy in seawater desalination, irrigation,
the water supply, purification of waste waters with applications in countries such as Morocco, India and Jordan
which may "interest the Algerian experience", noted Olivier
Mayer of the German Global Research centre.


Intensification of bilateral relations

The President of the National Council
of the Swiss Confederation, Andr
Bugnon, has left Algiers at the end of a
four-day official visit, upon the invitation of the President of the National
People's Assembly (APN), Abdelaziz
Shortly before his departure, Mr
Bugnon was very pleased with his visit
which, he stated in a press statement
will contribute to the intensification of
bilateral relations. Beforehand, he said
at the end of a meeting he had with the

Minister of Foreign Affairs, Mourad

Medelci, that the bilateral relations
"deserve to be intensified" as, he said,
"both our countries have goods to
trade", assuring that this trade "will certainly be fruitful. He finally emphasised that his different meetings with the
senior State officials have revealed
enormous potentials on both sides,
favourable to the intensification of the
economic and political relations between the two countries.

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march 2009


Maxime Verhagen, Dutch Minister of Foreign Affairs:

Algeria is a major partner

for the Netherlands
Mr Verhagen who talked during a meeting with the students of the
Diplomatic and International Relations Institute (IDRI), at the El Mithaq
residence, was accompanied by his Algerian counterpart, Mourad
Indicating that he was very happy to be
back in Algeria and having, hence, met
the President of the Republic, Abdelaziz
Bouteflika, in this conference, Mr
Verhagen repeatedly recalled that
Algeria is a major partner within the
Mediterranean for the Netherlands, a
partner with which his country "has
reciprocal interests. Going further, the
Minister said: We have taken the decision to make Algeria a strategic partner explaining hence that both parties
agreed on our participation in this new
diversification policy of your economy.
Mentioning international type issues,
Mr Verhagen underscored the fact that
the Netherlands supports the
Secretary General of the UN in his
efforts to reach a political solution
which stipulates the self-determination
of the people of Western Sahara. The
Dutch Minister indicated that "a lasting
solution to the conflict will not only
serve Western Sahara and Morocco,
but will open the doors to cooperation
in the Maghreb region. We support
the Secretary General of the UN as well
as his special envoy in the 5th round of
the (Manhasset) negotiations between
the Front Polisario and Morocco,
emphasised Mr Verhagen, who was on a
visit to Morocco specified that he had
made the same statement in Rabat, in
English, concerning the conflict between these two countries. I said the
same thing in Morocco and I think that
this is clear, he further said. With
regards the content of his meetings with
Algerian officials, Algeria's guest specified that these dealt with extremely

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march 2009

important issues of bilateral relations,

namely economic and institutional
cooperation and the fight against terrorism.
"We have exchanged information and
particularly consolidated our mutual
conviction to reinforce the cooperation
in several domains such as water, agriculture, renewable energies, etc.,
he said.
We have the ambition of transforming
this trade relation into a partnership
relation in all domains, particularly
food (grains, milk and meat) and

The Dutch Minister also stated that the

declaration signed in Algiers on nondouble taxation opens a new chapter in
the bilateral relations.
The intensification of our relations is
shown in many domains, particularly in
the economic and energy domain, he
added, stating that the Dutch companies have a lot to offer within the framework of the cooperation in other
niches such as agriculture, infrastructures and the financial activity. For his
part, our Minister of Foreign Affairs,
Mourad Medelci, stated that Algeria
intends to develop sustained cooperation with the Netherlands in the energy
domain given the fact that it is an
important intermediary between the
producer and consumer countries.
We want to develop a relationship with
the Netherlands which takes account of
the specific aptitude of this country to
be a useful intermediary between the
energy producer and consumer countries. Mr Medelci further pleaded in
favour of global energy cooperation
with Europe.
As a reminder, the official visit of the
MFA of the Kingdom of the
Netherlands falls within the context of
the strengthening of bilateral cooperation and political collaboration between
the two countries. It also takes place at
a time when Algeria and the
Netherlands are displaying a shared will
to give their economic partnership a
new boost through a now regular
exchange of high level visits.

First French technological days in Algiers

50 companies exhibit
their know-how
Organised by the
Economic Mission of
the French Embassy in
Algeria and the agency UBI France, in collaboration with the
Algerian Chamber of
Commerce and
Industry (CACI) and
the Forum of company
leaders (FCE), the
French technological
days were opened at
the Palais des nations.
Marked by the presence of Jean-Louis
Raffarin, Senator of Vienne, former
Prime Minister, this meeting brought
together about 200 participants representing 56 French companies which,
during this meeting, had to exhibit their
know-how in four strategic sectors for
the two countries.
These sectors are energy, excluding
transport and the information and
communication technologies (ICT).
More than 2,000 Algerian professional
visitors (political and institutional leaders, private and public decisionmakers, potential partners, agents,
importers, etc.) were expected at this
Franco-Algerian event that is the most
important of the year. After Poland,
Kuwait and Saudi Arabia, Algeria was
selected for this operation.
On this occasion, the former French
Prime Minister confirmed his confidence in the future of the Algerian economy, whilst stressing the importance
of Franco-Algerian relations and the
partnership which has always existed
between the two countries. "I am happy
to see French companies have confidence in the development of Algeria. It
is time to intensify the trade between

the two countries and to be at the centre of technology. Presided over by

Bruno Ponson, Managing Director of
the Ecole suprieure algrienne des
affaires (ESAA - Algerian business
school), the first day was marked by the
organisation of a workshop-discussion
on project management. Several presentations were given during this discussion session which included reports
on the different projects of large companies, such as Alstom Holdings
responsible for the energy production
and railway transport infrastructures,
Tansdev, private transport operator in
France, Egis Group, engineering and
consultancy in the domain of the construction of infrastructures, the putting
together of projects, running road and
airport infrastructures.
It should be noted that these days were
marked by an exhibition bringing together the large groups, SME, and
French centres of competitiveness
around these four sectors, as well as
workshops based on three important
themes: project management, transfer
of know-how and technology, innovative partnership outlines which were
organised on the fringes of these
works. The organisers were counting a
lot on the targeted meetings between
Algerian public and private decision
makers and heads of French companies. It is important to recognise that
France is still Algeria's number one
supplier and the number one investor
excluding hydrocarbons in the country.
Slightly more than 250 French companies have a presence in the country,
employing close to 30,000 labourers
and workers.
For both parties, the prospects for market development are particularly promising. Boosted by its oil and gas revenue,
the elimination of its foreign debt,
foreign exchange reserves which cover
more than three years of imports, the
Algerian economy is opening up and
infrastructure projects are abundant, as
well as Greenfield investment or privati-

Experts emphasise
the importance of
communication for
the company
Heads of French companies emphasised, in
Algiers, the importance of communication
for the company, both internally and externally, in the management of projects in
order to guarantee better efficiency in their
drawing up and implementation. During a
discussion workshop on the theme Project
management, experts talked before an
audience of Algerian company leaders
about the actions to be taken to improve the
performances of a company and the achievement of its plans. For the representative
of the company Alstom (energy production
and railway transport infrastructures),
Frdric Wiscart, the factors for the success
of a project consist of involving the team
responsible for the execution in the commercial phase and letting it know the
content of the contracts.
This also means, he said adapting to the
local specificities, anticipating and controlling the risks and putting in place a team
relationship. The representative of the company Bull Algrie (open methodology system) indicated, for his part, that project
management relies on a methodology, a
structuring set of rules, techniques and tools
applicable for the entire project, and on the
support of the client throughout the implementation of the change phases which are
the introduction and the implementation of
new technologies.
The Chairman & CEO of the Egis Group
(engineering and consultancy in the domain
of the construction of road and airport
infrastructures), Yazid Abela, covered the
organisational aspect, stressing the importance of identifying the different people
involved in a project and defining the role of
each person, particularly the steering

sation projects, particularly with the

arrival of new investors from Arab
countries (Egypt and the Gulf countries
mainly). The most productive sectors,
other than energy, are urban transport,
and public works, water and also the

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march 2009


The Canadian MFA:

Algeria is a solid partner
The Canadian Minister of Foreign
Affairs, Lawrence Cannon, stated in
Ottawa that Algeria is a solid partner
with which Canada has built a unique
In this time of global economic instability, as the entire world struggles to stabilise the international financial system,
it is reassuring to know that Canada can
count on Algeria. A solid partner, an
ally, an associate with whom, over the
last several decades, we have patiently
built - with business people, among
others - a unique relationship", emphasised Mr Cannon in a speech during the
lunch of the Canada-Algeria Business
Alliance (CABA).
Talking about the energy cooperation
between the two countries, he said that
Algeria and Canada are energy superpowers in their respective regions,
revealing that energy is at the heart of
our bilateral trade, which was worth
more than five (5) billion dollars in
2007, making Algeria Canada's number
one trading partner in Africa and the
Middle East. Algeria, he continued,

contributes to Canada's energy security

by supplying oil from an eastern part of
the country", adding that, for their
part, Canadian companies have recognised the enormous potential of the
Algerian energy sector and have invested in it, confident in Algeria's technological leadership and dynamism.
Canada is well aware that Algeria's
influence reaches far beyond its national
borders and that Algiers has become a
key player in the European and
Mediterranean regions, he emphasised. Returning to the history of
Cannon recalled that from the very
first months of its independence,
Algeria has had Canada by its side, a
friend that is resolutely committed to
supporting it in its aspirations to build a
dignified, modern and prosperous
Today, he added, Canada is active in a
number of sectors in Algeria, just as
Algeria is increasingly active in
Canada. Concerning the Algerian
community who have settled in Canada,

the Canadian MFA specified that

50,000 Algerians live in Canada, revealing that many of them now hold positions of responsibility in the universities,
research centres and cutting-edge
The Canadian MFA furthermore
emphasised the importance of the establishment of an air route between
Algiers and Montreal that facilitates
trade in different domains between the
two countries.
"I myself signed the air transport agreement between Canada and Algeria that
facilitates trade between our two countries. Air Algrie also established an air
route between Algiers and Montreal, the
first in North America", he said.
Furthermore, Mr Cannon expressed his
country's support for Algeria's efforts to
become a member of the World Trade
Organisation (WTO).
The CABA was created in 2004 to
contribute to the development of trade
and the promotion of investments and
partnership between Canada and


Signature of a cooperation agreement

The Minister of Energy and Mines, Chakib Khelil, and his
Sudanese counterpart, Zoubeir Ahmed Al Hassne, have
signed, in Algiers, a cooperation agreement between Algeria
and Sudan in the energy domain within the framework of
the consolidation of the cooperation and partnership between the two countries. Talking at the end of the signature
ceremony, Mr Khelil indicated that this document aimed to
give a new boost to the partnership in various domains, particularly in terms of oil exploration and production in the
two countries through the company Sonatrach and the
Sudanese oil companies.
The Algerian-Sudanese cooperation agreement also stipulates Algeria's support to Sudan for the completion of the
refineries' construction and operating studies as well as the

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march 2009

training of Sudanese executives and technicians in Algerian

institutes and specialised training companies, stated Mr
Khelil. For his part, the Sudanese Minister of Energy was
very pleased with the results of his visit to Algeria, stating
that both countries are working together in view of making
the latest retouches to the formalisation of joint projects in
the oil refining and mining sector, before predicting other
cooperation contracts in the future between Algeria and
Sudan. The Sudanese Minister also shared his country's
will to benefit from Algerian experience in the domain of
energy whilst expressing the desire to launch an investment partnership through the creation in Sudan of a joint
venture specialised in oil prospecting.

Algeria-United States of America

Algeria's Ambassador in Washington before

the Algerian-American Business Council:

We congratulate the constantly growing

volume of trade between our two countries
M. Bali also received the representatives of the Algerian community
who have settled in the United States.
Algeria's Ambassador to the United
States, Abdallah Bali, held a working
meeting which brought together the
presidents of the different associations
of the national community who have
settled in the United States, the
Embassy reports.
Speaking to representatives of the
national community, Mr Bali stated he
was ready to listen to their concerns and
to work on strengthening the resources
of the consular section, as well as rationalising its working methods to respond
as best as possible to their expectations.
In this context, he called upon them to
"commit to promoting the interests and
the image of Algeria" in the United
States and to participate "more resolutely in the internal development process. During the discussion, the representatives of the national community
who have settled in the United States
made a certain number of proposals
aiming for better handling of their
concerns in the consular section and
said they were fully ready to contribute to spreading news of Algeria in the
United States and its state of recovery.
The Ambassador, for his part, committed to hold periodic meetings with the
leaders of the national community in
order to ensure the monitoring of the
decisions taken outside the meeting.
Furthermore, Mr Bali, who was the
guest of the US-Algerian Business
Conference, was very pleased with the
ever increasing volume of trade between Algeria and the United States (20
billion US dollars), making our country, he said, the United States' number
one partner in Maghreb and the number two in the Arab World and making
the United States Algeria's number one
client and its number four supplier. The
Ambassador who further revealed the

predominance of the hydrocarbons

component which still characterises the
trade between the two countries, on this
occasion, called for American companies to seize the cooperation and
investment opportunities to be found in
the Algerian market in order to diversify them".
Underscoring the essential nature of a
constructive cooperation between the

Embassy and the Business Council in

order for both countries to achieve their
mutual objectives, Mr Bali finally reiterated his support as well as the Algerian
government's to the USABC in its
action and to act in a sense which can
favour the improvement of Algeria's
brand image both from American companies and with the federal bodies of the
United States, including Congress.

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march 2009

Associated with the operating of the large Camisea gas field

Sonatrach signals a new success in Peru

with the commissioning of the Pagoreni deposit
The Pagareni wet gas deposit in the department of Cusco,
in Peru, has just started production.
The official inauguration ceremony for the commissioning
of this deposit in the large Camisea field in the promotion
of which the national company Sonatrach is associated
alongside other oil companies took place in Pisco in the
presence of Mohamed Meziane, Chairman & CEO of
Sonatrach. With initial production of 6.5 million cubic
metres per day of gas and some 20,000 barrels/day of
liquids, the commissioning of this deposit is an undeniable
success for Sonatrach in its international development stra-

tegy. Committed to the Camisea project since 2002, in

2003 Sonatrach increased its stake in block 88. A rider
signed with the company Pluspetrol enabled Sonatrach to
take a 10% stake in the Camisea field upstream and to
increase its downstream stake by 10% in transportation-bypipeline. In 2004, the consortium in charge of Camisea and
grouping together Pluspetrol, Hunt Oil, SKGROUP,
Technit and Sonatrach had obtained the rights to develop
the Pagoreni gas field on which a well has already been
drilled. The estimated resources of this area are 223 billion
cubic metres.

Chakib Khelil decorated with the

Order of the Sun of Peru
Dr Chakib Khelil, Minister of Energy and Mines, made his official visit to
Peru during which he had intense activities and was decorated with the
Order of the Sun of Peru.
The meeting was the opportunity to
review the state of the cooperation relations in the domain of energy and
mining as well as the prospects for their
reinforcement. The Minister was also
received by the Peruvian Prime
Minister, Yehude Simon, and the Vice
President of Congress.
During this visit, Dr Chakib Khelil had
a working session with his Peruvian
counterpart, the Minister of Energy and
Mines, Pedro Sanchez Gamarra, extended to the members of both delegations.
The report signed at the end of these
discussions confirms both parties' will
to reinforce more the cooperation between the two countries, particularly in
the domains of training Peruvian executives in Algeria (IAP), exporting and
producing hydrocarbons, marketing,
transporting natural gas, refining and
Particular focus was placed on the
mining sector where the Peruvian party
marked its readiness to share its experience in this domain with Algeria. For
the implementation of the cooperation

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march 2009

bases identified in this report, a joint

group was put in place. The Minister
also visited the gas treatment plant in
Pisco and the liquefaction plant being
built in Malchorita (200km to the south
of Lima). As a reminder, Sonatrach is
present in Peru in the Camisea project
which is an integrated project including
the upstream, transportation, distribution and LNG segments with a 10%

stake in the development and production part and 20% in the transportationby-gas-pipeline.
On the fringes of his visit to Peru and
further to a decision by the President of
the Republic of Peru, the Minster was
decorated with the Order of the Sun
of Peru in recognition of the merit and
the efforts made by him in promoting
and developing the relations of friendship and cooperation between Algeria
and Peru.
The award ceremony for this honorific
distinction, the second of its kind after
the one in 2004, took place at the
Chancellery under the presidency of the
Peruvian Minister of Foreign Affairs in
the presence of senior political, economic and parliamentary officials.
In his thank-you speech, the Minister
reaffirmed his firm will to reinforce and
diversity the relations of cooperation
and partnership between Algeria and
Peru to make it a model of South-South

Closing of the 17th session of the Algerian-Tunisian joint grand commission

New impetus
to bilateral cooperation
Signature of 8 draft agreements, memorandums and executive
Eight draft agreements, memorandums
and executive programmes were signed
at the end of the 17th session of the
Algerian-Tunisian joint grand commission.
Theses documents concern the economic and trade sections, human resources and the consular and social section.
The preferential trade agreement relates
to a list system of products to be traded
and the granting of the same benefits
granted to the European Union within
the framework of the association agreement. Three price lists were selected in
this agreement to be subject to exemption. This means the customs dismantling from the entry in force of the agreement, the 20% reduction in the first five
years and 10% for 10 years. The agreement also lists measures related to the
fight against unfair competition and

preventative measures. An agreement

between the Algerian Centre for the
Technical Supervision of Public Works
(CTTP) and the Tunisian Centre for
Technical Studies and Construction
(CETEC) was also concluded between
the two parties.
This particularly targets exchanging
experiences, trainees and experts and
establishing a partnership for submission within the framework of national
and international appeals for tenders.
The human resources section for its
part concerns a cooperation agreement
and an executive programme in the
domain of higher education. The agreement provides for encouraging the
cooperation between the universities
and the higher education institutions in
the domains of renewable energies, the
fight against desertification, the new

information and communication technologies, biotechnology, health and

agriculture. The programme provides
for the facilitation of exchanges of student and scientific delegations between
the two countries.
The consular and social section
contains a master agreement in the
domain of religious matters, a cooperation agreement between the Office
national d'appareillage et accessoires
pour handicaps (National Office for
equipment and accessories for the disabled) and the Caisse de la scurit
sociale de Tunisie (Tunisia's Social
Security Fund) and a cooperation
agreement in the domain of Social
Security. It also provides for an executive programme (2008-2010) in the
domain of employment and professional relations.

Agreement to double Tunisias

supplies of Algerian LPG
The state and the development of energy cooperation with,
at the core, an agreement to increase Algerian gas exports
to Tunisia were the focus of the works of the working session co-presided in Tunis by the Minister of Energy and
Mines, Chakib Khelil, and his Tunisian counterpart, Afif
The opportunity was taken to announce the conclusion of
an agreement between the two parties to double the
amounts of LPG delivered to Tunisia, currently 150,000
tonnes/year, to close to 300,000 tonnes/year to cover
Tunisia's requirements here. It is a very good agreement
between the two parties, declared Chakib Khelil on the
matter, specifying that in addition to this renewable agreement of 300,000 tonnes/year, it is also a question for
Sonatrach to participate in the LPG storage facilities in
Tunisia. The two parties evoked the possibility of developing, in the future, land-based storage, in Tunisia, of LPG

Energie & Mines


march 2009

which would be used as a basis for storing the product designed both to cover Tunisia's requirements and those of
other Mediterranean countries for this product.
The two parties furthermore discussed the development of
the gas discovered in Tunisia, notably the methods of marketing it and the upcoming setting up of a working team
responsible for dealing with the issue, added the minister.
The other two subjects mentioned related to the LPG and
natural gas supply of the Tunisian border regions from
Algeria, as well as the project concerning the electric interconnection between the two countries.
We hope to start the transfer of electricity on 400 kilovolt
links in 2009, said Chakib Khelil, emphasising that with
the interconnection made a few weeks ago with Morocco,
the Maghrebian landscape in the domain of electricity is
starting to become a reality.



25 anniversary of the TTPC

The Minister of Energy and Mines, Chakib Khelil, attended the celebration of the 25th anniversary of the creation of the Trans-Tunisian
Pipeline Company (TTPC).
The TTPC is the company which assures the management and the operating
of the Tunisian section (370km) of the
Trans-Mediterranean gas pipeline
(Transmed) connecting Algeria to Italy,
via Tunisia; a 2,500km long project,
171km of which in deep water, which
enables the routing of gas from the
South Algerian fields to Europe. Mr
Khelil, who led a delegation of officials
from the Ministry of Energy and Mines
and the Sonatrach Group, visited the
region of Cap Bon (coast), east of
Tunisia, where he visited the facilities of
the El Haouaria compression plant.
The plant, located after 170km of gas
pipeline on the Tunisian territory, is placed upstream of the underwater pipeline of the Sicily Canal. It is equipped
with 10 regenerative cycle compression
plants (up to 210 bars) of a total power
of 260MW, according to a data sheet
presented on the occasion.
The Transmed was the subject of a project, realised by the Italian Group ENI,
to increase by almost 25% in two phases its transport capacities, i.e. from 27
billion cubic metres a year to 33.5
billion cubic metres a year on the total


execution of the project at the start of

October 2008.
An initial phase of this growth, i.e. for a
capacity of 1.2 billion cubic metres/year
was delivered in April 2008 and a
second for 3.3 billion cubic metres/year
at the start of October 2008, for an
investment of more than 500 million
euros, it was specified.
Transmed is a project comprising two
gas pipelines, the first of which with a
capacity of 12 billion cubic metres/year,
was commissioned in 1983 and the
second bringing the total capacity to 27
billion cubic metres/year has been operational since 1994.
The two gas pipelines are placed in
parallel and cross the Tunisian territory
over 370km from Oued Saf-Saf on the
Algerian-Tunisian border, up to the El
Haouaria plant at the point of Cap Bon
on the east coast of Tunisia. The latter is
connected to Sicily through five underwater lines equipped with a loading and
unloading terminal, it was added. For
Chakib Khelil, the project, which is
taking shape in the Algerian desert,
crosses Tunisia and ends in Italy, is of a
specific dimension and constitutes an

important physical link bringing the

northern and southern banks of the
Mediterranean closer together.
By connecting two continents, the project is the very symbol of the interdependence between these countries and
one of its objectives is certainly, and no
less important, that of orientating the
efforts of the countries involved to the
same development objective and acting
as a factor bringing Algeria, Tunisia and
Italy closer together, it was emphasised during the ceremony celebrating the
25 anniversary of the TTPC.
The volumes of gas delivered to
Sonatrach's clients on the Transmed are
estimated, at present, at more than 450
billion cubic metres, confirmed the
This ceremony was held in the presence, other than Chakib Khelil and his
Tunisian counterpart, Afif Chelbi, of the
Italian Under-Secretary of State for
Foreign Affairs, Mrs Stephania Craxi,
and executives from the Algerian hydrocarbons company Sonatrach, the Italian
ENI, the Tunisian-Italian Sergaz and
Tunisian companies Etap and Sotugat.


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march 2009


Extraordinary Meeting of the OPEC Conference in Oran

Strong presence
of the international press
The conference recorded the presence of:
Almost 300 journalists and photographers, over 90 of
whom foreign journalists and 22 accredited foreign press
correspondents in Algiers.
More than 40 bodies of the national press, including
Algerian Television with its three channels, the National
Radio (Channels I, II, III, RAI, Radio El Bahia)
46 bodies of the world foreign press did not miss this planetary meeting.
These particularly were made up of the American press
present in force in Oran through:
Bloomberg (TV and agency) with 10 journalists
The agency Platts with 4 journalists
The Associated Press (AP) agency with 4 journalists
The agency Dow Jones (4) as well as the Financial Times
(1), the Wall Street Journal (1) and Business Week.
The British press represented by:
Reuters (agency and TV) with 10 journalists
The Economist (1)

The Spanish with the agency EFE (2) and RER (Spanish
Radio). Also present were the AFP (6), Radio France internationale (1) and Radio France (1), the Italian daily newspaper Li Sole 24 (1), the German television channel ZDF.
The Japanese press was represented by the Japanese
press agency (Jiji press) (1), the Japanese television channels NHK Japan TV and Kyodo News, as well as the daily
newspapers Nikkei, Tokyo Newspaper and Shimbun.
The Chinese press was also present through the agency
New China with 7 journalists and Chinese public television
Bodies from the Russian, Nigerian, Emirati, Qatari and
Iranian press as well as Arabic television channels (El
Arabia, BBC Arabic, El Ikhbaria, LBC, El Hurra, Press TV,
Arab News Agency) also assured the media coverage of
this event.
It is important to point out that about fifteen accredited
foreign journalists were not able to travel to Oran due to a
delay in the issuance of visas.

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march 2009


OPEC's 151st Extraordinary Meeting - Oran, 17 Dec. 2008

147 dollars in July, 39 in December,

Five months of freefall for the barrel
The price of the barrel which reached a historic record of
147.50 dollars in mid-July 2008 is today only worth a
third of this value, if not less. Here are the key moments
of five month's fall in prices.
11 July. The price of North Sea Brent (London) reached
a historic record of 147.50 dollars (USD) and Light sweet
crude USD147.27 supported by geopolitical tensions and
the weakness of the dollar.
14 July. Prices go down, falling to USD143.93 in New
York and USD143.32 in London.
17 July. The barrel loses 10 dollars to 134.60 dollars in
New York after an unexpected increase in stocks of crude
in the United States.
23 July. Brent nosedives in Asia to USD129.01 and Light
sweet crude to USD127.69.
1 August. Prices fall to USD123.26 in Asia, depressed by
disappointing American growth in the second quarter.
11 August. London Brent falls to USD111.44 due to
concerns about the world consumption of crude.
15 August. Crude gets close to the USD110 threshold,
reaching USD111.34 in New York, after OPEC's report
announcing a slight downwards revision of growth in the
world demand for oil.
3 September. Crude drops almost USD6 in New York,
after the dissipation of fears about Hurricane Gustav, closing at USD109.71.
6 September. Prices fall in New York to USD106.23, with
an increase in unemployment in the States feeding to fears
of a new fall in oil demand.
9 September. Prices fall to USD105.79 in New York and
USD103.30 in London.
12 September. Brief fall of the price of the barrel under
100 dollars, touching USD99.99 in New York.
29 September. Oil loses more than 10 dollars in New York
at 96.37 after the rejection of the bank rescue plan in the
1 October. North Sea Brent falls to USD94.88 after the
announcement of economic indicators predicting a decline in world outlooks for oil demand.
22 October. Oil prices break through the 70-dollar threshold, losing more than USD4 in New York to 68.10 dollars and USD3.70 in London to 66.02 after the publication of American weekly stocks.
3 November. Oil prices drop sharply again, falling by
close to 4 dollars in New York to 63.91 dollars on a mar-

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march 2009

ket that remains pessimistic about the evolution in world

oil demand.
5 November. Oil prices go into freefall, losing more than
5 dollars in New York to USD65.30 after the announcement of an increase in oil product reserves in the United
6 November. The price of the barrel tests the 60-dollar
threshold in New York and falls under 57 dollars in
London, its lowest level since February 2007, due to another fall in the stock markets.
11 November. Oil breaks through the 60-dollar threshold
in New York, the lowest since March 2007, and trades at
less than USD55 in London, a level never reached since
January 2007 despite the announcement of a Chinese rescue plan.
12 November. Oil prices touch a new floor for twenty
months, losing more than 3 dollars in New York to
14 November. Oil prices fall to 54.24 dollars in London
faced with the accumulation of signs of deterioration of
the economy in the United States and in Europe.
19 November. Oil prices fall under the 54-dollar threshold in New York for the first time since January 2007 and
trade close to 50 dollars in London.
20 November. Prices break the symbolic threshold of 50
dollars, the lowest in almost two years and trade at
USD50.22 in New York and USD48.54 in London due to
the intensification of the economic crisis.
5 December. Brent breaks the 40-dollar threshold in
London, falling to 39.74 dollars after the publication of
American unemployment numbers.
8 December. Crude recovers vigorously, gaining almost 3
dollars to 42.67 dollars in London and 43.72 dollars in
New York, stimulated by the anticipation of a major
reduction in OPEC's supply in Oran.
11 December. Prices recover again by more than 4 dollars
to 46.73 dollars for North Sea Brent (London) and to
47.68 dollars for Light sweet crude (New York) due to a
predicted major reduction in OPEC's supply with the possible support of Russia.
12 December. Oil prices lose their recent gains to 44.76
dollars in London and 44.87 dollars in New York, brought
down by the Stock Markets and the automotive sector in
the United States.

international OPEC special

OPEC's 151st Extraordinary Meeting - Oran, 17 Dec. 2008

An organisation born in Baghdad 48 years ago

The Organisation of the petroleum
exporting countries (OPEC) is a
permanent intergovernmental organisation created in Baghdad (Iraq)
in September 1960.
Its mission is to coordinate and
unify the petroleum policies of
Member Countries and ensure the
stabilisation of the international oil
market and corresponding prices of
crude oil. The five founding members of OPEC are Iran, Iraq,
Venezuela. They have been progressively joined by nine other Member
States: Qatar (1961), Indonesia (in
1962 and which had to leave the
Organisation in 2009), Libya
(1962), the United Arab Emirates
(1967), Algeria (1969), Nigeria
(1971), Equator (1973), which
withdrew in 1992 to join the
Organisation once again in 2007,
Angola (2007) and Gabon (1975)
before leaving it for good in 1994.
Its supreme body is the Ministerial
Conference which is held every six
months with the exclusion of numerous extraordinary meetings which
have been milestones in the
Organisation's history.
In addition, three summits of sovereigns and Heads of State of the
Member Countries have been held
up until now at crucial moments for
the international oil market (in
Algiers in 1975, in Caracas in 2000
and in Riyadh in 2008). The path
covered by OPEC, for almost half a
century now, has experienced great
moments of cohesion and active
solidarity but also very harmful
events of disunion, fortunately
punctuated and often temporary as
quite simply contrary to the interests of its members, most of which
draw most their resources from the
oil exports they make. The necessary balance which has always made

this interest group strong thus

almost shattered in the middle of the
1980s when, for various reasons
dictated by the geopolitics of the
time, prices reached critical thresholds (up to 7 dollars a barrel), causing a break-up in the discipline
within the Organisation and giving
rise to what was then called the
price war
The Organisation had to pull itself
together after that to take firm
control of the market, which is its
raison d'tre up to imagining a few
years after automatic regulation system of its production to defend fair
and remunerative prices for its
It has also always ensured it takes
measures which ensures a balanced price, i.e. a consensual price
which is neither too low nor to high
and which, finally, makes all stakeholders, producers and consumers,
in the oil market happy, and which
is not an additional factor of destabilisation of the global economy.
Finally OPEC has often had at
heart, without always succeeding, to
bring together the other oil producer and exporter countries for common, concerted actions in favour of
a lasting balance of the international
oil market and, hence, the global
economy as a whole.
The Organisation, which today has
thirteen (13) Member States, represents about 43% of world crude oil
production. Saudi Arabia alone
assures 12.5% of global extractions,
almost at the same level as another
large producer such as Russia.
OPEC's headquarters was based in
Geneva (Switzerland) in the first
five years of the Organisation's existence before being transferred to
Vienna (Austria) on 1 September

Nicolas Sarkis recommends a floor price of

90-100 dollars a barrel
"OPEC must choose a floor price for oil of between 90 and 100 dollars if it wants to assure its
investments and develop its production capacities, according to the oil expert Nicolas Sarkis,
whilst feeling that a reduction in production of at
least 2 billion barrels/day was necessary for a
recovery in crude oil prices. "It is in everyone's
interest (consumers and producers) for the price
of oil to go back to 90-100 dollars at least to
assure the investments required and develop production capacities, said Mr Sarkis who is director
of Arab Petroleum Research Centre (APRC).
According to him, this price level would compensate for this natural decline in the production of
mature deposits, currently achieving an alarming
rate of 8 to 9% a year and deal also with the
increase in consumption needs. Mr Sarkis further
considers that the measures taken up until now
by OPEC to stop the collapse in prices were
considerably insufficient, stating that another
reduction decision needs a determination of the
Organisation's Member Countries to adhere to
their commitments.
"Too little too late. This statement resumes the
clearly insufficient and late measures taken up
until now by OPEC to stop the fall in prices.
Worse still, the reduction of 2 million b/d in production has only been adhered to by half", he
said. Questioned about the organisation's abilities
to play the market regulator role currently, the
analysis explained that OPEC cannot be the sole
master of the oil market but can play a more or
less determining role in it depending on the circumstances.
A substantial reduction in production of at least
2 million barrels/day during the crucial meeting in
Oran could return to the Organisation part of its
power that it lost during the economic crisis and
the decrease in world oil demand, further said the
director of the review Ptrole et Gaz arabes
"In a context characterised by a fall in demand, a
largely surplus supply, a strong increase in stock
and a collapse in prices, it is clear that OPEC can
completely change the scene by reducing its production substantially, i.e. at least 2 million barrels/day", he recommends.
In his opinion, a coordination of the production
and prices policy with Russia and other exporters
would facilitate OPEC's task enormously and
would be in everyone's interest, concludes the
APRC expert.

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march 2009

The reasons behind the price crisis

Paper barrels or real barrels?

Growth in derivative products
or problems in the physical oil

Fundamentals of a
market in recession or
financial speculation?
What is the cause of
the increase in oil prices ? To try to understand what is going on,
we have asked the
industry's main
experts the same five
questions. They all
seem to agree on one
point, namely that the
production capacity is
having difficulty
increasing and
that for various reasons demand seems
incapable of slowing
down with the same
intensity and speed
as in the past.

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march 2009

To explain the high levels recently

reached by oil prices, we have to
consider two points. On the one
hand, we have those which attribute
the current crisis to the strong growth
in the markets for derivative products
(paper barrels), and in particular to
the increased demand for future
contracts from institutional investors
and the speculation on these.
On the other hand, we have those
who say that the problems reside in
the physical oil market, which has
started to show signs of insufficient
growth in current demand. The production capacity reserve of the OPEC
countries is low, investments in the
new capacity are insufficient, oil production is reaching a peak and the
future growth in demand is too high.
What, in your opinion, is the most
plausible explanation?
Drollas Before determining whether

the records achieved by oil prices are

due to market fundamentals or
financial mechanisms, we have to be
clear about the bases of the economy. It
permits us to doubt whether Saudi
Arabia led OPEC to compress the oil
market in 2007. According to CGES
estimates, the reduction in Saudi
Arabia's production last year was
440,000b/d, i.e. 2/3 of the reduction in
production of 11 OPEC countries
(with the exception of Angola and
Equator). OPEC's reduction was masked by Angola's member to the
Organisation in January 2007 and by
Equator's in December 2007. Face with
additional global oil demand of around
1.1mbd in 2007 and a 0.8mbd reduction in non-OPEC supplies (including
OPEC's LGN), with Angola's rallying
to OPEC's camp, the world needed

approximately 2mbd of additional

OPEC oil last year. In fact, it received
just slightly more than 1mbd of additional oil from this source, all attributable
to Angola's membership to the
Organisation. Needing more oil and
not getting it from its support supplier,
the oil industry had to dip into its
stocks, which it effectively did in 2007
by taking out 0.93mbd.
World oil stocks decreased for six
consecutive quarters from the end of
the 3rd quarter of 2006. This reduced
the stock coverage from 73 days at the
start of the 4th quarter 2006 to 67 days
at the start of the 3 quarter 2008, after
miniscule stock formation in the 2nd
quarter 2008. Added to this overall
stock compression is the loss of oil supplies from Nigeria, namely light sweet
crude highly sought after for the production of middle distillate, products in
shortage at that time. The oil market,
consequently, had good reasons to be
concerned by the capacity and desire of
the industry's support suppliers to
continue to satisfy growing world oil
demand, whose growth rates recently
slowed down but which requires between an additional 0.6 and 1.0mbd of
oil every year.
Oil futures markets have had to face up
to and put up with this current persistent rigour, and are today very tense
(open positions on Nymex WTI
contracts currently exceed 1.3 billion b
compared to 440 million b in 2001).
Given the low yield from US
Government Bonds (approximately
1.8% from one year to the next) and
roll returns at 3 months for WTI
futures contracts approaching 4% this
year, investors are logically considering
the futures market as offering a good
stock picking model. When geopolitical
considerations come into play - such as
growing rumours about the potential of

international opeC special

an Israeli attack on Iran's nuclear facilities and the
growth in the nationalism of resources in Russia and
Kazakhstan -, everything is in place for oil prices to
increase and remain high.
In simpler terms, this can be summarised as follows:
the oil market became tense in 2007 further to the
restrictions imposed by OPEC bringing oil stock
levels to the lowest; this being the case, the market
started to worry about the future supply both from
OPEC and from non-OPEC countries; the futures
market swallowed everything, fed by the rumours of
imminent geopolitical instability. One last point is, in
my opinion, conclusive. Oil fundamentals have not
changed much since January 2008 the growth in
world oil demand is perhaps still too weak - and yet
the WTI went from $89.4/b in the last week of
January to $145 on 3 July, i.e. a 63% increase!
Lewis - The oil market today is very different from

how it was in the past, when in these last 30 years,

give or take, OPEC played a major role by imposing
and administering a certain form of price structure,
albeit with variable degrees of success. This provided
pointers or hope parameters, on which market
players could base their trades or investment behaviour.
Since 2004, however, OPEC only once had the
opportunity to play this role again: in 2006, after a
period of a strong decline in crude oil prices. This
demonstrated OPEC's capacity to fix a price floor but
the Organisation was neither capable of nor ready to
fix a price ceiling.
Considering the large list of transactions resulting
from it, and particularly the major upwards potential,
it is not surprising that the oil market attracted speculators. Short terms speculators very certainly exacerbate price volatility, but there is no proof or reasoning which would lead us to think that this group is
responsible for the increase in prices.
More longer term focused, institutional investors
have also increased their commitment to basic products in general, including oil, but once again an analysis of price increases related to different basic products, some being open to investors and others not,
indicates no correlation whatsoever between the
commitment of funds and the extent of the price
The upwards movement on oil prices is very probably
linked to supply/demand fundamentals. For most of
the past 3 or 4 years, the market could be described
as being balanced overall, but with an underlying
narrowness in certain sectors (e.g. light sweet crude
and poor middle distillates). Whilst this was the source of the latest impetus, the initial upsurge in prices

in 2004/2005, the most recent drive in prices, particularly this year, seems to be more linked to future
perceptions of weaknesses in supply. The market is
therefore, in traditional economic terms, in the process of trying to adjust supply and demand through
the prices. Since supply is much less sensitive to price
in the short term, it is demand which has to be adjusted. In the absence of an artificial ceiling imposed
by OPEC, the market will therefore continue to push
prices higher until demand contracts.
Long I do not think that the increase in oil prices is

the result of speculation on the paper markets. Oil

prices and prices of other basic products are pulled by two powerful fundamental market forces in the
long term: strong demand and restricted supply.
From the demand standpoint, China and India are in
the process of transforming the structure of the global economy by putting on the market 2.5 billion
future consumers. From the supply standpoint, political constraints and the increase in costs have inhibited investment in the new upstream production and
refining capacities, restricting oil supply and helping
to push prices upwards. Neither one is likely to fall
considerably over the next five years.
Despite the increase in oil prices, demand continues
to grow strongly in China and India, fed by a combination of rapid economic growth, internal price
controls and subsidiaries. Last year, China's economy
developed by 12% and India's by 9% and the use of
oil increased by 5% in China and 7% in India. These
countries alone accounted for half the growth in
world oil demand of slightly more than 1mb/d in
As consumers in China and India are still protected
from the increased prices of the oil market by internal controls and subsidies, they are less encouraged
to use it more efficiently. Oil is also widely used to
produce electricity - particularly small diesel generators used to palliate network breakdowns.
Over time, the oil supply will tighten up. Upstream,
the production of crude oil outside OPEC countries
is now decreasing, creating a ditch which only OPEC
can fill. In the first half of this year, non-OPEC crude
oil supply fell by 600,000b/d (1.5%) shattering forecasts for a strong increase.
But, in spite of much higher recent oil revenue, the
governments of OPEC Member Countries are still
not investing sufficiently in new production capacities and prefer to use their money for other purposes.
With so many global oil reserves still unexploited
concentrated in OPEC countries particularly in the
Middle East and controlled by national companies,
it is becoming increasingly difficult to increase

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march 2009

But that's not all. This year, oil prices are being pul-

led further upwards by a shortage of diesel. Demand

for diesel is growing at an untenable rate as oil refiners cannot make enough of it. In the first quarter
of this year, diesel demand increased by 8% compared to the same period one year earlier. But demand
for other main refining products has been either
unchanged (petrol) or has reduced (heating oil and
residual fuel oil). Demand is growing more quickly
in China and India where diesel is used both for the
transportation and the production of electricity,
particularly in small generators. Demand for diesel
increased by 14% in these two countries during the
first quarter.
Marzo I personally share the point of view accor-

ding to which the truth is right in the middle. On the

one hand, the past years have been marked by a very
strong increase in financial aspects linked to the
energy markets. Not only oil, but natural gas and
electricity have also seen very active trade, well before the real oil turbulence. Increased financial
concerns about oil call for new types of agents on
the futures markets: investment funds, arbitrage
funds and sovereign funds.
In a period characterised by the low profitability of
the traditional financial markets, investors for non
oil-producers motivated by the prospect of high
yields have found a new form of financial investment by their very active operator role on the financial markets. On the other hand, anticipations of an
imminent increase in oil prices have a real fundamental: sustained demand from China and India is
spreading doubt on the future availability of oil. In a
certain sense, the only potential real explanation for
the current turbulence is perhaps linked to a sort of
fear of a future shortage.
Morse There is no doubt that the main cause of

the increase in oil prices is under-investment at all

levels of the energy chain over about twenty years.
The same situation has also been observed for other
raw materials, including base metals and agricultural products. For more than two decades, the prices
of basic products have reduced in terms of relative
value, discouraging new investments. Then, at the
start of this decade, the consequences of underinvestment created a tightening up of the market
conditions and an increase in prices.
In the case of oil, three sectors of the oil supply
chain have suddenly been affected by an escalation
in prices due to a massive withdrawal from unused
capacities or stocks. These three sectors include the

Energie & Mines


march 2009

services sector, where labour and equipment shortages have caused an escalation in prices; the refining sector, where the use of capacities has climbed
to more than 95% at world level; and production
where, due to geopolitical factors in Venezuela,
Nigeria and Iraq, the infrastructure available for the
production of oil has been restricted. It is only in the
context of a really tight supply that the role of financial factors may be understood. The financial factors which have made prices rise higher than justified by the fundamentals are, inter alia:
the depreciation of the dollar, which is responsible
for at least 30% of the price increases since 2003;
the introduction of purely long term index-based
the growth in transactions on long/short term
firms, goods which are the source of an instability in
prices that is larger than would have otherwise been
the case;
short term investments to postpone money on the
probability of an interruption in supply attributable
to weather or geopolitical conditions;
the withdrawal of oil and gas producers from hedging transactions which has caused profound imbalances on the financial markets and accentuated
speculative flows. When oil reached $145 and more
at the start of summer, my opinion was that these
factors were responsible for $50 of this increase.
But the increase of $95 was purely the result of physical fundamentals.

Reinforced regulation
of financial transactions
in the markets?
The oil derivatives market and the forecasts it
engenders (forecast of a structural crisis in supply) seems to have an important role in the increase in prices which have been rife for years. Do you
think that these forecasts are rational and justified or are they based on the alleged catastrophic
scenarios (the end of oil) announced by the traditional negative oracles?
To avoid oil prices being at the mercy of irrational
forecasts or speculations, do you think that stricter regulations and controls of financial transactions in the derivatives markets are needed to hinder or prevent the manipulation which benefits a
minority to the detriment of the global economy?
Drollas Some forecasts are rational and justified,

others not. There are good reasons to be worried

about a loss in the oil production capacity in some
countries such as Venezuela (0.9 million b/d since
1998); Indonesia (0.6 million b/d since 1998) and

international opeC special

Nigeria (0.7 million b/d due to the temporary closing of wells since last year), the reduction of production in Mexico and stagnated production in
Russia. It is also appropriate to be concerned about
the lack of investment in the new discoveries in all
OPEC countries, with the exception of Saudi Arabia,
and the constant exclusion of international oil companies from any operation in the large oil producer
countries of the Middle East. However, the market
must not worry about the idea that oil, as a resource, is literally in the process of running out.
At world level, there are more than a trillion barrels
of proven conventional oil reserves, which represent
43 years of supply at the current extraction rate, 170
billion barrels of oil buried in Canada's asphalt sands
and more than 300 billion barrels of heavy crude in
the Orinoco Belt in Venezuela.
The peak oilers (defenders of the peak theory of
oil production) are at the controls of the pessimistic
train which is moving, and are listened to, apparently avidly, by investors wishing to justify their orientation towards raw materials in general and oil in
With regards reinforcing the regulation of the futures markets in order to curb "irrational impacts, any
form of regulation which reduces liquidity and hence
the efficiency of this market must be rejected as the
futures markets are very elaborate price determining
systems. At present, and according to the data available today, these markets estimate that by 2016 the
price of oil should gravitate around $145/b. If new
data is brought to the market's awareness - which is
inevitable over time -, then the perception of oil prices by the market will undoubtedly change and prices could increase more, or fall even more.

combination of factors such as the race to financing,

the fear of excess supply of the market and a fall in
prices and the conservation of resources).
The reproaches made to various parties for being
responsible for the price increase result from the
frustration of the consumer countries who are suffering from economic and political pressure, as they
are unable to exert influence on the oil market. The
proposals to regulate the activity of the futures markets seem to be dictated by mainly political factors,
particularly in the electoral year in the USA. Without
proof of a link of causality, such measures will not
have great effect even if they are implemented.
Long It is obvious that in any raw materials' market, anticipations play a crucial role in the determination of prices for future deliveries, particularly
when related to longer maturities. However, they are
not "irrational" since they speculate on the future. A
key function of the futures markets is to be a forum
where forecasts can be discussed in order to share
the risks. Speculations improve price determination
(price discovery) by injecting liquid assets.

Studies on other raw materials' markets where speculation has been banned (American futures markets for
onions and Berlin market for wheat) show that prices
were higher and more unstable after the ban than
before. In the case of oil, anticipations have systematically underestimated the future prices of oil, leaving
it to be believed that they follow what is going on in
the physical market rather than controlling it. All the
studies on investor behaviour, in the oil futures markets, show that speculations follow the price movements rather than create them. The ban on speculative activities would harm the markets without changing the market's underlying fundamentals one bit.

Lewis In these last few months, the perception

was growing within the industry of the probability of

a shortage in the supply of oil in the short/medium
term - regardless of the consequence of the oil
peak or of the investment shortage - the result is
the same.
In my opinion, this last conclusion is quite plausible.
The ever-growing dependency of NOC investments
to assure, in the future, incremental supply is inevitable. Times have changed; we are no longer in an
era where the commercial oil companies essentially
played this role. The NOCs must report to their
sovereign governments, which have different objectives from those of the commercial oil companies and,
in particular in a bullish oil price environment, will
probably opt for fewer investments (resulting from a

Marzo As I've already said, such forecasts are not

totally irrational. At the root, there is the doubt

that if China and India continue to grow at the same
rate as today in the long term, problems with the oil
volumes required to support their development
could occur. For the time being, there is no real
shortage problem but rather the fear of a future
Morse Do you think that to avoid the oil price

being taken hostage by irrational "forecasts or speculations, there is a need to reinforce the regulation
and the control of financial transactions established
in the derivatives markets, in order to restrict or prevent the manipulation of the markets which benefit a
minority to the detriment of the global economy?

Energie & Mines


march 2009


my opinion, the major factors which manage the

financial flows, apart from the depreciation of the dollar faced with a basket of currencies, have been the
uncertainties and the forecasts dictated by these same
The uncertainties are mainly provoked by the lack of
transparency and, in turn, the lack of transparency has
been provoked by a change in the supply and demand
of the OECD, of non-OPEC countries to the emerging
markets and the OPEC countries. In the next three
years, most of the increase in supply will come from
countries of the Middle East belonging to OPEC which
do not like transparency and jealously guard information on their exports as State secrets. Given that most
of the incremental demand comes from emerging markets, whose customs data is hardly reliable and misleading, we can no longer monitor these flows.
In the emerging markets, which represent the majority
of demand (especially in the Middle East even and in
South and East Asia), the governments are either incapable of quantifying incoming funds or refuse to do so.
The market is therefore misled - the world indirectly
obtains incremental supply which evolves in spite of any
screening system; and incremental demand leads to an
infinite black hole.
In this environment, anticipations rather than knowledge prevail. The analysts and the oil companies have
ended up with the idea that the oil peak is indeed here.
This conclusion demolishes 140 years of history that oil
is a trading good, but it influences the anticipations
which, in term, have a major impact on the financial
flows which exacerbate the prices.
As we are aware, however, the price trajectory is unforeseeable and is not purely one-way. Prices cannot
evolve according to a parabolic basis for a very long
time, and whether they reached their peak at the start
of the month, at the end of the month or have not yet
reached it, the fact still remains that in the next three
months they will be largely below the level of the 2nd

Have we fallen back into the dot-com market of the start

of the 2000s?
In your opinion, are investments in the domain of oil
derivatives characteristic of the long term or, in case
of first price reduction, do you think of a capital leak
which would cause a sudden fall in the value in these
activities (confirming the theory of a speculative bubble in place)? Are there similarities with what happened in the dot-com market at the start of the

Energie & Mines


march 2009

Drollas We know that participation in oil futures

contracts tends to be greater in the short term, but will

fall back as we progress along the futures curve. On the
other hand, due to their nature, information on swap
contracts is rare, but they cover all sorts of eventualities
and the commitment in these contracts is both in the
short and in the long term. Oil, for a few years now, has
been fashionable for investors and several of them have
been amply rewarded for only having invested in oil.
However, if oil reserves were to start being built up,
spot prices would start to fall on the futures markets,
thus creating a significant report. In these circumstances, will there be a rush towards the sale of futures
contracts across the curve, thus causing the entire
curve to collapse, or will this simply increase and
encourage the purchase of oil for storage? This will
depend on the perception of the tightness of the market
by the latter in the future.
If the market thinks that oil demand will remain low
and that oil supplies will increase in the long term, then
a history of the dot-com type could appear, with sales
across the futures curve, causing a major fall in oil prices which would bring the oil spot price to levels more
compatible with the long term fundamentals.
The question concerns the oil derivatives markets,
which do not seem to be attracting as many investors as
the organised petroleum exchanges, such as Nymex,
are. The derivatives markets are essential customised
protection systems which offer, at a certain cost, protection against prices for oil consumers and producers.
This does not mean that investors do not consider the
oil derivatives markets are useful, as I am certain that
this is the case for many of them, however most investors will prefer the liquidity, the transparency and the
maturities offered by the organised exchanges.
Lewis The volume of financial investments in the oil
futures markets contributes very certainly to volatility.
We can, in fact, expect a strong reduction in prices
once the peak is reached. Given that this will not necessarily be accompanied by a significant reduction in oil
demand, however, OPEC should be capable of fixing a
price floor by reducing production.
Long I do not think that oil prices are forming a speculative bubble. Oil prices are drawn upwards by the
tightness of the market's actual fundamentals. Oil is a
good that is essential to the operating of the global economy with a real value for the consumers - not a speculative good like a dot-com share whose price is linked
to anticipations of future profits. In the short term,
there is no real substitute for oil in its number one market, transport. In case of a fuel shortage for transport
and particularly diesel, most consumers will pay a very
high price to assure its supply.

international opeC special

Oil is a long term activity. It implies investments of
five, even ten years, in the new refineries and new oil
deposits and numerous large consumer oil assets have
an even longer lifecycle. Hence, the oil futures markets need long term maturities to be more efficient. If
there is a sudden collapse in oil prices, it will be due
to an abrupt change in the market's fundamentals and
in price anticipations, such as Iraq's return as a major
oil producer or the invention of a real substitute for oil
for transport and not due to the bursting of a speculative bubble.
Marzo Personally, I do not think that the current oil

prices are determined by a bubble in the sense of

speculative activity. The prices are not necessarily
high because there is a speculative bubble. At the
moment, I think that the fear of a future shortage
results from the observation of low replacement rates
for the reserves of the large oil companies combined
with low investment rates in drilling and extraction.
Above all else, there are geopolitical tensions in the
Gulf region where the oil is mainly concentrated.
On this subject, do you see similarities with what happened in the dot-com market at the start of the
2000s? I do not think there are a lot of common
points between the current situation and the dot-com
Paradoxically, the lower the investment in the drilling
and exploration of oil deposits, the higher the price of
oil could be and this would reinforce the shortage
phenomenon or the fear of a shortage. In the dot-com
experience, the low level of investments caused the
reduction in prices of the net-companies (new enterprise models). To the contrary, with higher oil prices,
the value of the shares of oil companies will be higher.
Morse There is no clear answer to this question.

Most financial flows in the oil sector are the result of

new instruments which enable portfolio managers to
diversify assets whilst guaranteeing them direct long
term exposure to balance the other assets in
These instruments have become particularly interesting for the pension funds, which have recently benefited from their investments in raw materials, whereas
their shares and bonds have been a lot less profitable.
These instruments are, by their nature, in the longer
term and are not likely to reduce, even in case of a fall
in the prices of raw materials.

the costs of discovering and developing oil. The latter

have increased over the last half-decade and undoubtedly explain why reported futures prices or long term
prices have increased so spectacularly compared to
$20 a barrel at the start of this decade. The pressures
on costs will finally reduce so that the bottlenecks of
supply and employment are re-absorbed, with the
reduction in these factors for tension entailing, hence,
that of the costs reported.

Leo P. Drollas
Assistant Director and chief economist at the Centre for Global
Energy Studies (CGES), based in London. After gaining his
PhD at the London School of Economics, Mr Drollas joined the
Corporate Planning department of the company British
Petroleum where he led the economic modelling unit, carrying
out numerous studies on different aspects of the oil market. In
1989, he joined the CGES which was founded that year by
Zaki Yamani, Saudi Arabia's former Minister of Oil.
Mark F. Lewis
Member of the Executive Committee of FGE. After obtaining
his degree in economics and finance, Mr Lewis gained more
than 30 years' experience as a consultant in the oil and energy sector. He worked for more than 15 years for the company
Petroleum Economics where he was Managing Director, before becoming a founding member of EMC. Over the years, he
has worked as a consultant for numerous clients, ranging from
American multinationals to former State-controlled European
companies and producers such as the NOCs.
David Long
Independent consultant for the oil sector, he started his career
at British Petroleum in 1977, where he worked in the
Procurement and Corporate Planning department. He then joined the Oxford Institute for Energy Studies to study the formation mechanisms of futures prices in the Brent market, the
development of the refining industry in Europe and the links
between the forward, futures and physical markets for diesel.
In 1986, he founded Oxford Petroleum Research Associates
of which he is one of the directors.
Massimiliano Marzo
Associate professor in the department of economic sciences
of the University of Bologna, he obtained a PhD in economics
at the University of Yale in 1997. He taught macroeconomics
as well as international finance and economics. His publications deal with budgetary and monetary policies, the financial
markets and the development and regulation of stock markets.
He heads up the Scientific Committee of the magazine
Edward Morse
Executive Consultant at Hess Energy Trading Co., LLC, he
runs the crisis department of the James A. Baker III Institute at
Rice University in Houston, Texas. He was president of
Petroleum Intelligence Weekly Inc. During the years of the
Carter and Reagan administrations, he occupied several positions, including that of Secretary of State to the International
Energy Policy, and United States representative at the
International Energy Association.

On the other hand, speculative flows can evolve from

flows mainly in the long term, and boost prices, to
flows mainly in the short term and accentuate the fall
in prices, which will probably end up happening. At
the same time, another factor has an influence: that of

Energie & Mines


march 2009

Bretton Woods Institutions

President Bouteflika:
A new Bretton Woods
The 12th Francophonie Summit ends its works at the Quebec
Conference Centre.
The President of the Republic,
Abdelaziz Bouteflika, the special guest
at this forum, endeavoured during his
numerous speeches to "reconnect" to
this summit which has been taken hostage by the global financial crisis and
the efforts to provide a remedy to the
reality of the countries of the South,
particularly Africans, thousands of
whom are dying of hunger and diseases
on a daily basis at a time when the
North is putting together, in a few days'
time, almost 2,000 billion dollars to rescue the financial system put in place
more than sixty years ago. As during his
speech before the Heads of State and
Government invited to the summit, the
President of the Republic returned to
the burden of the "international financial crisis". For supporting arguments,
he pleaded for "the emergence of an
international regulation and supervisory
body" which could "ensure the smooth
operating of the international financial
system", "to keep disorder and the systematic risks, regardless of those
responsible and the cause, at a distance. As a number of renowned economics and Heads of State, Mr Bouteflika
suggested a "new Bretton Woods",
which would make it possible, he
explained after recalling that this propo-

sal from the countries of the South

dates back to the 1970s, for there to be
a transparent, fair and equitable international financial and monetary system
where everyone would have a place
capable of ending the unbridled liberalism and the financial speculation
which threatens the real economy and
the equilibrium of all human societies,
particularly the least well-off. The holding in Doha of the conference responsible for examining the implementation
of the Monterrey consensus on financing for development in 2002 seems to
us an excellent opportunity to progress
towards this objective, he said.

The restoration of peace and

security is essential for our
"The restoration of peace and security
and their preservation is, for our countries, of essential importance", he said
speaking during the discussion on the
theme Stakes of peace, democracy and
rule of law. Mr Bouteflika's precision:
the formalisation of this three-fold
quest (prevention, management and
settling of conflicts) does not only
require a political will. It needs physical
and logistical resources, things which

some African countries do not have.

The same applies for good governance
which is part of the Millennium
Development Goals. According to the
President of the Republic who reported
on the progress made by several African
countries in the domain of good governance and the progress made by those
who have become members of Nepad,
this requires "international cooperation". This cooperation could be initiated in the Francophone area which
brings together the North and the
South and could be used as an example
for other areas, not only on this theme,
but also in other "stakes" such as the
environment where African countries
are "the most vulnerable" without them
being, however, responsible for it". In
Canada, Mr Bouteflika reminded the
developed countries of their commitments: transfer of technologies and
increase in the volume of aid to developing countries to deal with the environmental risks. In these difficult
times, no country is sheltered from the
consequences induced by globalisation, concluded the President of the
Republic calling upon the countries of
the North to abandon any notion of
assistance to the South to substitute
that of partnership and solidarity.

The financial crisis

He saw this clearly
When Thomas Jefferson talked about banking institutions
I believe that banking institutions are more dangerous to
our liberties than standing armies. If the American people
ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and
corporations that will grow up around the banks will deprive the people of all property until their children wake-up
homeless on the continent their fathers conquered.
Thomas Jefferson 1802

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march 2009

I believe that banking institutions are more dangerous to

our liberties than standing armies. If the American people
ever allow private banks to control the issue of their
currency, first by inflation, then by deflation, the banks and
corporations that will grow up around the banks will deprive the people of all property until their children wake-up
homeless on the continent their fathers conquered.
Thomas Jefferson 1802


Mr Laksaci calls upon the IMF

to play a more active role in global
financial stability
The Governor of the
Bank of Algeria,
Mohamed Laksaci called upon the
Monetary Fund to play
a more active role to
protect international
monetary and financial stability.
In a speech made before the
International Monetary and Financial
Committee (IMFC) of the IMF within
the framework of the annual meetings
of the Bretton Woods institutions
which are held in Washington, Mr
Laksaci recalled that during the last
IMFC meeting, the world economic
situation had already considerably
deteriorated with greatly slowed down
global economic growth, particularly in
the United States, and in a lot of
advanced countries which are now on
the brink of recession.
The recent intensification of the financial crisis and its spreading to other
countries, including emerging and
developing countries, is making world
economic growth outlooks even darker,
deplored the Governor on behalf of a
group of countries composed, other
than Algeria, of Afghanistan, Ghana,
Iran, Morocco, Pakistan and Tunisia.
In this context of shock to the global
economy that is unprecedented since
the 1930s and increased uncertainties,
despite the actions recently taken in
several major capitals, stabilising the
markets and restoring confidence are
our main priorities, he noted. But this
depends crucially on the cooperation
and reinforcement of the international
coordination or policies, including
assuring adequate liquidity, dealing
with the issue of compromised assets of

banks and that of the recapitalisation of

financial institutions, as well as assuring an adequate guarantee for depositors, he considered. In parallel, the
monetary and financial policies, in the
context of a downwards trend in inflationary pressures, must be focused on
supporting the rapid economic recovery, whilst preserving budgetary stability
in the medium term.
In view of its universal nature and core
mandate of preserving the stability of
the international financial system, the
IMF is well-placed and has the responsibility to play a key role in helping address the present crisis and contain its
potential spill-over effects, pleaded Mr
On this point, he underscored that the
group he represents within the IMFC
welcomes the announcement by the
Managing Director of the IMF of the
activation by this international financial
institution of emergency procedures to
respond quickly to requests for help,
with high access to financing and attenuated conditionality.
"We repeat our appeal for the institution to step up efforts to establish a new
liquidity instrument for market-access
countries and those seeking greater
integration into the global economy,
extolled the Algerian Central Banker.
It is equally crucial to emphasise that
this crisis and its high costs for the global economy have highlighted the need
for the IMF to gain back the ground
lost in the actual accomplishment of its
mandate, he said. In particular, its key
supervisory mission, particularly systematically major financial markets and
economies, must be considerably
strengthened in order to enable early
detection of the risks of the stability
and give effective advice in time, further stressed the Governor of the Bank
of Algeria.
For him, the effectiveness of the IMF's
supervision can only be reinforced if its

recommendations and its advice are

taken into consideration by all its
Member Countries, particularly those
of systemic importance.
To enable the IMF's evaluations and
advice in its main areas of responsibility to be of the highest quality and relevance, the reinforcement of its analysis
and expertise capacities in these
domains, through the recruitment and
keeping of high quality personnel, is
crucial and must not be hindered by
excessive budgetary constraints, he
advised. Furthermore, he dealt with the
issue of the IMF's revenues which must
be adequate and stable for the IMF. In
this respect, it is crucial that the necessary parliamentary ratifications of
essential components of the revenue
model recently adopted for the IMF,
namely the extension of the IMF's
powers in matters of investment and
the sale of part of its gold assets, be
obtained as quickly as possible, further
pleaded Mr Laksaci.
As rightly underscored by the
Managing Director of the IMF, at the
same time as the financial crisis is taken
in charge, attention must continue to
focus on the need to contain the impact
of the high prices of food products and
energy on the most vulnerable Member
In this respect, he reported that the
group he represents welcomes the
amendments recently made to the
Exogenous Shock Facility (ESF) to
help these countries deal with exogenous shocks: We encourage the IMF
to continue to play a catalytic role in
the mobilisation of financial aid, more
importantly in favour of countries
affected by the high prices of food products and energy, and to provide them
with the appropriate advice and technical support, taking account of their circumstances and socio-political constraints."

Energie & Mines


march 2009

Karim Djoudi :

Algeria has the means to

protect against the international
financial crisis
The Minister of Finance, Karim Djoudi, upheld that
Algeria has the means to protect its economy
against the international financial crisis thanks to its
economy financing policy and its method of managing
its foreign assets.
Mr Djoudi made this statement to the press on
the fringes of the plenary session of the
National People's Assembly (APN) dedicated
to the adoption of the bill on methods of granting land designed for investments through
Questioned on the potential effects which
could be induced by the American financial
debacle on the countrys economic and financial situation, the country's Treasurer emphasised first of all that in a world economy where
trade is global, we cannot not take into consideration what is going on in the world.
However, he explained: The decisions taken
by the Algerian government and the national
financial and monetary authorities in terms of
financing our economy and managing our
foreign assets through foreign debt or foreign
exchange reserves mean that we have the
means to protect our economy.
Making allusions to the financial engineering
practised by American banks without strict
supervision favouring bad debts and the propagation of the American financial torment
through the European financial centres, the
country's Treasurer explained that Algeria is
not present on these international markets
since our banks do not intervene in the activities of these portfolios on the international
Mr Djoudi also indicated that the defeasance
policy implemented by Algeria has led to a
reduction in the amount of interest incurred
and, as a knock-on effect, we no longer suffer therefore from the insufficiencies present
on the international market in terms of liquidity crisis and the increase in interest rates.
With regards the subject of the currency reserves that Algeria has, Mr Djoudi indicated that
the Bank of Algeria follows a logic in terms of

Energie & Mines


march 2009

managing foreign exchange reserves which is

looking for safe assets and not risky assets.
Safe assets, in his opinion, rely on the quality of the entity with which we deposit the
money". For the Minister, there are two kinds
of risks for assets: "zero risk" when the money
is deposited with the American Federal
Reserve or those of European countries or any
other country (Treasury bonds). As for risky
assets, these are deposits placed with banks
and companies. The Minister specified that
the difference between these two risks is the
level of remuneration of the assets deposited
which differs depending on the risk these
assets incur.
Now, historically, Algeria has gone for zero
risk, through sovereign assets and, consequently, our foreign exchange reserves are
deposited in public assets where the remuneration is relatively low but the capital is guaranteed, explained Mr Djoudi.
Returning to the question of sovereign funds
which certain milieus have suggested the creation of, Mr Djoudi considered that the current
international financial crisis confirms the
government's decision not to go for sovereign
funds, as, in his opinion, such an option,
even if its sometimes gives rise to greater
yields, would have led to an uncertain situation. It is important to recall that during the
annual session dedicated to the finance sector,
the President of the Republic, Abdelaziz
Bouteflika, confirmed that for those which
suggest setting off in the adventure of a
Sovereign Fund to make our foreign exchange
reserves abroad more profitable, the country
continues to have enormous need for capital
for the development of the national economy,
which is not currently advocating this

The key
words for
understanding the evils
of finance
Sub-prime. In the United
States, a mortgage granted
to modest households by
institutions not subject to
banking regulation, without
consideration of their inability
to repay.
Securitisation. Package
enabling a financial institution
to transfer a series of debts
(property, consumer credit,
etc.) into marketable shares
in view of transferring to a
third party the risk of nonrepayment of the initial credit.
Inter-bank market. Each
time a bank lends 1,000
euros, it puts into a reserve,
into a Central Bank account,
2% of the loan, i.e. 20 euros.
If a bank does not have
enough reserves to lend, it
can borrow the reserves of
other banks. These interbank loans take place on the
inter-bank market.
Liquidity injection. When
banks cannot - or no longer
wish - to lend to each other,
they go to the Central Bank.
This Central Bank then lends
in the short term in exchange
for shares.
Off-balance sheet. The
balance sheet of banks is no
longer the image of their
assets. Deregulation and
technological progress have
given financial institutions
many possibilities of innovating in terms of financial
assurance and credit.
CDO (Collateralised
Debt Obligation). Each
CDO represents a series of
bank loans marketed in view
of recreating liquidity or passing onto a third party a risk
of non-repayment of the
loan. The CDO is a form of
CDS (Credit Default
Swap). The buyer of the
CDS pays an insurance premium without the insurer
having the obligation to set
aside funds to guarantee the

Gas Exporting Countries Forum

Adoption of the articles of association and

appointment of Doha as the Forum's headquarters
The works of the 7th Gas Exporting
Countries Forum (GECF) which took
place on 23 December 2008 were marked by the signature of the Forum's
articles of association and the selection
of Doha (Qatar) as the headquarters of
this Forum.
Algeria is represented in the works of
this Forum by the Minister of Energy
and Mines, Dr Chakib Khelil. The
GECF is an area for exchanging experiences in view of consolidating relations and developing partnership projects between the gas producing and
exporting countries. Dr Chakib Khelil
stated in his speech that this Forum
must adapt to each evolution of the gas

industry. Every step in the expected

evolution of the gas industry should
lead to the required adaptation in the
organisational form of our Forum and
every restructuring has to reflect potential evolutions of our objectives, stated
Dr Chakib Khelil.
However, the Minister of Energy and
Mines said that one must not forget
that the fundamental objective which
was behind the creation of our
Organisation, i.e. the sharing of information and experiences, aims at identifying and materialising ways and
means to promote cooperation between
our member countries. This cooperation is increasingly necessary to ensure

a smooth development of our industry, he said. For Chakib Khelil, this

should allow the achievement of the
best possible valorisation of our gas
exports on the basis of equitable conditions which save the interests of all
As a reminder, the GECF was created
in 2001 in Teheran and has 15 Member
States including Algeria, Russia, Iran,
Venezuela and Qatar which own 73%
of gas reserves and more than half the
world's gas production. During this
meeting, the participants also chose the
capital of Qatar to host the 8 session
of the GECF.

With the commissioning of Medgaz

Algeria will export more gas in 2009

The year 2009 will see Algeria's gas exports increase. In
fact, with the 8 billion cubic metres which will be routed by
the end of 2009 by the new Medgaz gas pipeline, and the
7.7 billion cubic metres which represent the increase in the
capacities of the gas pipelines already existing between
Algeria and Europe, no less than 15 billion cubic metres
will be added to the capacities currently exported by the
country. Hence, Algeria hopes to increase its gas exports
to 85 billion cubic metres in 2011 compared to 63 billion
This strategic project which offers the most direct and most
economic supply route to Spain for natural gas aims to
secure the supply of Southern Europe.
Medgaz is an international and multi-disciplinary project
comprised of Sonatrach (36%, majority stakeholder), the
Spanish companies Cepsa and Iberdrola (20% each), Gaz
de France and Endesa (12% each).
In December, the Medgaz consortium completed the
installation of the gas pipeline which directly connects
Algeria and Spain. With this last welding, Saipem SPA,
the Italian company responsible for the underwater infrastructure, is completing the connection works of a gas pipeline which covers 210km between Bni Saf and Almeria.
The first vessel in slightly deep waters (up to 550m deep)
welded and put in place a part of the gas pipeline from the
Spanish side towards Almeria. In a second phase, between
August and November, the Saipem 7000, for its part, took

responsibility for placing down the pipe in the deepest part

of the track (up to 2,160m deep). The last welding done
by the Crawler therefore completes the assembly of the first
gas pipeline in the Mediterranean Sea at more than 2,000m
With a capacity of 8 billion cubic metres of gas a year, this
gas pipeline of a total length of 210km offshore covers a
depth of up to 2,160m.
Sonatrach, the number one gas producer in Africa,
confirms its ambitions: to consolidate its place as Europe's
number two gas supplier, to develop the promoting liquefied natural gas (LNG) market and to move beyond
Algeria's borders by working abroad. With Europe, "its
natural market, the development means the extension of
the gas pipeline network. Hence, in addition to Medgaz's
contribution, Sonatrach hopes to increase its market share
in Italy, bringing Transmed's capacity from 26 to 33 billion
cubic metres, to which will be added, in 2012, the Galsi
pipeline going through Sardinia.
As for the Trans-Saharan project, a 4,000km pipeline
which should connect Nigeria to Algeria, this in the midst
of being constructed for 2015-2017. To gain its independence from the pipelines and reach the Asian markets, the
Sonatrach Group is also counting on LNG transported by
tankers. The Group's liquefaction capacity will double by
2012. The future objective is to assure 50/50, between
natural gas and LNG.

Energie & Mines


march 2009

Gas Exporting Countries Forum

Chakib Khelil: Algeria has at any

early stage put forward the idea
of developing a Global Gas Model
The trends of the energy sector and the outlooks of the gas segment in
the light of current conditions were on the agenda of this 7th ministerial

The works of the 7 Gas Exporting

Countries Forum (GECF) ended with
the signature of the articles of association of the Forum and the choice of
Doha (Qatar) for this Forum's headquarters. Participants also chose the
Qatari capital to host the 8 session of
the GECF, indicated the Russia
Minister of Energy, Mr Sergei
Shmatko, in a press conference organised at the end of the works.
Algeria is represented in the works of
this Forum by the Minister of Energy
and Mines, Chakib Khelil. The GECF is
an area for exchanging experiences in
view of consolidating trade relations
and developing partnership projects
between the gas producing and exporting countries. Facing these market
dynamics, it is vital that the Gas
Exporting Countries Forum, whose
works opened in Moscow, defines
tools to ensure a genuine coordination
for assessing future developments and
to be proactive, instead of being only
reactive to events or to decisions taken
unilaterally by others, confirmed our
Minister of Energy and Mines during a
speech in front of his peers.
Indeed, according to Khelil, it is light
of such necessity, that Algeria has at
an early stage put forward the idea of
developing a Global Gas Model.
Emphasising the fact that this should
be higher on our agenda today than
ever, Khelil said that this should allow
a better assessment of the impacts of
world scale projects and permit member
countries to exchange information

Energie & Mines


march 2009

about their respective plans, and also to

identify potential temporary overcapacities, while mitigating their negative
consequences on a regional market.
Hence, the organisation of the Gas
Exporting Countries Forum must adapt
to each evolution in the gas industry, he
recommended. Every step in the
expected evolution of the gas industry
should lead to the required adaptation
in the organisational form of our Forum
and every restructuring has to reflect
potential evolutions of our objectives,
declared Mr Khelil during this 7 ministerial meeting of the GECF hosted by
the Russian capital.
He did however say that one most not
forget that the fundamental objective
which was behind the creation of the
Forum, i.e. the sharing of information
and experiences, aims at identifying
and materialising ways and means to
promote cooperation between our
member countries. This cooperation
is increasingly necessary to ensure a
smooth development of our industry,
he felt.
In his opinion, this will enable the avoidance of imbalances between supply
and demand in the markets during
more or less long periods on the one
hand and to face unforeseen developments and/or initiatives on these same
markets or their institutional frameworks on the other.
For Mr Khelil, this should allow the
achievement of the best possible valorisation of gas exports on the basis of
equitable conditions which save the

interests of all parties. Mr Khelil, who

recalled that the Forum had neither
statutes, nor Secretariat or a budget is
convinced that the draft statutes proposed by the ad hoc committee which was
entrusted, in Doha (Qatar) in 2007, to
reflect on the improvements to be made
to the organisation and to the Forum's
operating methods will fill this void.
This new step in the evolution of our
organisation is necessary and the proposed road map is the most appropriate, he maintained.
The GECF, created in 2001, groups
together about fifteen natural gas producing countries, including Algeria,
Iran, Russia, Qatar and Venezuela
which own 73% of the world's reserves
and assure 42% of production. The
members of this Forum have discussed,
since the beginning of 2007, the creation of a gas organisation on the model
of OPEC.
On 16 November, Mr Khelil confirmed
that the creation of a body for gas on
the model of the Organisation of
(OPEC) is not in the interest of the gas
countries, as this would encourage the
consumer countries, particularly the
European ones, to opt increasingly for
other energies.
The Minister of Energy and Mines,
Mr Chakib Khelil, went to Moscow to
participate in the meeting whose trends
for the energy sector and outlooks for
the gas segment in light of current
conditions were on the agenda of the
Amel Zemouri


This is not
a Gas OPEC
Whilst, on the face of it, the
organisation and the operating method of the GECF
are similar to those of
OPEC, the two organisations are fundamentally different, Mr Khelil was keen
to point out.
According to the Minister,
the GECF is a lot more
focussed on the future and
must not concentrate on
everyday problems as is the
case of OPEC which has to
act according to the everyday evolution of the oil
Given that most Member
States have, like Algeria,
signed long term contracts,
the GECF cannot play the
same role as OPEC.
There is a big difference.
The GECF which looks
much more towards the
future must not be obsessed by everyday problems,
he stressed.
The Forum's specific role
is to exchange information,
cooperate in specific
domains as well as issues
related to the reduction of
the consumption of highcontent coal fossil energies
and the use of other substitute sources of energy, such
as nuclear, solar or wind
energy, he further explained.
The Russian Minister of
Energy, Sergei Shmatko,
also stated that the objective of the meeting in
Moscow was not to create a
Gas OPEC which arouses
fears from consumer countries. We do not intend to
create a cartel of (gas) producers but establish equilibrium between the gas producers and coordinate the
policy between the producers and consumers, he
stated to the Russian media
on the eve of the Forum.

Russia favourable
to an increase
in gas prices
The Russian Prime
Minister, Vladimir Putin,
warned the consumer
countries that gas prices could increase,
during a forum in
Moscow of the main
producer countries
whose intentions arouse fears as to the possible creation of a Gas
Despite the current problems in finances,
the era of cheap energy resources, of
cheap gas, is coming to an end, stated Mr
Putin in a speech to the Gas Exporting
Countries Forum (GECF) at the meeting
in Moscow.
Despite the current problems in finances,
the era of cheap energy resources, of
cheap gas, is coming to an end, stated Mr
Putin in a speech to the Gas Exporting
Countries Forum (GECF) at the meeting
in Moscow. The financial distress followed by a broader economic crisis is a
serious trial for the global oil and gas
industry, added the Head of the Russian
Government. Oil prices plummeted to a
quarter of the summer level August
through November, he underscored.

The evolution in world oil prices, to which

gas prices are indexed, was one of the subjects covered by the GECF.
Mr Putin's statements were made after
several months of crisis between Ukraine
and Russia over Kiev's debts to the
Russian gas giant Gazprom and the price
which Ukraine had to pay after the new
The purpose of this meeting is to make
(the GECF) a more organised forum and
we await decisions in this sense, stated
the Vice-President of Gazprom, Alexander
Medvedev. This is a non-gas OPEC, he
"This is not an organisation, we defend
our national interests, added the
Venezuelan Minister of Energy, Rafael
Ramirez. "Our meeting is important in a
strategic sense, insofar as it takes account
of a crisis situation in the economy which
must be dealt with at world level, he
This meeting "shows our serious determination to continue to share information,
commented, for his part, the Iranian
Minister of Energy, Gholam Hossein
His Venezuelan counterpart however left
the door open to the creation of a Gas
OPEC. We see in this Forum an opportunity to build a solid organisation based
on the same principles which gave rise to
OPEC, declared Rafael Ramirez.

Message from His Excellency the Ambassador of Cuba
Your Excellency,
The Embassy of the Republic of Cuba in Algeria presents is compliments to the honourable Ministry of Energy and Mines of the Algerian Democratic People's Republic and is
honoured to confirm, in reference to its letter no. 89/CAB.09, the receipt of the 2009
Directory on the Energy and Mines sector.
Thanking the honourable Ministry of Energy and Mines for sending this document, the
Republic of Cuba's Embassy in Algeria is taking this opportunity to reiterate its high and
distinguished consideration.

Energie & Mines


march 2009

The gas crisis between Russia and Ukraine is arousing abundant
comments in the Austrian press

Algeria is Europes hope to escape

dependency on Russian gas
The polemic aroused on Russian gas supplies crossing through the
Ukrainian territory is abundantly commented on by the Austrian press
which points to the supply difficulties faced by Austria, Bulgaria, Czech
Republic, Hungary, Romania, highlighting Europe's dependency on
Hence, the daily newspaper Salzburger
Nachrichten contends that North Africa is
Europe's hope to escape dependency on Russian
gas, particularly Algeria which appeals with its
immense reserves. This country is the world's
fourth largest gas producer and is developing,
together with the Europeans and European financial aid, gas pipelines which connect the Sahara's
gas fields and Europe, going under the
North Africa will become increasing important
in oil and gas matters, predict diplomats. The
Medgaz gas pipeline is ready, and the connection
is made between the pumping stations of the port
town of Bni Saf and the Spanish town of
The commissioning of the new AlgerianEuropean gas pipeline, with a cost of 1 billion
euros, will probably happen in September 2009.
It will pump close to 8 billion cubic metres of gas
to Europe. Other gas pipelines are planned: the
Galsi from Northern Algeria to Italian Sardinia,
then to the interior of the country. Up to 2012, it
will absorb 10 billion cubic metres.
Two other gas pipelines already present will be
developed: the Transmed (which crosses the
Sahara via Tunisia to Sicily. The 24 billion cubic
metres will increase up to 33 billion cubic metres)
and the Maghreb-Europe pipeline which runs
from Algeria via Morocco, crossing the sea by the
Strait of Gibraltar to the south of Spain. The current production of this pipeline is 9 billion cubic
metres and has to comprise 12 billion cubic metres in the future.
Nigeria has the largest reserves in Africa: 30
billion cubic metres of gas will be delivered,
annually, by the planned Trans-Saharan Gas
Pipeline, concludes the newspaper.
Samia Kahina Bouzid

Energie & Mines


march 2009

Ahead of the World Gas Conference

Launch of several
projects in Oran
A signature ceremony of an agreement between Sonatrach
Downstream and the Entreprise nationale des grands ouvrages d'art
(ENGOA) took place at Sonatrach's headquarters in Oran. The agreement in question plans the construction of an underpass approach that
will be 90m long, 15m wide and 5.5m high.
This work which ENGOA has to realise within a 6-month period will facilitate access to the Palais des Congrs which has already, even before
it is completed, a meeting planned for a world event: the 16th World
Gas Conference which will take place from 18 to 21 February 2010 in
Oran. The cost of this underpass approach is estimated at 833 million
dinars - peanuts in light of the sums of any other size injected or planned in different works which must be completed with this deadline of the
World Gas Conference.
Hence, to give an example, the Palais des Congrs which will be located in the eastern part of the City of Oran is actually part of a big complex which includes, among others, an international class hotel. This
hotel infrastructure, whose contract was signed some time ago between
the Vice President of Sonatrach Downstream and Starwood, states that
the latter will be in charge of this hotel; a future Meridien over a period
of 30 years, a period during which Sonatrach will use this label for its
own activities.
Starwood was rightly selected due to its international reputation for
managing high quality infrastructures. The complex, hotel, convention
centre, restaurant, etc. which will offer 3,000 places for the conferencegoers and more than 2,000 covers is not the only construction which will
be responsible for welcoming the thousands of participants at the World
Gas Conference who will come from the four corners of the planet but
the Es Snia airport is also part of this dynamic since the first area
which will have to receive the flows of participants will obviously be the
airport which has been an open site for a few years now. Different quick
welcoming, guidance and routing areas for equipment are planned in
the airport itself to deal quickly with the thousands of people which the
Conference will attract. Sonatrach Downstream and the company
entrusted with the management of the airport infrastructures have met
on several occasions to set down the details of the facilities this airport
will have ahead of this event.

Oil and gas engineering

One of the worlds giants

sets up in Algeria
The Algerian subsidiary of the Japanese
company JGC, world giants in oil and
gas engineering, was officially launched
on 25 November at the time of the holding of the 6th session of the AlgerianJapanese
announced Algeria's Ambassador to
Japan in a press release.
JGC intends to enlarge its area of
cooperation and depart from hydrocarbons for investments in electric power
plants, seawater desalination plants and

other areas of industry, according to its

president, Yoshiro Shgehisa, also president of the Algerian Keidanren
Committee and co-president of the
Committee, cited by the press release.
JGC also wishes to make Algeria "a support point for its global redeployment
and the exporting of its services to
Africa. For Mr Shgehisa, Algeria
offers all the prospects of being a radiation centre of engineering in Africa,

continues the press release. The constructor of post-independence Algeria's

first refinery also plans to become a
facilitator of business and an investor
whilst acting as a catalyst for Japanese
investment in Algeria, according to the
same source. The 6th session of the
Algerian-Japanese Economic committee held on 24 and 25 November 2008
in Algiers saw the participation of representatives from about twenty Japanese

Arab Oil and Gas

Sonatrach plans to extend the length of its

hydrocarbons transportation network by a third
Algeria has a major hydrocarbons' - crude oil, condensates,
natural gas and liquefied petroleum gas - network but its
domestic requirements and its will to increase its exports
imply major works to upkeep and develop this network. In a
presentation document, Sonatrach's Transportation-byPipeline (TRP) activity indicated that its network extension
programme aims to increase the network from 16,200km
currently to 21,500km by 2012, i.e. an increase of 5,300km
(+32.7%). Sonatrach adds that another intensive programme, related to the renovation of the existing facilities, has also
been launched and that it has a budget of 51 billion. Whilst
the focus is clear, the exact figures are somewhat subject to
confusion. In tables supporting the commentary mentioned
above, the TRP activity reports a network that is 18,894km
long at the end of 2007 and an objective of 22,800km at the
end of 2012, which would represent an increase of 20.7%
(these tables are given below). The differences between the
figures are not explained in this document but they might
come from the taking into account or not of the international
gas pipelines of which Algeria is a part.
Algeria's current transportation capacities are estimated at
322 million tonnes of oil equivalent and they should reach
445Mtoe at the end of 2012. Sonatrach has 19 transportation-by-pipeline systems, 8 of which for natural gas, 7 for
crude oil, 2 for condensates and 2 for LPG. This number
should increase to 22 by the end of 2012, 10 of which for gas
and 3 for condensates (no change for crude and for LPG).
The projects in progress by the TRP Activity include the cons-

truction of an LZ2 oil pipeline, which will enable it to reinforce and secure the LPG chain, the GZ4 gas pipeline between
Hassi R'mel and Bni Saf, which will add to the Medgaz gas
pipeline between Algeria and Spain as well as electric power
plants, a future aluminium and petrochemical complex in Bni
Saf and Sonelgaz public distribution posts; the GK3/GK4 gas
pipeline, which will supply the future Galsi gas pipeline between Algeria and Italy and the NK1 pipeline, which will evacuate the condensates from Haoud El Hamra to Skikda and
will supply the condensates topping plant which is being built
in Skikda.

The construction of Medgaz was completed

in December 2008
Saipem has done the last welding on the Medgaz with the specialised Crawler vessel 1.6km from the Algerian coast.
Medgaz connects Bni Saf to Almeria over 210 km. The
Medgaz consortium underscored that the construction was
completed within the expected timeframes. Hydraulic tests,
designed to check the correct operating of the gas pipeline,
will be carried out in the first quarter of 2009. The commissioning of Medgaz will take place during the second half of
this year.
The gas pipeline's initial capacity is 8 billion cubic metres a
year. Its diameter is 24 inches. The investments required were
estimated at 900 million euros. The placement of the pipeline
represented a technical feat since the maximum depth in the
sea is 2,160m. In PGA

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march 2009

A new convention centre in Oran

Chakib Khelil: Satisfying the event's

On behalf of the Algerian government, I am delighted to
announce the construction of a new Convention Centre
designed to host the 16th International Conference and
Exhibition on Liquefied Natural Gas (LNG 16), planned
from 18 to 21 April 2010.
Algeria, which had the honour of organising LNG 4 in
1974 in Algiers, is proud to host this event once again. In
2010, LNG 16 will take place in Oran, Algeria's second largest city. Oran is also home to the facilities in Arzew, which
will facilitate the organisation of technical visits which are
an integral part of this event's programme. The new Oran
Convention Centre has been designed to satisfy the specific needs of the LNG16 event. It will be mainly comprised
of a 3,000-seat auditorium, two 500-seat session rooms,
20 meeting rooms, a 20,000m2 exhibition hall, a 2,000cover banqueting hall and a 300-room 5 star hotel. The
construction contract for this new Convention Centre was
won by the Spanish group OHL. The participants at LNG

15 know OHL's work through the Barcelona International

Convention Centre (CCIB) which hosted this conference.
The City of Oran has seen significant redevelopment in
terms of infrastructures; it hosts the structures of one of
Sonatrach's branches, namely the Downstream Activity,
whose new headquarters has just become operational, as
well as several projects for international standard hotels
which will be completed before the holding of LNG 16. In
addition, the Algerian government is working with the
National Organisation Committee (NOC) of LNG 16 and
with Sonatrach to guarantee that participants have direct
flights, local transport, security, ease of obtaining visas, etc.
and all the conditions necessary for an event of this importance. Located on a promontory looking onto the
Mediterranean Sea, the Oran Convention Centre will be an
iconic structure of our city which will be appropriate for the
international size of LNG 16. We look forward to welcoming you at LNG 16, in Oran, in April 2010.

Dr Abdelhafid Feghouli :

The pace is picking up

Latest of the Downstream publications, the LNG 16 News review sets out from the
offset its ambition to establish itself as an essential tool to accompany one of the
most important international events in the domain of energy.
In 2010, Oran will be the world's liquefied natural gas
(LNG) capital and a hub for the gas industry in view of the
importance of this meeting, the high number of participants, their ranking and their quality. A tool for promoting
a brand image of modern Algeria, the LNG 16 News
review, through its various articles, wishes to be a medium
likely to demonstrate the enormous investment and partnership opportunities which are deemed formidable, even
essential, as to the promising prospects of the wilaya of
This review's summary includes a multitude of information
outlining the different stages overcome in the organisation
of this major event. The LNG 16 conference is a huge
international meeting which will be characterised by strong
foreign participation, and all the availabilities expressed as
of now by our partners are gauges as to attracting an
impressive number of participants.
This spirit of cooperation is perfectly illustrated in the
composition of the National Organisation Committee
(NOC) of LNG 16 which has been extended to representatives of our partners and foreign companies based in
Algeria and operating in the domain of LNG.
Their active involvement for the success of this event is

Energie & Mines


march 2009

proof of the importance of these stakes and of their conviction of the strong position Algeria enjoys in the domain of
the gas industry. Our country's gas vocation is constantly
confirmed and the concrete results achieved are there to
support this reality. Indeed, we are happy to announce that
our accumulated LNG production since 1964 just reached,
in the month of September 2008, the 1-billion cubic metre
This performance is likely to improve in the coming years
thanks to the LNG mega-train projects being constructed
in Skikda and Arzew, which will increase Sonatrach's production capacity by 30%, and the efficiency of our managers and collectives. Another reason for satisfaction is the
progress recorded in the construction of the Oran
Convention Centre which is starting to take shape under
the impetus of His Excellency the Minister of Energy and
Mines, Dr Chakib Khelil, who has specific interest in this
It is therefore with a certain amount of pride that we monitor this project which is making great progress. This pride
is also motivated by the fact of offering in El Bahia (Oran)
a modern infrastructure which will help to bring it up to the
level of the large international metropolises and will illus-


trate the role which Sonatrach is playing in the interest of the national collective.
The Oran Convention Centre was the subject of a
visit made on 27 August 2008 by the President of
the LNG 16 Steering Committee, Anadon Lopez
Ernesto, and members of this body, who left feeling
confident in our ability to meet the ideal conditions
for the holding of this conference. The LNG 16
News review reports on this visit and activities organised at that time.
This second edition also highlights the expansion
taken by Oran in light of the large projects to its credit in the different domains as demonstrated in the
interview accorded to us by the wali of Oran, Tahar
Sakrane, and in which he paints a detailed picture
of the preparations being made for this event.
Another destination, another town: planned within
the scope of the cultural events of LNG 16, we invite you to discover Tlemcen, a town of art and history and a centre for tourism. All that remains for me
to say is how much we hope that this publication
will have faithfully described the preparations for
LNG 16 which will be intensified and will have
contributed to making our country better known
and to promoting its brand image.

Official establishment of the National

Organisation Committee (NOC) of LNG 16
On 29 May 2008, the Minister of Energy and Mines, Dr Chakib
Khelil, officially announced the establishment of the National
Organisation Committee (NOC) of the 16th edition of the
International Conference on LNG (LNG 16) during a ceremony
which took place at the headquarters of the Ministry of Energy
and Mines.
Mohamed Meziane, Chairman & CEO of Sonatrach and patron
of the NOC, covered, in his speech, the preparations for this
meeting whilst mentioning the different committees put in place
for this. Furthermore, he was keen to thank the representatives
of the foreign companies operating in the LNG domain in Algeria
for accepting to join this committee whilst ensuring them that all
conditions will be met for the success of this event. The Minister
of Energy and Mines, for his part, emphasised the vast programme initiated by the Algerian government and the interest
accorded to the success of this event before officially announcing the establishment of the NOC.
The National Organisation Committee of LNG 16 held its first
meeting on 9 June 2008 in the headquarters of the Downstream
Activity in Oran under the presidency of Dr Abdelhafid Feghouli.
At the end of this meeting, the delegation visited the site of the
future Oran Convention Centre then went to the Arzew industrial
zone to visit the LNG plants. lace on 26 August 2008 to evaluate the progress made in preparing for the LNG 16 conference.

Energie & Mines


march 2009

According to the IMF

Favourable economic, financial

and monetary evolution for Algeria
The holding of the joint annual meetings of the IMF and the World
Banks is the occasion of the publication of financial, monetary and
economic reports, a sort of huge diagnosis of the world's economies.
Everyone knows that these meetings are
being held at a time where there are
particularly dramatic conditions with
historic falls for the Stock Markets and
the Western and Asian financial markets, particularly, where panic reigns.
The IMF report has completely favourable indications as to an economy such
as ours, for which the Fund's experts
feel that the large aggregates have positive effects. In terms of economic
growth, the forecasts give 4.9% for
2008, compared to 4.6% for 2004.
In 2009, this rate should be around
4.5%. With regards the Balance of
Payments, it should see surpluses of
around 28.1 billion dollars (22.8b in
2007). The inflation rate, for its part,
should be around 4.3% for 2008 compared to 3.6% in 2007. In 2008, this
rate should reach 4%.
This rate is expected to come down in
the coming years. The IMF experts are
greatly satisfied with Algeria which,
through its defeasance policy to reduce
its foreign debt, has increased its credibility. In a context of acute financial crisis and particularly tense financial markets, the IMF report supports the recent
analyses made by Algerian political leaders and our country's monetary and
financial authorities.
Furthermore, the IMF experts have
confirmed a trend which the national
economy has been seeing in the past
years. Algeria has been able to take protective measures which enable it to protect itself from the devastating effects of
the world crisis.

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march 2009

Speaking in turn, the Head of the

Government, the Ministers of Finance
and Energy and the Governor of the
Bank of Algeria, recalled these protective measures which, for the time being,
are sparing our economy from the jolts
of the crisis.
Ahmed Ouyahia finds in the little access
to financial markets of our economic
system reasons behind why our country
is not feeling the effects of the crisis
today. Our economy is indexed to
hydrocarbons. The variations in oil prices set the scene for the country's economic life. But the public authorities
have been able to put in place regulation
instruments. The comfortable foreign
exchange reserves (more than 130
billion dollars) and the early repayment
of foreign debt will have helped to protect our country from the exogenous
shocks related, in particular, to the
reduction in foreign financing and the
increasingly complex terms of granting
The foreign debt reduction policy will
have enabled advised uses of resources
whereas the serious disruptions shaking
the foreign financial markets since 2007
have given rise to increasingly complex

terms of granting loans by the international banks. The Governor of the Bank
of Algeria, Mohamed Laksaci, pointed
out that the current increase in the
euro/dollar exchange rate would have
multiplied tenfold the impact of foreign
debt and harmed the State's budget if it
had not made early repayment of the
debt before the eruption of the international crisis.
The fiscal policy for banks, strict management of monetary policy interventions and prudence in terms of managing budgets all this has contributed
to a stabilisation of the system which
has benefited the country's economy.
In management where demonstration is
made that experience is required to
overcome the effects of the crisis, or
better to prevent them, our country is
making prudence a rule today combined with stabilisers which seem a good
The IMF in its different reports revealed
this effort made by our country in terms
of reforms and monetary and financial
stability, stressing, however, the need
for a diversification of the economic
fabric and also productivity.

Message from His Excellency the Ambassador of India to Algiers
Your Excellency,
I am delighted to acknowledge receipt with thanks of the letter from Your
Excellency no. 89/CAB.09 dated 26 January 2009 on the sending of the Directory
of the Energy and Mines sector. Indeed, this publication is of great use and it
contains important information and will be used appropriately by our mission. Thank
you once again. Yours faithfully.
Dr Ashok K. Amrohi

According to Algex

78% increase in Algerias trade

surplus with AMU countries
Algeria's trade surplus with the other
four countries of the Arab Maghreb
Union (AMU) saw a 78.48% increase
in the first 8 months of 2008, increasing
to 445.23 million dollars compared to
239.45 million dollars in the same period of 2007.
Algerian exports to the other countries
of the AMU reached 677.7 million dollars, up by 59.6%. As for imports, these
amount to 232.54 million dollars, up by
32.84% compared to the reference period, according to the Algerian National
Agency for the Promotion of Foreign
Trade (Algex).
Furthermore, Algeria's trade balance
excluding hydrocarbons with the AMU
countries had a negative balance (85.06 million dollars) in the first 8
months of 2008, compared to -50.15
million dollars for the same period of
2007, according to an Algex publication.
With regards Algeria's exports to the
Maghreb countries (Tunisian, Morocco,
Libya and Mauritania), they are still
dominated by hydrocarbons with a
share of 78.24%, i.e. a value of 530.28
million dollars, compared to 300.03
million, up by 76.74%.
With regards exports excluding hydrocarbons, they recorded an 18.46%
increase with a value of 147.48 million
dollars in the first eight months of
They are mostly comprised of the
semi-finished products group with
113.16 million dollars, followed by food
products with 22.91 million dollars
(+178.03%) and industrial equipment
goods (5.88 million dollars), up by
138.06% compared to the first eight
months of 2007.
Non-food consumer products with a
value of 3.28 million dollars saw an
18.52% fall, followed by agricultural
equipment goods with 0.52 million dollars and finally commodities with a
value of 0.17 million dollars.
Concerning imports, the breakdown

per product group reveals an increase

for most product groups, with the
exception of food products, commodities and agricultural equipment goods.
Imports of semi-finished products lead
with a value of 87.94 million dollars, up
by almost 50%, followed by industrial
equipment goods with 80.36 million
dollars (+70.98%), non-food consumer goods with 44.52% million dollars
The amount of food product imports
reached 9.8 million dollars, down by
45.8%, commodities 8.9 million dollars
(-48.05%) and finally agricultural
equipment goods with 0.11 million, also
down by 73.81%.
Algerian imports from other Maghreb
countries were around 279 million dollars in 2007 (compared to 235 million

dollars in 2006), whereas its exports

were 695 million dollars in 2007 (compared to 515 million dollars in 2006).
Inter-Maghreb trade is characterised by
a structural weakness in trade which
is between 1% and 2% of the region's
foreign trade and by a barely diversified structure of the products traded
due to the similarity of production and
the lack of competitiveness, according
to the same source.
With the aim of promoting trade between the AMU countries, Algiers hosted the first Maghreb Trade Fair at the
end of November last year in the presence of 267 exhibitors, 189 of which
Algerian companies, 35 Libyan, 32
Moroccan and 11 Tunisian.

Energie & Mines


march 2009

Algeria's Energy Week (SEA4)

Sonatrach, leader on the continent

After taking up the
challenge to construct
an oil and gas industry which is proving
itself, we now need to
redouble our efforts to
take up the challenge
of competitiveness in
an increasingly
demanding environment in terms of quality and price, particularly for the national
oil companies,
this is what the
Minister of Energy and
Mines, Chakib Khelil,
indicated in substance
during the opening
of the works of the
4th Energy Week
(SEA4) at the Hilton
Hotel in Algiers.
Indeed, the Minister underscored that
this event is taking place at a time when
the energy sector is working for the
institutional consolidation of good
governance, particularly for civilian
nuclear energy, whose cooperation is
being given new impetus.
This year on the theme of "The new
energy world, challenges but opportunities too", the continent's largest oil and
gas company is organising one of the
most important events of the energy
In fact, some 1,700 participants and
240 companies, coming from 35 countries, participated in this 4th edition of
Algeria's Energy Week (SEA4) which
lasted until 19 November 2008.
This international event, also attended

Energie & Mines


march 2009

by the Nobel Peace Prize winner and

expert in climate change and sustainable development, Mohan Munasingh,
as well as the European Commissioner
for competition, Mrs Neelie Kroes, is an
opportunity to reveal to professionals
and the general public alike the technological progress made in the energy
industry in general and in hydrocarbons
in particular, state the organisers.
This meeting also includes essential
events, such as the 8th Scientific and
Technical Days (JST8) and the 6th
International Strategic Conference on
investment opportunities in the domain
of energy in Algeria (CSI6), as well as
the 3rd International Oil and Gas
Exhibition (Aloge 4).
It takes place at a time when the energy and mines sector is working for the
institutional consolidation and the putting in place of good governance, particularly for civilian nuclear energy, as
specified in her inaugural speech the
Executive Directive of human resources
at Sonatrach, Mrs Mlika Belkhala, who
is also president of the event's ad-hoc
organisation committee. This new edition aspires to become, according to its
organisers, a multi-purpose crossroads
for exchanging information and for the
promotion and economic and technological development of the hydrocarbons'
and energy industry in Algeria.
For the Minister of Energy and Mines,
Chakib Khelil, the organisation of an
international meeting of such an extent
contributes to a greater diffusion of
information on the investments and
projects made in the energy sector, particularly in terms of developing petrochemistry and seawater desalination.
The Ministry of Energy has worked for
greater communication with its surrounding environment, particularly the
press which, in turn, has to reflect to the
general public the challenges faced by

Regarding SEA4
parallel events
Having become an impossible to miss
meeting since its creation, the
Conference (CSI6), which, according
to its organisers, shall be attended by
a representative of the International
Atomic Energy Agency (IAEA), aims to
be a favoured meeting place enabling
the different companies to share their
experiences and discuss development
and investment opportunities in the
energy sector in Algeria.
Almost 500 participants are expected
for this conference which also aims to
enable the international companies
operating in Algeria to share their
experiences and to enable new companies to get information on the investment opportunities offered by the legislation in force.
The Aloge 4 exhibition, whose objective is to enable the national and international oil and gas organisations to
present their technologies and their
know-how, should bring together 240
companies from 35 countries.
Regarding the usefulness of holding
such events in the hydrocarbons'
world, their main objectives are to enable executives from the sector at the
national and international levels as
well as the scientific community to discuss the latest developments and challenges related to technology, protection of the environment, the role of
human resources, managing risk, the
economy, finance and globalisation,
emphasised Mrs Belkahla.
The three previous Energy Weeks
were organised in December 2002,
June 2004 and November 2006.

this sector, he declared on this point.

The themes selected for these meetings
will, inter alia, cover the management of
the industrial and commercial risk, the
marketing of energy, energy savings
and mining, i.e. an entire programme.


Civilian nuclear energy, the other oil

A senior official from the French nuclear group Areva has said that
the construction, by 2020, of the first Algerian nuclear plant is a very
achievable option.
The investments must be financed within the framework of foreign
partnerships, feel the experts.
Investments in the use of nuclear energy for civilian purposes should be financed within the framework of strategic
foreign alliances and partnerships, felt
the participants at a session within the
framework of the 6th International
Strategic Conference (CSI).
Hence, the participants in this session
recognised that investment in the civilian use of this energy, particularly in
the start-up phase, requires major
investments to be mobilised within the
framework of foreign partnerships.
The marketing director of the French
nuclear group Areva, Jacques de
Mereuil, focussed, in his speech, on this
aspect, highlighting the need to mobilise major funds for the upstream investments, particularly the research and
exploration of uranium or even the
construction of power plants.
According to him, this financing could
be profitable after the commissioning of
the plants built, thanks to the competitiveness of the production cost of
nuclear energy compared to other sources such as gas or coal.
With regards the announcement made

by the Minister of Energy and Mines,

Chakib Khelil, as to the construction by
2020 of the first Algerian nuclear power
plant, Mr de Mereuil said that Algeria
could achieve this objective within such
a timeframe thanks to the regulatory
framework which should be put in place
in the coming months. Mr Khelil
announced when opening the CSI that
Algeria will have its first nuclear plant
dedicated to electricity in 2020.
According to him, this plant will be
constructed after the adoption, expected for the start of 2009, by the government of the Nuclear Energy Bill. With
regards project financing, this bill stipulates at the start that the private and
public companies are responsible for
financing small projects, whereas the
State will finance the expensive projects. In addition, the consultant at
Sonatrach Group, Mahmoud Lomri,
stated that this bill should remove the
financial constraints faced with the
development of civilian nuclear energy
in Algeria mainly thanks to the continuing research in this domain which
would be guaranteed by the State.

Furthermore, the director of the

National Atomic Energy Commission
(Comena), Brahim Meftak, specified
that the existing potential, some 30,000
tonnes of uranium concentrated mostly
in Algeria's far south, is still underexplored and requires a reinforcement
of the Upstream mining activity.
Currently, nuclear energy represents
14% of the electric energy produced in
the world, according to the figures put
forward during this discussion-meeting
which preceded the closing of the CSI6.
As a reminder, the fourth edition of
Energy Week in Algeria was inaugurated by the Minister of Energy and
Mines, Chakib Khelil, in the presence of
the Nobel Prize winner and expert on
climate change and sustainable development, Mohan Munasinghe, as well
the European Commissioner for competition, Mrs Neelie Kroes.
Some 500 national and foreign participants took part in the different works of
this biannual energy meeting, this year
on the theme of "The new energy world:
challenges but opportunities too.
Amel Zemouri

Sonatrach, a company which wants to get into the top ten

Sonatrach is currently ranked 12th in the world. We
would like it to be in the top ten best oil companies, stated
its Chairman & CEO, Mohamed Meziane, thus explaining
the fact that far from resting on its laurels, this company
constantly questions itself, hence the holding of the 2008
edition of Energy Week.
And for this time, the challenge for Sonatrach is very
important since this important event is taking place at a
time when the energy and mines sector is working for the
institutional consolidation of good governance, particularly for civilian nuclear energy, whose cooperation is experiencing new impetus. This is especially the case given that
the Algerian company is also involved in other sectors, such

as electric production, new and renewable energies and

seawater desalination. Ranked the world's 12th largest oil
company, it is also the world's no. 2 LNG and LPG exporter, no. 3 natural gas exporter and no. 1 condensate exporter.
We want to forge ahead and this Energy Week will enable
us to draw up a negative and positive report on the company. I have been delighted to note that hundreds of proposals have been made by our young engineers and executives during this Week. This is proof that we know how
to question ourselves", summarised Mr Meziane, proud of
the future senior management which is starting to prove

Energie & Mines


march 2009


New order
and new players
By Samir Allal (*)
and Moncef Ben Abdellah (**)

I have spent my lifetime trying to make

obstinate economists
understand that from
the moment economic
development meets
nature, it would also
meet its true dimension: the true dimension of the economic
act is not only handling money, but also
transforming physical
and energy realities
to produce useful
goods, at the cost of
rejecting a certain
number of disrupting
elements for the biosphere. This here is a
whole new field which
is opening up the economy Ren Passet,
emeritus professor
University of Paris 1
Panthon Sorbonne
Summer University Carthage 28 and
29 September 2004)

oday, everyone agrees that

progress in the domain of
energy savings and promoting
renewable energies enable us
to reduce potential greenhouse gas emissions and help to reduce the
economic activity's dependency on
energy. The main stake then is to find
out how we can respond both to ever
growing energy needs, fight against
greenhouse gas emissions and remain
competitive whilst controlling our
consumption, in an increasingly free
and competitive market. Are there policies capable of modifying our collective
behaviour and influencing supposedly
inevitable evolutions?
The equation is not simple. It seems a
lot more complicated today that it was
when the LEF was launched.

Some points
of consensus
Energy is at the heart of sustainable
development's ambition because it is an
essential means of accessing a certain
number of fundamental public services
and goods such as education, health,
water, food, transport, social cohesion
and of developing income generating
activities and thus mobilising productive forces. It is also a set of activities and
sectors potentially responsible for the
harm done to the environment or the
sustainability of the planet's non-renewable resources. The continuation of
current energy consumption trends at
world scale is coming up against insurmountable constraints, is accentuating
the inequalities between rich and poor
countries and is contributing to social
Energy security and environmental
constraints are a challenge for the economic and social development at plane-

Energie & Mines


march 2009

tary level. This development can only

be slowed down, or even made impossible, by the insecurity and deterioration of the environment. This challenged can only be taken up by the establishment of a new energy systems'
model compatible with sustainable
development in order to respond to
current needs without compromising
the possibility for future generations to
have access to their own needs.
Now, it is important to note that the
world's current energy system poses the
problem of accessing a larger number
of modern forms of energy. It enables
no actual possibility of development or
getting out of the poverty spiral for at
least one out of every three inhabitants
on the planet.
It is, furthermore, based on consumption modes whose coal and pollution
levels are already worrying. There is
therefore no alterative to a renewed
energy system, a sustainable system
based on extended accessibility in the
South and on sobriety in its energy efficiency and renewable energy development components, in the Northern
countries, but also in Southern countries.
Sobriety is behaviour inspired either
by a love for health or by the inability to
eat a lot.
The traditional approach of the energy
paradigm has been to consider the
energy issue as concerning only energy
supply, with this having to respond to
an ever increasing demand, in the best
conditions of supply and cost: a growth
in demand considered unlimited should
be followed by similar growth in supply. And in this case, the concept of
energy savings goes back only to the
energy performance of machinery (outputs from power plants, car consumption, heating and air conditioning
machinery, etc.). Obviously it is very
important, but it is not enough.

sustainable development

The oil crises have made us aware

that fossil fuel resources are not unlimited, that their careless consumption
would make them scarce and increase
their cost and, finally, that the concentration of the largest resources in certain geographic regions may entail
serious economic and political crises.
Despite this warning and the threats to
the global environment which are
confirmed year after year, the current
trends according to the energy supply
priority paradigm are persisting and are
leading to more micro and macroeconomic vulnerability.
Indeed, the user's needs (household,
company, local authority) are not direct
energy products but goods and services
that are essential to economic and
social development, to welfare and
quality of life. In order to be satisfied,
obtaining these goods and services
requires a certain amount of energy
consumption. Controlling energy
consumptions implies behavioural
changes but above all the generalised
adoption of the most effective techniques. The question of infrastructures
is crucial (building, means of transport,
urban development, territorial development). The energy efficiency and local
and renewable energy promotion policies which especially target the territories are fundamental from this standpoint.
The new energy paradigm thus consists
of conceiving the energy system as
encompassing not only the energy sector (supply) but also energy consumption (demand) and of assuring its development so as to obtain an energy service in optimal conditions in terms of
resources, economic and social costs
and in terms of protecting the local and
global environment. These new energy
policy guidelines therefore pose a certain number of problems - macroeconomic problems in countries and terri-

tories and also macroeconomic problems on which we need to work.

Today, we place increasing confidence
in market mechanisms. Now, if market
prices are a good signal for investment
in the domains of energy savings and
alternative energies, can we rely on
relatively volatile prices to anticipate
and make the most optimal choices?
And if the market is relatively shortsighted, how can we change scale in
these domains with a vision which is
rather long term? Of course, this central question raises another question on
the position of the State in terms of the
market to change scale in the energy
savings and renewable energies policies
in increasingly deregulated markets.
After all, in the domain of energy
savings and renewable energies, which
are demands where social profitability
is very high, with economic profitability higher than financial profitability in
the short term, can we restrict ourselves to having confidence in market
mechanisms alone?
How will the State weigh up the future
choices? Will this purely mean guiding
choices by giving information and correcting distortions?
What is the right combination of sectoral energy policies to put in place in
order to respond to different concerns,
but also to different constraints?
What consistency must be found between national energy policy bases and
the development of the energy policies
of territories? In a word, if the State
has to intervene, but in an opening up
to competition context, what instrument, what institutional device, what
mechanism then needs to be implemented to achieve the objectives of sustainability?
There is a very great lack of empirical
determination in the cost/benefit analysis of energy savings programmes.
This type of evaluation is still the sour-

ce of any economic logic in terms of

decision making. After all, it makes
good sense to say: We only make decisions if the expected benefits outweigh
the costs we can evaluate in the field.
This difficulty, despite the solid theoretical foundation of a cost/benefit
approach, means that, increasingly, we
have arrived at evaluating energy
savings programmes using a multi-criteria evaluation.
But these multi-criteria evaluations
often reach a dead end on the weighting of the different criteria. On many
occasions, we note that for some criteria, there are indeed objective criteria
we can determine, but there are also
criteria which are purely from the subjective and normative domain. Even the
weighted sum which is sometimes
applied to evaluate the projects and
programmes do not enable us to overcome these normative value judgement
problems. This is why the World Bank,
for example, is developing a participative multi-criteria approach: all those
directly concerned by the project or
programmes have to be involved in
order to determine, together, the
weight of the different criteria which
enter into the evaluation and also to
overcome the problem of social acceptability. This is why the partnership
approaches take on another weight and
provide another clarification.
Indeed, feedback shows that substantial investments in energy sobriety have
not been produced spontaneously by
the market mechanism itself, but by the
putting in place of detailed policies,
including economic, institutional and
regulatory components, with major
public intervention means: research
and development programmes, regulations on energy consumption; information programmes for consumers and
training programmes for technicians
and managers; financial incentives

Energie & Mines


march 2009



reduced rate loans, tax

deductions) to encourage innovation,
demonstration or investments in the
rational use of energy and finally the
creation of institutions, organisations
and service companies for the design
and realisation of energy savings programmes and projects.
Citizen participation in these programmes and projects is important. The success of these programmes assumes that
citizens are aware, but also greater
information for a greater mobilisation
of public opinion and all those involved. Citizens have to be allowed to
understand and then rely on their
initiatives to find solutions validated by
themselves. A one-way control policy
by a centralised administration can
only be counterproductive.
In fact, apart from the measures taken
by governments, what is perhaps the
most important are changes in mentality; it is certain that, from this standpoint, changes are very slow. However,
we can cite a few examples which
appear here and there of groups which
defend the idea of a certain amount of
sobriety in everyday life and which,
from this standpoint, illustrate the
maxim of La Rochefoucauld who already said in the 17th century: Sobriety is
behaviour inspired either by a love for
health or by the inability to eat a lot.
We must not desire sobriety inspired by
the inability to eat a lot, but, however, if
a love for health inspires greater sobriety in the way of consuming energy, everyone will be a winner.

Business as usual
policies lead to a development deadlock
If we restrict ourselves to the statements made by energy policy officials,
we have every right to be satisfied
because, contrary to what happened
about twenty years ago, all the state-

Energie & Mines


march 2009

ments start with the priority of controlling demand before any action on the
energy supply.
However, if we look more closely at
what is happening, the evolutions are
more qualified. On the one hand it is
certain that the effectiveness of systems
to convert primary energy sources into
energy services, as a general rule, is
continuing to make progress.
But on the other hand, we are seeing
continued diffusion of the uses of energy or energy services which are often

highly energy-consuming and which do

not respond to the satisfaction of fundamental needs.
The International Energy Agency (IEA)
annually publishes the World Energy
Outlook whose drafting principle is
based on an analysis of needs and
resources and on the continuation of
the current State and company policies
("business as usual or BAU scenario).
World primary energy consumption
would be in this BAU scenario multiplied by 1.8 between 2000 and 2030

sustainable development

(annual growth rate of 1.5%), and CO2

emissions by 1.62. Natural gas
consumption would have average
annual growth of 2.1% per annum, but
oil would still be the dominant energy.
Biomass is increasing its contribution,
with the other renewables (wind,
solar) experiencing strong growth but
remaining marginal in 2030 in absolute value. Annual growth in primary
energy consumption would, from
2003, be 1.5%. The total investment in
the energy sector (supply) would be,
over the period 2000-2030, more than
20,000 billion dollars, 60% of which
for electricity (production, transportation and distribution) and 18% of these
investments in China. This prospect
outlined by the IEA is accompanied by
huge upheavals of the structure of the
world's energy demand both geographically and sectorally.
In fact, 62% of the increase in energy
consumption would be found in the
developing countries. The percentage
of these countries in world consumption would go from 30% today to 43%
in 2030. China would take the lion's
share in this growth in consumption,
with almost a third of the total growth
of the developing countries, followed
by India and Brazil (5% each). In 2030,
it would consume more or less what

North America consumes today or the

equivalent of what the whole of Europe
would consume at that time.
Sectorally, transport and captive uses
of electricity are likely to continue
stronger than average growth, whilst
thermal uses would see a more moderate growth.
The percentage of transport in the
world's final energy consumption
would thus go from 29% today to 33%
in 2030, and electricity from 18% to
22%. Now, what goes from transport
goes for oil, and what goes for electricity goes for Carnot output and major
transformation and distribution losses.
The energy world which the IEA suggests to us for 2030 would thus be a
world where the almost captive uses of
oil would be considerably weighed
down, despite the threat of climate
change: there is no sustainable development compatible with this model
and this energy paradigm. Even at
consumption of primary energy would
exceed 30 billion toe, i.e. almost triple
current consumption.
If, as demographers predict (and in the
absence of global catastrophes), the
world's population were to reach 9 to
11 billion, such a reasoning would lead

to consumption of around 50 billion

toe. Such a situation is not only non
sustainable, it is quite simply impossible (in terms of resources, economic
costs, environmental damage, armed
conflicts, etc.). The energy system
would not be able to respond to such
demand: three to five Planet Earths
would be needed to do so!
The aspiration to economic and social
development is legitimate and, for this,
we need energy. What the IEA's energy
outlook shows is that the continuation
of development following the current
energy model of industrialised countries (which the developing countries
are taking as an objective to be achieved) is so difficult and expensive that,
due to energy alone, the economic and
social development would be radically
compromised and not only for the poorest countries. Furthermore, this would
inexorably aggravate the risks of climate change.
A recent study carried out by Enerdata
and LEPI-EPE presents two energy
scenarios by 2050: a business as
usual (BAU) scenario comparable
with the IEA scenario and a Factor 4
(F4) scenario whose objective is to
divide France's CO2 emissions by four
at the end of the period compared to
their level in 1990. This study, other
than the case of France, also studies the
European and world energy systems.
The BAU scenario leads to final global
consumption in 2050 of around 16
billion toe, which is about the magnitude found in most business as usual
The F4 scenario leads to final
consumption in 2050 of slightly less
than in 2001 (start year of the outlook
exercise): in this scenario, global energy demand would stabilise between
2015 and 2020 and then decline. Such
a result is obtained thanks to the implementation, in all countries, of a vigorous energy consumption control policy in all sectors. The stake is sizeable
but the benefits in economic, energy
security and environmental terms are

Energie & Mines


march 2009


considerable: such a scenario is parti-

cularly the condition that is essential to

a reduction in greenhouse gas emissions required by the fight against climate change.

For an exclusive energy product supply logic

to an overall response
to a service need logic:
new order, new players
The implications of the new energy
paradigm (energy sobriety, promotion
of renewable energies) are considerable
in many respects. The consequences in
economic and environmental terms are
significant, as we previously said:
reduction in energy consumption
means an improvement of energy security, considerable reduction of pollution
and risks. But the most profound
modification of the energy issue is the
end of the usurpation of energy questions by the energy companies which
control the production, the transportation and the distribution of energy
(Bernard Laponche, Actes de l'UMET,
The growth dynamic of these companies and the energy policies that have
been imposed in reality can lead to economic and ecological deadlocks.
The user is forced into a passive role,
reduced to paying energy bills, when
the energy was supplied and when he
could pay for it.
The energy savings policy comes from
this closed system: obtaining the energy service becomes the affair of territorial and urban development, the construction of buildings, the production of
equipment. Each user, company, local
authority, household is no longer simply an energy consumer but a direct
stakeholder in drawing up and implementing a new energy policy.
Architects, town planners, builders,
equipment manufacturers have as
important a role as the energy supplier.

Energie & Mines


march 2009

The scope of energy savings is not limited to the energy sector; it extends to
industry, construction, transport,
consumer behaviour, consumption
modes. In this new context, new
players emerge, with a decisive role:
households, companies, local and territorial authorities. The State has a role
to play, but more so as a regulator than
master of the game. The energy companies must also amend their practices
and go from an exclusive energy product supply logic to an overall service
need response logic.
The urban agglomeration is the place
where most of the energy services are
concentrated: consumption of households, offices, places of education and
healthcare, leisure and culture, moving
of people and goods, etc. The town
then has a privileged position as an
energy consumer, but also as a promoter, in all its manifestations, of the
development of energy services for sustainable development. The municipalities and the other territorial authorities
have an essential responsibility in
controlling and mobilising the players.
The challenge of governance, mobilisation and reinforcement of the capacity
of players (public authorities, local
authorities, private sector and civil
society), within the framework of a system which would respect a shared ethical conception of sustainability, would
be essential.
The re-appropriation of the energy
question by citizens is certainly the
most interesting dimension and the
most crucial in the future of the new
energy paradigm. This does not mean
that the solution is easy, but this means
that sustainable development, the running of the planet, is a sacred problem
which would require respect of very
hard constraints, without which no survival would be possible. But we are
seeing outlooks emerge which did not
exist beforehand. These are outlooks
which justify the need to change the

What Prigogine, Schroedinger reveals

to us are the possibility and the responsibility of man as a player in the history
and as a manager of this planet. (Ren
Passet, 2004)

For a new energy
and climate deal
The profound change in energy paradigm which substitutes demand priority for supply priority is profoundly
changing citizens' relationships with
energy systems. The satisfaction of an
energy service instead of an energy
supply places new players in the lead:
companies, authorities, households,
transport, industrial or agricultural
production and the tertiary sector. The
towns and the territorial authorities are
becoming essential promoters and
coordinators of these new policies.
The energy and coal saving potential is
considerable. It partly depends on technologies to be promoted and partly on
new behaviours to be encouraged.
Several reliable estimates show, over
the next twenty years, a potential of
around 20% of consumption (more if
energy prices continue to increase).
The policies implemented in the emerging countries in the next ten years will
be decisive. China, India and Brazil, the
Mediterranean countries and others are
experiencing strong economic growth
and numerous factors are playing in
favour of controlling the demand for
energy: low hydrocarbons resources and
weight on their economy of oil imports,
very strong potential in new infrastructures (town planning, buildings, means
of transport), development of renewable
energies whose combination with
controlling demand is the most promising path for the future.

sustainable development

Even if the countries are in very different situations, they all have room for
manoeuvre to improve the efficiency of
their energy uses and contribute to sustainable energy development, with different rates in each country. The desired crossroads implies a change in
paradigm and the re-conversion of the
economies of countries based essentially on fossil energies (coal, gas and oil).
This orientation is a realistic option for
all countries, in terms of energy security and in terms of climate security.
The inconsiderate growth in energy
demand is not therefore a fatality. The
main problem is not the shortage of
resources but their more rational and
more economical use. The main objective is, in this century for 9 to 10 billion
individuals, to lead an industrial revolution and changes in consumption
modes, with different rates in each
country, and to have the means of
focussing investments now in the long
term (power plants, buildings,
transport systems and other infrastructures) to more efficient solutions, less
intensive in coal and more vulnerable to
the effects of climate change.
The question of financing investments
in energy savings is still the weakest
point. The causes of these difficulties
come particularly from the dispersion
of projects and due to the fact that they
are not, in general, the main concern of
those who could run them. The putting
in place of market-backed economic
instruments appears necessary to internalise the externalities, to guide choices
and correct distortions, but is not
enough. In fact, without structural
measures (for example, public
transport offering, economic house
building programme), these measures
remain inefficient.

and relieve the constraints of industrial

competitiveness. Seeking an acceptable
compromise between market confidence with regards prices, the use of State
intervention with regards promoting
new technologies and the concern for a
cooperative strategy with regards the
environment, is a major stake in energy
even if the preferences of States are not
always compatible in this domain.
Awareness of the importance of climate change is increasing in the emerging
countries. These countries are also
aware that with a barrel of oil at more
than 100 dollars, energy inefficiency is
becoming a major obstacle for their
growth, their independence and the
balancing of their budgets. Dirty
growth is already undermining their
Europe can offer emerging countries a
new global deal which incorporates
different sections: energy efficiency and
coal saving programmes with a sharing
of the extra cost of investments, local
and global efficient economic incentives, intellectual property rights, and
finally a definition of standards adapted
to the characteristics of the countries.
The scope of such an agreement will
lead to the establishment of a reinforced partnership on a new development

Agence internationale de lnergie
(AIE) : World Energy Outlook 2007.
Samir Allal et Stphane Quefelec
(2006), Politique nergtique et dveloppement durable en Mditerrane :
dfis et nouveaux enjeux, Liaison
Energie Francophonie, n 71, 2 trimestre 2006.
Samir Allal et Stphane Quefelec
(2008), Energie et environnement en
Mditerrane. Pour un new deal climatique dans la rgion, Medenergie,
n 25, janvier 2008.
Christian de Perthuis, Houda Ben
Jannet, Stphane Pouffary, Le mcanisme de dveloppement propre dans
les pays mditerranens. Comment
acclrer la mise en uvre ?, Liaison
Energie Francophonie, IEPE, n 71, 2e
trimestre 2006.
Bernard Laponche, Moncef Ben
Abdallah, Samir Allal, La matrise de
lnergie, Cahier Prisme n 1, IEPE.
Bernard Laponche, Matriser la
consommation dnergie,
Paris, Editions Le Pommier, 2004.

S. A. & M. B.
In Liaison Energie-Francophonie

(*) Director of the Academic Technology

Institute (University of Versailles), France
(**) Tunisia's Ambassador to the Federal
German Republic and former Minister of
Industry and Energy

The clean development mechanism

created by the Kyoto Protocol is not
able to deal with the stakes; these measures must therefore be completed to
influence the investment dynamics in
the energy and urban infrastructures

Energie & Mines


march 2009

Exhibition of the Peruvian painter Sergio Silva Cajahuaringa
at the Muse national d'art moderne et contemporain (Mama)

Man, art and ecology

"The picture must be for the artist as for anyone experiencing it later a
revelation, an unexpected and unprecedented resolution of an eternally
familiar need, Mark Rothko.

By Mohamed Djehiche (*)

Any work reflects, highly intimately, the

driving forces of the soul, the quests
and the pilgrimages of its author.
Painting thus becomes a vital need to
tell a story and to express poetically the
emotional concerns felt, the things that
affect or touch.
A painter committed to the abstract,
Sergio Silva Cajahuaringa's exhibition is
about the past and the future, he is
interested in archaeology and the ancestral elements of his Inca culture and
also in the question of ecology on which
man's perfect equilibrium and health
depends. His relationship to the cosmos
is rendered with a lot of sensitivity and
his canvases resemble landscapes where
the smallness of being manifests itself.
In this case, his work shows his anger
about the major threats to the environment. With the shapes, colours and

Energie & Mines


march 2009

materials, natural, pictorial and mental

areas intermingle whereas here is an
extremely vibrant and poignant piece of
work. Although its priority remains
above all a figurative work laid out from
different positions, it is the result of an
initial specific project where the painter
discovered new forms and an increased
freedom of expression which encouraged the onlooker into reverie.
Allusive abstraction, in reference to the
immensity of the areas, to the force of
natural elements, to archaeology and to
architectural intervention in nature,
creates a constant dilemma in his pictorial researches and becomes the land
favourable to a more internalised meditation. Sergio Silva Cajahuaringa
demonstrates complete mastery of oil
on small and large formats. His both
hollow and solar poetics lend an irresis-

tible new breath of life to an already

greatly exploited pictorial niche.
It is through the form which Sergio
Silva Cajahuaringa has renewed his writing which encourages us into active
reverie. The balances and imbalances of
his layouts, the telescoping of the lines
and his different plains in a space defined by the dimensions of the painting
generate a changing, limitless dynamic.
His base palette - reds, earthy yellows,
browns, blues, blacks - and the light
emerging from it possesses a character
which seems to be that of the gold
which the Incas presented as an offering
to the gods. The sensation that his work
flows with incantatory spirituality does
not leave us after being steeped in his
M. D.
(*) Director of the Museum


Energie & Mines


march 2009


Chakib Khelil receives

the GS Ptrolier players
The Minister of Energy and Mines, Chakib Khelil, received
in Algiers the winners of the 30th edition of the African
Handball Clubs Cup, the players from the Groupement
sportif des ptroliers d'Alger (GSP - Algiers oil companies'
sports consortium).
During a ceremony organised at Sonatrach's headquarters, attended by the Managing Director of the company,
Mohamed Meziane, the president of the Algerian Olympic
Committee (AOC), Mustapha Berraf, and the Director of
the GSP Sports Association, Mohamed Djouad, the
Minister congratulated the performance of GSP which, he
said, has been able to honour Algerian colours during
international competitions.
The captain of the GSP handball team, Loukil Abdelghani,
gave the Minister the continental trophy brilliantly won by
his comrades. Then, the Minister received from the
President of the Association the new orange strips of the
GSP team, bearing the national emblem and the logo of
the company. The section's manager, Djafar Belhocine,

indicated to the APS that we are proud of this first title

won by GSP, after only a few months since its creation,
and which adds to the hundred or so titles (national and
international) won by the old team, MC Algiers".
It was therefore a very important mission to take up the
challenge, he emphasised, adding that this ceremony took
place on the eve of an important event, namely the commemoration of the 38th anniversary of the nationalisation
of hydrocarbons.
A souvenir photo with all the players and the technical and
administrative staff ended this ceremony which took place
in a friendly environment.
Sonatrach officially withdrew in 2008 from Mouloudia
Club of Algiers (MCA), by creating its own sports association (GSP) and by returning the logo of MCA to the
In the final of the 30th edition played in December in
Casablanca, GSP won its first African title, beating the
Rabita team from Morocco by 22-20, it was reminded.

A huge operation in the month of Ramadan

The Sonatrach Group leading the solidarity

The subsidiaries of the Sonatrach
Group were greatly sought after in the
sacred month of Ramadan and they did
not fail to show solidarity with needy
citizens and families. The companies,
Enageo, GCB, Naftal, Enafor, ETP,
GTP, ENSP, EGZIA, to mention just a
few, intervened in all wilayas of the
country, led by their parent company.
To the contributions not given a financial amount, should be added the donations made for example by Enageo (2
million dinars) GCB (DZD500,000),
Naftal (500 baskets) which concerned
the wilayas of Laghouat, Algiers,
Boumerds, El Bayadh, Ouargla,
Ghardaa, Illizi, Tamanrasset, Adrar
and Jijel.
The companies Naftal, Enafor, ENTYP
and GTP served in the second month
some 650 meals a day in the wilayas of
M'sila, Mostaganem, Ouargla, Bjaa,
Constantine, Oran, Algiers.

Over 2 million dinars in the form of

financial contributions and donations
were paid by EGZIA, ENTP, ENSP,
Enafor and GCB to charitable associations as well as to public institutions in
several wilayas.
The local departments of some ministries, the Algerian promoters, Civil
Protection, Algrie Tlcom, Algerian

Muslim Scouts and Sahraoui refugee

camps benefited from them.
More than 30,000 Ramadan baskets
were distributed by the Group in the
holy month and concerned all wilayas in
the country.

To Chakib Khelil
Minister, please accept my sincere and great thanks for the donation you kindly gave to
the Ecole suprieure des beaux-arts of Algiers. Through your honourable gesture, the wonderful work of Mr Abderahmane Khelifa, entitled Honaine, former port of the kingdom of
Tlemcen, enhanced the fund of our library, thus making accessible through knowledge a
whole area of our so rich and extensive history. Yours faithfully.
The Director of the Ecole suprieure des beaux-arts

Energie & Mines


march 2009

SCIENCE& &technology

Southwest Algeria megafans

help to interpret geological features
on the planet Mars
By MT. Bouarroudj & N. Bourenane (*)

In addition to the observations and the

description of the tasks and experiments carried out by the crew of expedition 18 of the International Space
Station (ISS) comprised of Mike
Fincke, F. E-1 Yuri Lonchakov, FE-2
Sandra Magnus during this mission,
NASA's status report for the day of
1/1/2009, published on the website describes particular geological features, taken in
Southwest Algeria, similar to those discovered on the planet Mars.
It particularly writes: the photo target uplinked for today as Southwest
Algeria Megafans (an unusual cloud
bound in the western Sahara Desert)
should have been passed by time of closest approach. Shooting right of track
for 60 secs since the target is relatively
large. Parts of the megafans should have
been visible between any scattered
cloud. As very large spreads of river
sediment, megafans explain the widespread but enigmatic flat, stony plains
described by early explorers of the
Apart from their intrinsic interest as
newly appreciated geological features,
megafans are being investigated as analogs for features on Mars, and have just
been used in a new reconstruction of
past landscapes in Amazonia.
(In NASA ISS on-orbit status of
This observation confirms what was
observed on 13/3/2008 where these
megafans were located in South West
Algeria. Two megafans - one very large
at 320km radius - shows obvious radiating surface streams. The fans were laid
down by rivers that flowed west out of
local mountains when climates were
wetter 5-15,000 years ago. These huge
sediment masses have only recently

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march 2009

Perspective of the circumference off the Holden Crater of the Planet Mars.
The megafan can be seen in the centre and the Uzboi Vallis canal system is visible on the right. (09/05/2005). Source: website: www.cielqr/planetemarsun.php.

been identified in this remotest part of

the Sahara Desert. They are an analog
for parts of Mars where enormous
quantities of layered, apparently riverlaid sediment, occur (especially in the
high-interest area, Sinus Meridiani,
where the rover Opportunity is still
Sediment has buried the base of hills
along the northeast side of the megafan
in a way that stimulates buried Martian
impact craters.

Visual cues are major linear dunes located to the NW, and contorted rocks
immediately east), and Central Algeria
Megafans (north east of the target
above lies a complex of smaller fans, all
right of track. Understanding details of
these complex patterns will allow more
sophisticated modelling of sedimentary
layers on Mars (underway). (In NASA
ISS on-orbit status of 3/12/2008.)

Conference of Ministers responsible for

the Development of Mineral Resources
13-14 October 2008 - Addis Ababa

Energie & Mines

Africa Mining
Vision for 2050

This common vision presents:

An African mining sector based
on knowledge, a catalyst contributing to large growth and development which is fully incorporated in a common African market
downstream interdependence
in the enhancement of minerals
and production;
upstream interdependence of
mining equipment goods, consumables and service industries
mid-way interdependence in
the domain of infrastructures
(energy, logistics, communications, water) and development of
skills and technologies (HRD and
mutually beneficial partnerships between the State, the private sector, the civil sector, the
local communities and other
players; and
exhaustive knowledge of the
mining estate.
A durable and well regulated
mining sector which produces
efficiently and generates revenue
from the resources, which is
safe, healthy, takes account of
gender and ethnical aspects, of
the environment, which is socially responsible and is appreciated
by the surrounding communities.
A mining sector which is an integral part of a globally diversified,
dynamic and competitive African

economy on the industrial level.

A mining sector which has enabled the creation of infrastructures by maximising its propulsive
economic interdependence at
the local and regional levels.
A mining sector which optimises
and contains enormous finite
mineral resources, which is
diversified, incorporating industrial metals of a lesser commercial value at large and small
scale, and
A mining sector which is a key
player in the competitive and
dynamic basic products' markets
at the continental and international scale.

The United Nations Economic
Commission for Africa (CEA)
held a meeting from 20 to 22
August 2008 of the technical
group of experts in view of drawing up the new Africa Mining
Vision 2050 in preparation for
the first conference of the African
Union of Ministers responsible
for the Development of Mineral
Resources. The technical group
of experts put in place jointly by
the African Union (AU) and the
CEA particularly includes representatives of the African Mining
Partnership (the inter-governmental Forum of African
Ministers of Mining), the African
Development Bank (ADB), UNCTAD and UNIDO.
The Africa Mining Vision 2050 is

the result of numerous initiatives and efforts at the subregional, continental and world levels aiming to draw up
regulatory policy frameworks in order to maximise the products extracted from the mining of mineral resources.
We can cite, inter alia, the Johannesburg Political
Declaration as well as the Implementation Plan (chapter 42
and paragraphs f and g of chapter 62 on sustainable development in Africa), the World Summit on Sustainable
Development, the Yaound vision on artisanal and small
scale mining, the African mining partnership on the
Sustainable Development Charter and the mining policy
framework, the SADC framework for the implementation of
harmonised mining policies, the standards, the legislative

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and regulatory frameworks, the WAEMU common mining

policy and the community mining code, the 2007 Big
Table summary report on Managing Africa's natural
resources for growth and poverty reduction which was the
subject of a meeting organised jointly by the CEA and the
ABD, the works of the international working group responsible for reviewing Africa mining systems. Appendix 1 presents a list of all the initiatives taken within the framework
of drawing up the Africa Mining Vision. This vision will be
implemented progressively and will take account of the
local context and the specificities.

Mining natural resources:
key to Africa's development
Africa is the largest producer of numerous mineral resources in the world as well as other important resources but
Africa is still suffering seriously from a lack of geological
cartography which might reveal an even larger amount of
potential resources.
Unfortunately, most minerals in Africa are exported in the
form of concentrated or metallic minerals without any real
added value. Consequently there is a large potential for
enhancing minerals.
Africa also contains numerous resources known under the
name of fossil fuels (oil, gas and coal) and a vast potential
of biomass and bio-fuels (ethanol, biodiesel) particularly in
the tropics.
In addition, Africa has enormous hydroelectric potential
(Inga 45GW and the River Congo 200GW) as well as a
large unvalued geothermal potential along the African
Grand Rift Valley. The urgency of Africa's industrialisation
is recognised throughout the world. The transformation of
our economies is an essential component of any long term
strategy in view of achieving the Millennium Development
Goals (MDG) in Africa, growth and sustainable development as well as eradicating poverty throughout the continent. The main problem does however reside in the formulation and implementation of efficient industrialisation strategies relying on the unique assets of our continent rather
than the emulation of strategies which might have been
effective under other skies.
An industrialisation and development strategy for Africa
based on its resources must rely on the use of Africa's
enormous resources in order to boost diversified industrial

development as in the case of the successes recorded in

the implementation of several old economies of the developed world such as Finland, Sweden, Germany (particularly in the Ruhr region), in the United States over more
than a century ago and to a certain extent in the medium
income countries of Malaysia, Brazil and South Africa.
Development and industrialisation strategies based on
resources are nothing new.
The vision according to which the mineral resources could
stimulate Africa's modernisation transpires in numerous
development strategies and plans in Africa at the national
and regional levels (for example, the Lagos Action Plan,
the Sectoral Mining Programme of the SADC, the NEPAD
mining charter and, more recently, the African mining partnership). However, most of these plans and strategies aim
to put together ambitious and grandiose projects (examples of the iron and steel factories in Ajaokuta, Nigeria)
designed in a spirit of a very narrow mining box. A number of these projects were large capital consumers and
depended on foreign investment. Most of them have failed
as they were ineffective and barely sustainable given the
low level of development infrastructures, market imperatives and the lack of knowledge suffered by the beneficiary
Experience of development and industrialisation relying on
resources in the Nordic countries reveals that the sustainability and success of this strategy depend on favourable
external and internal factors such as natural resources as
well as early and deliberate actions by the main stakeholders, particularly the governments. These actions are particularly necessary and serve to:
Facilitate and encourage the development of human
resources and the acquisition of skills along with the development of technological resource agglomerations through

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the facilitation of research and development (R&D) and the
setting up of knowledge segments and networks including
the universities, industries, government and other sectors.
Put in place support infrastructures particularly roads,
energy and hydraulic projects and also telecommunications networks.
Encourage the establishment of a crucial mass of similar,
secondary, interdependent and associated key industrial
players who work together and sympathise with each other
so as to improve the initial factor of advantages, stimulate
competence, innovation and diversification.
Promote the enhancement at the local level and the
added value of minerals in order to obtain the raw material
for industrial production.
Establish an industrial base through the upstream and
downstream correlation.
Encourage and support the small and medium sized
enterprises in order to incorporate them in the production
Increase the confidence and participation of the private
Create incentive markets required for capital and basic
Facilitate research and development (R&D) and set up
knowledge networks and segments with universities,
industries, government and other players; and
Exploit the Public Private Potential (PPP).
Constant innovation and the development of human
resources are decisive in the reduction of dependency on
the contribution of the initial factor (natural resources) in
the construction and support of a locally rooted, competitive and diversified economy. However, when there is not
enough human, physical and institutional knowledge capi-

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tal as well as limits in terms of governance, insufficient

innovation systems, a low rate of economic awareness and
progress and a lack of business organisation, it is impossible to transform the contribution of the initial factor into a
construction platform of successful segments and diversified economies.
The lessons learned from the experience of the Nordic
countries suggests that it is important to share a common,
deliberate and early vision of a collective action led by the
government, interventions within the appropriate time and
the coordination of public and private community interests
at all levels in order to achieve, at the continental level, a
development and industrialisation strategy in Africa based
on resources.
Furthermore, it is necessary to identify, at the regional and
national levels, the main projects which will be contained in
the strategy.
However, in view of palliating the major infrastructural
constraints, the continent must, in addition, overcome "the
enclave of the resources of the past in the development of
its resources in order to be assured that the numerous
resources as well as the economic correlation of resources
are formalised locally throughout the continent. To this end,
it is proposed, first of all, to put in place an African Spatial
Development Programme (PDSA) comprised of a network
of development Corridors throughout Africa in order to
exploit the continent's resources and all its potential.
The PDSA aims to synchronise the offering of infrastructures with the users in order to reinforce the potential investments and create a strict economic environment for investments into infrastructures. It also serves to evaluate the
projects according to an economic and business mechanism, which enables investments to be prioritised effecti-

vely in the domain of infrastructures. In view of assuring

the success of the PDSA, it is necessary to create local
participation opportunities particularly in the supply of
goods and services. We can distinguish these opportunities by assuring the transparency of the mining industry,
which would enable us to identify the gateways to (i)
increase the support sectors (supplier/input industries)
downstream; (ii) reinforce upstream the industries based
on increasing local enhancement and the added value of
goods; (iii) facilitate the sideways migration of mining technologies to other industries; (iv) multiply the human, social,
institutional knowledge capital (which may be used in other
sectors); (v) promote the improvement of living conditions
of mining communities; and (vi) create small and medium
sized enterprises as well as a balanced and diversified
economy with great multiplying effects and the potential to
create jobs.
The role of cooperation and regional integration in reducing
the costs of transactions, drawing up intra-regional synergies, reinforcing competitiveness and achieving economies
of scale which would boost the development of mineral
segments must not be underestimated. Nevertheless, in
view of facilitating the free movement of goods, services,
capital and other factors, it is important to accelerate the
harmonisation of laws, the regulations and tax systems
which are, inter alia, determining factors.
Such an African Industrialisation and Resources
Development Strategy based on resources (IR/DS), relying
on the use of Africa's enormous resources (comparative
advantage) in view of boosting growth in other sectors,

might be a viable component of an integrated and sustainable growth and development strategy for Africa.
This strategy would be used to maximise interdependence
in the resources' sector by creating integrated industrial
resources' segments (downstream, upstream and mid-way
interdependence) as well as the development of high level
skills within the segments, through the acceleration of
investment in Human Resources Development (HRD) and
Research and Development (R&D) in order to enable
Africa progressively to build a sustainable competitive
advantage drawn from the comparative advantage of its
resources. Such a competitive advantage would, at a later
stage, be independent of its wealth of resources.
The current expansion of basic products: a minefield of
opportunities and profits in the long term for Africa
Numerous African countries have recently experienced
dynamic growth after several decades of stagnation due to
the recent expansion of basic products further to strong
demand from China and, to a lesser extent, from other
emerging economies such as India and Vietnam. Many
African countries have enormous potentials in the production of basic products, particularly minerals, and Africa has
thus seen a remarkable resurgence of FDI since 2002, particularly in the mineral resources' sector.
Resources saw a boom in 2003 with an exponential increase in the prices of minerals followed by the upsurge in the
prices of agricultural bio-fuels in 2006 and, finally, of other
agricultural raw materials in 2007. The depreciation of the
prices of agricultural subsidies of developed countries
within the OECD added to the inelasticity in the production
of minerals very certainly caused the shifting in the prices

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of agricultural products faced with Asian demand.
However, although the improvement of prices in the world
is a godsend for the development of most African rural
populations, urgent strategies are required in order to
improve the impact of the increase in prices of food products on Africa's poor and vulnerable rural populations.
The essential question is still, however, one of knowing
how much time this expansion will last. Will it disappear
progressively like previous ones? It has been represented
by the trans-national mining companies as a super cycle
as it has experienced a longer lifecycle than previous
The fundamental driving force behind the demand for
minerals is the intensity of metals faced with the growth in
world GDP. The following diagram presents the intensity of
steel (which is a good indicator of the intensity of metals)
compared to world GDP.
The intensity of steel compared to world GDP has revealed
three distinct phases since the Second World War.
1. Phase I (1950-1984): High intensity. The reconstruction
of the developed countries after the Second World War and
their increasing purchasing power entailed high demand
for minerals as well as an increase in prices. This impact
was negligible in the developing countries.
2. Phase II (1984-2000): Low intensity. The creation of
infrastructures in the developed countries, the movement
of services (only the Asian tigers in the high intensity
phase but too low to have an impact on the world trend)
entailed excess production and the weakening of mineral
prices. This was proof of the failure of world growth which
continues due to the hegemony of the developed countries
faced with the international trade system and the increasing use of subsidies (e.g. CAP & steel).
3. Phase III (2000 to present): High intensity (higher than
in phase I). With the start-up of developed countries and
the constant revision of trade rules which denotes a partial
lack of hegemony of the developed countries on the international trade systems. Period of high demand and increased prices.
The intensity of metals on the international scene would
have experienced a constant upwards trend if world growth
had spread to most of the world's populations in the 1980s,
but this growth only benefited the Asian "tigers" with a
population of less than 80 million. The world in its entirety
only experienced growth (and its extent) twenty years later
(BRIC and others). Several African countries were still
colonies during phase I and at the time of their independence, they adopted State-based systems for mining
their natural resources just before the start of the low intensity of phase II characterised by low demand and reduced
prices. This entailed the general revision of natural resources' systems in the 1980s and 1990s (generally initiated by

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the World Bank) in order to attract FDI (foreign direct

investment) in favour of TNC (trans-national companies)
characterised by a low conditionality, a low distribution by
the State of the revenue made from resources and a low
correlation of the sources' sector with the national economies. Given the new global scenario, these systems must
be revised urgently so that the current "expansion" stimulates sustainable development in the resources-rich countries of Africa.
Given that China (PRC) is about a third of the way through
its high intensity phase, that India is about a third of China's
intensity and that the population of these two countries is
around that of the developed countries, we can reasonably
assume that the current high intensity phase of metals in
the world might continue at least as long as phase I (see
Steel/GDP diagram) or almost 30 years (1950-1980)! This
assumption does not take account of the growing intensity
of other emerging economies such as Brazil, Vietnam,
Indonesia, amongst others, as if we were to take account
of them we would have a high intensity phase of 30 to 50
years. It would, consequently, be prudent to assume that
the current explosion will be a long unprecedented super
cycle only if China and India continue to have vigorous
growth. The fundamental question is still one of finding out:
how can the current growth of the African States boosted
by the resources be transformed into industrialisation and
sustainable development?
A mining sector in the midst of growth:
historic instrument of progress in Africa
Africa has always mined its resources. In fact, the oldest
mines in the world are in Africa, among which we can cite
the Ingwenya mine in Swaziland which was mined some
20,000 years ago for its ochre iron which was used for the
paintings made on rocks. Furthermore, there are thousands of old gold and metal mines across the continent.
These mines were generally incorporated into the local
pre-colonial economies and provided the main raw materials and high value goods for trade (gold, copper). With
the European colonial conquest, the African mining sector
was incorporated into the European economies through
the supply of raw materials for their industrialisation.
With independence, African leaders set about reinforcing
the mining sector and its contribution to the continent's
economic and social development. In the 1960s and
1970s, according to the recurring issue of national sovereignty which then prevailed following the end of colonialism, the dominant thought consisted of considering that
development could only be achieved if the State had a
good share in or, better, the full ownership of the mining
companies. This enabled the nationalisation of major private companies, and in many countries including Ghana,
Guinea and Zambia, the State took control of the industries. One hoped that the nationalisation would be a driving
force for growth and quick industrialisation which would
generate enormous economic benefits for the nation and

would improve the living conditions of the populations.

Among other factors that contributed to the stagnation and
even the decline of the nationalised mining companies we
can cite the political interferences in the decision-making,
the lack of respect or lack of managerial and technical
expertise, insufficient reinvestment which entailed the
consumption of capital, the lack of access to financing and
the reduced prices of minerals.
Towards the end of the 1980s, the mining industry in Africa
was mostly experiencing a crisis and recorded results
below performances. This encouraged the government to
change attitude. There was a profound change in system
and a redefinition of the State's role which went from 100%
control to deregulation and almost total withdrawal.
Numerous African countries set off in the process of radical reforms to attract foreign direct investment in view of
boosting their declining mining sector.
To this end, State companies were privatised; efforts and
resources were deployed with the effect of creating an
environment favourable to investments. New legal, regulatory and administrative policies favourable to private
investments were drawn up and implemented. The priority
was focused on the security of enjoyment and the reinforcement of mining rights. A series of incentives in terms of
reducing taxes and duties was put in place in favour of
investors in the mining domain. All these measures combined with the increase in prices favoured the explosion of
the mining sector, increased foreign direct investment and
enabled the inflow of mining capital, technologies and
However, towards the end of the 1990s and at the dawn of
the 21st century, criticisms were made that the boom in
resources and the profits in terms of efficiency which would
result from it as well as the increase in exporting income in
numerous economies of Africa would produce uncertain
social benefits and development. They felt that most
reforms were limited and aimed more to attract private
investments and promote rather than favour local development. They thought, furthermore, that the reforms were
sectoral and did not take account of the macroeconomic
objectives which could boost larger scale development
objectives: according to these criticisms, these reforms
gave pre-eminence to FDI to the detriment of local capital
Some revealed that although the profits garnered by the
mining sector in some national economies are important,
the price to be paid at the local level (environmental
impact, social and cultural disruptions) particularly in the
local communities could not offset this evidence.
Furthermore, they insisted on the importance of the incentive measures offered to mining companies, which, to a
certain extent, reduced the amount of revenue on which
the African governments depended in order to finance their
social and development programmes. They added that the

mining sector had not achieved its objective to reduce

poverty which had not been incorporated into mining policies as the correlation at the local, regional and national
economies' level was low. They were also concerned that
the reform process was mainly encouraged by the government. According to them, the asymmetrical relations of
power in the communication, consultation and decisionmaking processes favoured bipolar initiatives (government
and private sector) and results which, hence, would not be
sufficiently representative and participative. The development objectives would, consequently, be limited and would
only take account of the interest of the government and the
mining companies without any consideration of the opinions and aspirations of the local communities and civil
society overall.
Faced with the new pressure faced by the mining industry
as to the equitable distribution of profits and the maximisation of the local impact for sustainable development, the
mining industry considered adopting a new social contract
which could lead to an integrated development with various
economic ramifications, the increase in social welfare,
security in living conditions and the reduction of the vulnerability of poor communities but which would take account
of the local nature of the mining estate which requires the
equitable distribution of local benefits with the implementation of sustainable national policies in view of reducing
New contracts and legal texts encouraging the active participation of local communities and other players as well as
new revenue (generated from duties, income tax, land tax,
lease income, etc.) from distribution and sharing mechanisms at the local level on the one hand from income collected at the central level are all measures and challenges
considered within the framework of this new development
system. In the same vein, the triple partnership between
the government, the private sector and the local communities is implemented with the effect of strengthening the
relations of these three stakeholders and achieving social
development at the local level. The same applies for public
participation in order to assure the downstream of the
government in the industrial actions.
However, in any system, it is a question of finding the right
balance between the payments of annuities from the
resources between the regions rich in resources and those
which have few resources as these revenues are finally
dedicated to investments in physical and human infrastructures in order to stimulate future competitiveness at the
national level.
Some mining companies abandoned these old development and community relations methods characterised
either as Strictly business or Practical partnership and
adopted statutes on the social responsibility of "less instrumentalist and more holistic" companies as well as development approaches which enable the capacities of local

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communities effectively to be reinforced. It further seems
that there is a better understanding that sustainable development within the framework of the mining sector means
that mining in the world must be sustainable in the environmental, economic and social domains and must take
account of the market's dynamics, of technological innovation, community involvement, the impact on health, safety
and the environment and finally the institutional framework.
The corporate world is therefore starting to understand that
successful mining industries and companies will be evaluated using three criteria, particularly financial success,
contribution to social and economic development and environmental management.
This principle inspired the Global Reporting Initiative (GRI)
in drawing up recommendations in its report on the mining
and metallurgy sector. The GRI's recommendations on the
mining sector were published in 2004 and present the
social, environmental and economic indicators in domains
as diverse as the production of revenue, management and
distribution, added value broken down by country, compensation for local communities, employee benefits apart
from those legally imposed, and the description of policies
or programmes on equal opportunities. No mention is
made of the integration of the mining sector in the local and
regional economies as to its determining upstream, downstream and mid-way correlation.

ces encourages the development of access zones and

offers an opportunity for potential resources such as
agriculture, forestry and tourism which can thus generate
Added value downstream: The use of the region's advantage (CAFFOB) to produce crude resources with the possibility of setting up resource transformation (enhancement) industries which, in turn, produce the raw material
for the production and industrialisation.
Added value upstream: The use of relatively important
resources within the framework of a sectoral market in view
of developing the resources and inputs' (equipment goods,
consumables, services) production sector.
The Development of technologies and products: The use
of the technologies related to the resources must generally be adapted to local conditions (e.g. climate, mineralogy,
soil) which offer opportunities to develop technological
skills by segment in the inputs' sector. This sector mainly
requires a reinforcement of its capacities and, hence, must
be primed through investment into HR and R&D.
However, many studies have shown that this sector has
the capacity to reinvent itself at a later stage outside the
resources' sector through the lateral migration of technological skills in order to produce new products for other

Why an Africa Mining Vision for 2050?

Africa's decolonisation unfortunately coincided with the
decline in the intensity of use of metals in the world as previously mentioned. Since their independence, most African
countries, with a few close exceptions, have not made
enough progress in the integration of mining sector in their
local economies due partly to the collapse in prices and
inappropriate policies. The Asian boom is offering Africa a
new opportunity to integrate the mining sector into the local
economies through the creation of an essential correlation.
But this will not come about automatically, hence the pertinence of an Africa Mining Vision and the putting in place of
a series of appropriate strategies and interventions in order
to achieve this vision.
The major objectives of this Africa Mining Vision which
would enable the stimulation of strong growth and development, if using the implementation strategies with success elsewhere, are the maximisation of the opportunities
offered by a wealth of mineral resources particularly the
reinforcement of the mining sector through the optimisation
of its correlation in the local economy.
The main opportunities offered by this mining wealth are:
The Revenue from the resources: The use of unexpected
revenue in the improvement of basic physical, social and
human infrastructures.
The physical infrastructure: The indirect use of the infrastructures built by the revenue generated from the resour-

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Major constraints and success factors

for the accomplishment of the vision
The main question is finding out why most African States
have not been able to make the most of these opportunities offered by its wealth of resources in order to lead to
this essential correlation and thus achieve diversification,
growth and development? The failures of each of these
opportunities are:
Income made from the resources: The curse of resources goes back to the traditional transfer of income in short
term consumption (imports), and sometimes the covert
exporting of resources which entails low levels of reinvestment. However, inadequate governance is its real cause,
particularly the lack or even the ineffectiveness of appropriate institutions. This sometimes affects the percentage
of State income to the point where African States which
have a low level of governance generally are not able to
impose a taxation system which assures a fair distribution
of income particularly extraordinary earnings, due to the
State's inability or even the loss of its ability to produce
overall satisfactory results.
Collateral use of infrastructures emerging from the
resources: to a certain extent, this is an advantage from
which most resources-rich economies benefit but the development of other sectors, particularly agriculture for commercial reasons, throughout and inside the infrastructures

of the serviced regions is seriously affected by the macroeconomic impact of the expansion of resources (strong
currencies or the Dutch Disease) and by the inability to
invest and to maintain the necessary upstream infrastructures connected to the infrastructures emerging from the

directly determines the "relative distribution of the related

profits" and which has an indirect impact on the reinforcement of the sector through a downstream and upstream
correlation of the local, regional and national economies.
To this end, we can mention five strategic intervention

Added value downstream: One of the many reasons for

this failure is the non-availability of other major inputs,
apart from the raw materials required for competitive
enrichment, i.e. energy and also the huge impact barriers
(economies of scale) of several enrichment processes
(e.g. iron and aluminium steel and copper) and the global
corporate enrichment strategies of the TNC (Trans-national
Companies) which often prefer to send the raw materials to
an enrichment factory in another country, or even adopt the
policy of sticking to their main skills in terms of extracting
resources, and then making the half-transformed resource
available at a monopolistic price (price guaranteeing parity) on the local market provided that it has a monopolistic
or oligopolistic position in the country in question. One
might state that it is also a failure of governance of imposing enrichment minima in the agreement on the extraction
of the mineral or of creating a competitive and effective
regulation structure.

The level and quality of the potential resources data:

The less the investor knows about the potential value of
the resource, the more the investor will demand in terms of
income due to the high risk of discovering and evaluating
the resources, which might turn out to be without a large
economic stake. This hypothesis mainly applies to the
mining and energy resources but we can also take it into
account in the conclusion of transactions related to other
resources such as lands for agriculture, forestry, fishing
and tourism.
Most African States do not have a basic geological cartography or, at best, an inadequate one. This situation is a
risk factor for investors which, consequently, demand an
extremely favourable taxation system for any operation
which could result from their fundamental exploration.
In order to respond to the challenge of this "knowledge
infrastructure", African States have to adopt the measures

Added value upstream: the main failures here are the

centralised procurement strategies of most TNCs specialised in the extraction of resources, the non-existence of a
national business structure with the necessary capacity
and being able to have access to the capital that enables it
to make the most of these opportunities and the lack of
local human resources as well as the technological expertise to put in place these knowledge-intensive industries.
Governance is a decisive element here in order to assure
the local minima programmes in the contracts and the permits and invest in the development of appropriate HRD
(Human Resources Development) technologies.

Increase investment in the renovation of resource-related

knowledge infrastructures. Numerous studies have clearly
shown that investment in basic geological prospecting
generates enormous profits for the State. Other than these
investments in physical infrastructures, Africa and its bilateral and multilateral partners must consider investing in its
resource-related knowledge infrastructures. It goes without
saying that the more a State is aware of the potential value
of a resource, the more it can, to this end, conclude transactions which take account of the fair distribution of the
future income and profits generated from the mining of its

Development of technologies and products (lateral migration): this point is closely linked to the previous one with
regards making the most of the resources and, to this end,
the State and the companies specialised in resources have
to target investment in HRD as well as in R&D (Research
and Development). However, the TNCs generally centralise
their R&D in third world countries (often their local base)
which generally have the human resources necessary as
well as the R&D infrastructures particularly the support of the
State and the incentive measures for the development of
technologies and products. One could even talk here about
a failure of governance in relation to the laying down of
conditions on HRD and R&D on companies specialised in
resources and to facilitate this process through the State's
investment in technical HRD and incentives on R&D.

Self-evaluate the taxation systems in relation to the

resources which increase with growing profitability thus
enabling the State to accumulate unexpected income
during the price explosion period of the raw materials
which are preferable for the resources rather than ordinary
tax in terms of percentage of profits. Such a rate of return
(RR) or even taxation systems based on profitability are
based on profits in terms of percentage of turnover or earnings rather than on profits alone, but are more usual in the
systems governing gas and oil than in the systems governing mining resources. The disadvantage is that these profits are more difficult to determine than ordinary profits but
this problem is not specific to raw materials on the stock
markets (constant determination of prices on the international scale) as the turnover will simply depend on the volume and a transparent price. There needs to be creative
accountancy in the determination of profits, which is usual
in both systems.

The main optimisation strategy for resources consists of

setting up a regulatory system for the resources which

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Auction the potential shares from the resources. This
practice is usual in the systems governing oil, gas, fishing,
forestry and logging but is rare in the mining systems. Most
mining systems tend to have an incentive taxation system
for mining resources, which attracts investors in the exploration of unknown high risk soils despite a relative potentiality (problem of "one size fits all"). But there is generally
a virtual automatic conversion which allows for the awarding of a mining permit, which means that once the exploration permit is awarded, the State then only has a limited
right to oversee the taxation system applicable to the
mining resources regardless of the profitability or the financial importance of the mining deposit. In most cases, the
investor will have a better idea of the value of the potential
shares than the State and competitive auctioning would be,
in some circumstances, an efficient method to obtain a fair
value. However, in the event there is very little or no geological data, it is unlikely that an auction would reduce the
actual value, and these soils would be better governed
through a transparent taxation system based on the rate of
Select the soils containing resources according to their
potential. According to the best practices in force in the oil
and gas sector, this system will divide a country into high
risk regions (inadequate geological data) and low risk
regions compared to soils rich in metallic minerals (such as
the African gold-bearing regions, the multi-layer complexes, the oil deposits, the copper-rich regions of Zambia
and the Congo, etc.). A taxation system based on a fixed
rate of return can be applied to the first case in point
(exploration soil) whereas the last one (demarcated soil)
will have its shares auctioned and the State's deductions
(percentage of the income) would be the main criteria for
the auctioning in order to obtain the best transaction for the
State. With the increased investments in resource cartography (geological prospecting) and the collecting of geological data, the regions would be reclassified into high risk
regions (exploration: low conditionality, taxation system
based on the RR) and into low risk regions (demarcation:
high conditionality, taxation system based on auctioning)
and vice-versa.
However, there will always be vagueness between the
known assets (auctioning) and the unknown assets (exploration permits) of partially known resources (indicated).
This rift will be overcome if PPP exploration (geological
prospecting) is authorised which stipulates that in the event
a viable resource is demarcated, the private company in
charge of the exploration is guaranteed to receive the stepin-rights once the resource is eventually auctioned.
This is the case for the exploration of oil and gas where the
seismic prospecting companies receive all or part of the
step-in-rights for any share sold in auction in the prospecting area. The rate of the "received" step-in-rights (5% to
20%) will be determined by the cost and the duration of

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the exploration programme as well as the prospectivity of

the soil.
The determination of the known and unknown mining
soils must be transparent and objective on the basis of
solid geological data. To this end, existing resources-classification systems must be used such as JORC (Australia)
and Samrec (South Africa) and must be certified by a geological consultant (competent person), but Africa must
consider putting in place a continental scale system or
CRMA (African Mineral Resource Classification) under
the cover of a continental professional organisation (like
the South African Institute of Mining and Metallurgy:
Contract negotiating skills
Second capital intervention: the reinforcement of the negotiating skills of African States with the multinationals on the
resources-mining system. In general, these negotiations
are done at two speeds: on the one hand, the multinationals
which have resources and competences and, on the other,
the States, with fewer tools. Hence, in the last few years,
the interventions of some financial backers related to the
adjustment of this state of affairs through the recruitment of
international consultants in view of supporting the States in
the sensitive contract/licence negotiation process as well as
in the reinforcement of the capacities of States in the
domain. The African Development Bank is currently putting
in place a legal consultation framework to support the
Member States in this complex long term contract process.
(a) Very often, the authorities prefer not to make any decision (or delay the process) with regards the major resources-mining contracts to avoid signing a bad agreement:
this state of affairs is explained by the fact that these authorities are aware of their lack of technical and legal negotiating skills and fear sabotaging the agreement (with, without
any doubt, political repercussions), which benefits neither
the State concerned not the multinational in question.
These resources-mining contracts are generally staggered
over a very long period (20 to 30 years) (mining permit),
hence the need to draw up a good contract from the start
of the operations;
(b) the use of self-adjusting mechanisms which incorporate all the phases of the process;
(c) the introduction of triggers/stages throughout the
contract in order to deal with unforeseen events.
It is important to look at the State's ability to optimise the
licence (granting of permits) from the start (agreement of
the mining contract), insofar as it is difficult to renegotiate
systematically the contracts at a later stage at the risk of
sending red signals to investors, which would be synonymous with uncertainty of these contracts with, at the end, a

perception of the high risk of negative investment. It is,

consequently, opportune to identify the reference links from
permit/licence/contract), even if the local economy is not
able to make the most of such opportunities. The most
important elements to consider are presented thus as follows:
fair distribution of the resource leases;
non-discriminatory access for third parties to the reference infrastructures (particularly transport, energy and
the development, where appropriate, of the reference
input/service provider chain (particularly the equipment,
the services and the consumables) at local level through
the use of steps adapted to the local content and flexible;
the construction of resource-transformation factories
through the use of incentive measures and steps and the
initial recommendation of a competitive price formulation
for the spin-offs/products on the local market for the duration of the project; and the development of the required
local human resources, as well as the technological capacities through lump-sum investments in the domain of training, research and development, preferably in partnership
with the State (joint financing and counterparty funds).
Development of current African
resources and management capacity
Third intervention key: the development of Africa's capacities in terms of auditing, monitoring, regulating and improving the current resources-mining systems and the development of the links of the reference sector in the local economy. This will be possible thanks to the incorporation of
the skills-transfer part in all consultancy contracts during
the negotiations on licences/permits, as well as through a
targeted strategy in view of developing such a resource
management capacity. Given the lack of such capacities in
Africa, focus may be placed on pooling the resources of
neighbouring States through the regulation of cross-border
resource infrastructures (transport authorities, factory
levers, water collection organisations, etc.); the possibility
of sharing the management of cross-border resources and
creating a capacity within the regional economic communities. These capacities can also be reinforced through
membership to continental and international resources'
monitoring and supervision organisations, like the African
Union's APRM1, the EITI2 and the "Kimberley Process
Certification Scheme" for diamonds.
Whilst developing this African capacity, focus may be placed on the transfer of certain aspects of the regulating,
auditing and monitoring, like the auditing of tax returns on
companies with, however, specific provisions on the transfer of skills. The major element enabling the existence of
resources to be confirmed in a country is synonymous with
a curse and a blessing - it is the management capacity and
the existence of solid institutions.

African countries can, nevertheless, find themselves faced

with a chicken and egg situation insofar as they are
underdeveloped due, in fact, to the lack of governance and
the weakness of their institutions. It is difficult to elucidate
this enigma but we can say that the international context
has improved, thus enabling us to contradict the statement
according to which the term resource is associated with a
curse. The elements below argue in favour of this:
We are increasingly seeing a phenomenon of globalisation, particularly with the creation of monitoring and regulatory mechanisms at planetary level, like the WTO, the
Kyoto agreement (UNFCCC3) and Equator's banking principles;
Most developed countries now consider the phenomenon
of corruption in Africa States as an infringement (this element is used to deduct the taxable revenue);
With the end of the Cold War, the political reasons (anticommunism) no longer justify the support of the superpowers for corrupted African governments;
Civil society is increasingly fussy about the activities of
multinationals in Africa which now have to produce a
report on sustainable development on the basis of international directives on drawing up reports;
The communities, unions and local authorities can now
participate in the resources' mining and supervision process thanks to new standards for drawing up reports
(three-level process Report on sustainable development,
ESI4 & SAP5);
African States have the possibility of joining new mechanisms which monitor the profits made from resources at
planetary scale, like EITI, or the Kimberley Process and
more recently still, the Construction Sector Transparency
Initiative (CoST);
The countries can join new regional and sub-regional systems for evaluating and monitoring governance, like the
African Union's APRM;
With the emergence of China and India as reference markets and investors, African States now have more options
than they had under the occidental colonial system and
It is obvious that there is no uniform strategy in terms of
reinforcing governance and African institutions.
Nevertheless, some strategies can be applied overall, particularly the signing up to international protocols (APRM,
EITI) and the putting in place of strategic institutions to
enable the optimum exploitation of natural resources,
an independent legal system and the use of regional and
international protocols;
independent competition authorities and integration into
the regional economic blocs (free-trade agreements, customs unions) in order to increase the size of the market
and increase the market's self-regulation capacity;

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the infrastructure regulators (transport, energy, water,
telecommunications) and the pooling of limited national
resources through cross-border regulators (collection organisations, transport authorities, levers, factories, etc.);
the independent academic institutions (universities, institutes of higher education) and building relations between
these institutions and other regional and international institutions;
the technological development institutions (R&D) with the
private sector (PPP). At this level too, the regional research
and development projects will enable a large amount of
inputs to be put in place in technological development and
the independent local stock markets (banks, stock
exchanges), and commercial markets. Once again, the
regional institutions will see viability grow by increasing the
size of the markets;
the local finance development institutions (FDI), particularly with regards support to the SMME6 (access to capital
and skills) although the experience of the African FDIs is
not particularly expressive on this point. The regional and
continental institutions could be deemed beneficial in the
pooling of resources, whilst awaiting a larger market and
the improvement of supervision;
nevertheless, the largest institution is the authority which
awards or issues the resource mining permits; it is surrounded by national supervision, regional supervision
(CER), continental supervision (APRM-AU) and international supervision (EITI, KPC).
The alternatives of multinationals in terms of resources
To obtain capital and skills quickly, most African States
have decided to promote foreign capital rather than rely
mainly on the development of local mining companies.
Nevertheless, a resource sector with foreign capital (multinationals and YOC7) is likely to be politically unsustainable
or at least remains problematic. Furthermore, local capital
is more likely to facilitate the integration of the resources'
sector in the local economy due to :
in-depth knowledge of the opportunities and local supply
markets, thanks to efficient networks,
the lack of a procurement network (unlike the multinationals) which encourages the local companies to look for
supply opportunities in situ, like lime, activated carbon
(from coconut husks) for the processing of gold (these products are generally imported by the multinationals from
gold-producing African countries, despite the availability of
limestone and coconut husks in situ);
the lack of transformation (enrichment) infrastructures for
the resources (unlike the multinationals) requires invest-

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ments in the local infrastructures in order to assure the

enrichment, as has been the case in the Nordic countries;
the lack of a resources' mining strategy (dirty mining)
within essential skills companies (unlike the multinationals and young operating companies); this strategy focuses solely on extracting the resources and does not give
the African States the possibility of enriching the resources
and supplying the companies. This is partly due to the fact
that in the first phases of economic development, there is
a tendency for growth towards a diversification of conglomerates (in order to build the foundation of the social capital required for the major projects). In many countries,
there is, for example, the "zaibatsu" in Japan, the "chaebol"
in Korea, the "Bombay Club" in India, as well as the diversification of the "Mining Houses" in South Africa and
Zimbabwe. Over the years, these structures have been
divided up into companies specialised in specific industries. This disintegration is accelerating due to the fact that
the world's major companies are part of the major minority
stock exchange sites in an increased international context
(institutional) where they suffer immense pressure to degroup and sell off secondary activities and promote the
shares owned;
the absence of technology and the lack of human resources development capacities (R&D and HRD) outside
African countries in the third world (compared to the multinationals) leads local investors to develop the technologies
(R&D) and the competences of the local institutions or
finally, the intrinsic desire to develop the local economy:
the famous patriotic capital (often supported by a larger
State and the public influence on the local companies).
African States are, in many respects, generally characterised by an extremely weak industrial sector. Due to this
weakness, African countries cannot exploit their potentials
(in terms of the resources sector and relations with the
other sectors). In any event, targeted strategies have to be
drawn up that are specific to the countries to enable the
local capital to make the most out of local resources; there
are, however, a few generic strategies which should be
pointed out:
access to credit, one of the most widespread constraints
in Africa; the FDIs could, at this stage, play a major role
outside their traditional function to facilitate the putting in
place of a solid, independent banking system. As each FDI
has a clearly defined shareholder mission without interference in the day-to-day running, this has had a positive
impact on the development of local capital. Nevertheless, it
is probably preferable to put in place a specialised
research FDI with the required competences in earth
sciences for partnerships with the local YOCs within the
framework of high risk exploration projects as was done in

Quebec in the 1960s where a specialised FDI was created

(Soquem) to develop Francophone mining capital;
the partnerships with the bilateral and multilateral financing agencies as well as with philanthropic organisations
increasingly constitute capital at risk and competence suppliers in Africa particularly for the SME;
macroeconomic stability confers more predictability and
reduces the cost of the capital for new entrepreneurs, and
this stability is facilitated by regional integration in the form
of monetary zones and common customs unions as well as
the institutional mechanisms which prevent the future regimes from cancelling or interrupting the process;
access to skills for the entrepreneurs and the personnel
of the new local companies is fundamental; it can be
promoted by partnerships with the multilateral institutions
(World Bank Group, United Nations organisations),
the neighbouring States and the appropriate financing
access to technologies is also vital and can be encouraged by the local and regional academic institutions and the
R&D organisations through the technology partnerships
with the local multinationals which are facing similar technological challenges;
access to the required infrastructures is just as important
and can be encouraged by open mechanisms providing
access to infrastructures, developed through the FDIs
finally, one can state that the main factor of developing
the local capital relies on foreign investments (multinationals) which have the necessary capital, skills and the
expertise required but are not focused on the development
of local skills. This must, consequently, be incorporated in
the mining contract through provisions such as those
contained in the South African "Mining Charter"; namely:
local human resources development (HRD)
complementary targets of technical personnel and executives;
local purchasing;
local minority investments (property);
the local valorisation targets/stages;
the local research and development incentive measures
and targets;
the creation of investment funds in local partnerships
As mentioned above, the State's ability to impose its conditionalities is deployed at the start of the process (when the
mining permit is awarded). Consequently, things must be
crystal clear from the offset to avoid bad negotiations later.

Improving the management capacity of mineral resources

One of the mechanisms used by the host States in the past
to try to capture mining income was the creation of public
mining companies. These structures still exist although
they are now no more than the preferred instrument of the
States. Numerous countries have privatised these companies or have dismantled them. It has often been said that
public investments in mining projects expose governments
to pointless risks and that the stake of governments in the
mining companies, even free-stakes, offer no considerable
advantage when the dividends are not declared. The decision on what to do when faced with a specific situation
should be motivated by the specific context and should not
be made dogmatically or through unconscious imitation.
Mining projects fully supported by the State are increasingly rare in Africa and in most developing countries. It is
increasingly frequent to see, in the mining regimes, the
State or the community take minority stakes in this sector's projects. Sometimes, these stakes are remunerated
from the start or else from dividends when these are declared. In some cases, no direct payment is made and the
allocation is quite simply an integral part of the total profitsharing. Once again, it is important to determine clearly
whether the stake taken is just symbolic (sometimes for
cash) or whether it enables some sort of profit to be garnered. Specifically, such a stake-holding should be compared to other mechanisms such as royalties.
Today, many States agree on the fact that they can achieve most of their objectives (defined in the mining projects)
through the regulatory process or through the political
instruments. This position starts with the assumption that
the State has no difficulty whatsoever in attracting private
investors but is incapable of mobilising the necessary
financing and does not have the technical skills and executives required to get involved directly in the mining projects. However, if the State has the required resources, it is
possible to invest in a profitable and purely commercialtype project as was the case with Deswana, a diamond
mining company, co-owned by De Beers and the
Botswanan government. Likewise, South Africa's Royal
Bafokeng Nation (RFN) is a good example of a community
which was able to make the most of its stake in the mining
projects carried out on its lands.
The duty which the governments have of reporting the
income made from the mining projects has become a
major subject of governance. The Publish What you Pay
campaign, launched by an NGO group as well as the
Extractive Industries Transparency Initiative (EITI) supported by the British government are remarkable initiatives
which, today, help to bring the question of governance to
the international programmes. The two initiatives benefit
from the support of a certain number of governments, multilateral agencies, companies and groups from civil society.
Nevertheless, it is important to point out that some African

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governments are dragging their feet on the application of
the principles of the EITI and related campaigns. Whilst the
national decision-makers have generally focused on equity in the distribution of profits between the mining investors
and the host country, today, the attention is brought to the
profits made by the communities where the mining projects
are set up to assure equilibrium between the local and
national interests and concerns. These profits may take on
several forms. For example, income accumulated by the
community from rental (property rate and rental of the
lands), profits which represent the community's stake with
regards the income from central government and the profits excluding revenue such as employment for the local
residents; the aid to the community healthcare and education institutions; access to the use of the mining infrastructures by the general public, etc.
One of the major subjects of concern for the decisionmakers in the developing countries is the mechanisms
which allocate the central government's percentage of
mining income to the local mining communities and the
management of the funds thus allocated. The most important element which must be monitored with regards the
income paid to the communities (as well as the income
kept by the central government), is the way in which these
funds are managed and used. Given the fact that mining
deposits have a limited lifecycle, the local economies
which depend mainly on mining may, at a given moment,
stop running if the use and the management of the community's income are not planned carefully. The major stake
remains the diversification of the economy to avoid the
creation of mining communities which degenerate into
ghost towns after the resources have been established.
Specific attention must be paid to the training of these
communities in income management, in reinforcing their
negotiating skills with the governments and the private sector as well as their capacities to invest in the economic activities after the mining and in the utility infrastructures.
There are several mining income management programmes in host countries and communities. There is, for example, the Alaska Permanent Fund (based on oil income) and
the Fiduciary Funds set up on Nauru Island which are
added to by phosphate income.
The income allocation, management and monitoring plan
for the Chad-Cameroon pipeline project incorporates the
principle of safeguarding part of the State's income "for the
future generations.
There are two other aspects of this scheme which may be
used as a model for other mining projects in Africa. These
(a) the allocation of a proportion of the revenue in view of
financing the priority sectors defined in the national economy;
(b) the creation of a supervisory committee (composed of
representatives of the authorities and members of civil
society) responsible for managing and controlling the funds
injected into the structure. Given that the project has only

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just started, it would be shrewd to evaluate the efficiency of

this management scheme in its practical phase.
There could be provisions and special agreements between the mining companies and the respective local communities likely to promote, efficiently, the development of
these communities. These include, inter alia, mechanisms
facilitating the general public's access to certain mining
facilities and infrastructures (electrical lines, roads, etc.);
help in the construction and running of the healthcare and
education services; and mechanisms concerning the preferential employment of local labour and the use of the services of the local companies.
As an illustration, the mining companies in the gold-bearing
fields of Lake Victoria in Tanzania have concluded similar
community development programmes with the local authorities. A mining company can also accept to provide certain
infrastructures to the community in exchange for tax relief.
Other major challenges which must be taken up
by the decision-makers:
(a) the creation and the sustainability of the mineral resources without compromising the environmental, social and
cultural considerations and whilst assuring a regulatory framework which encourages the creation of minerals;
(b) the safeguarding, through investments, of mining income in order to assure the sustainability of the resources;
(c) the improvement of the governance and of the macroeconomic policy in order to remedy the phenomena such
as the "Dutch Disease", the seeking out of income and corruption, the impact of the mining of the natural resources
on conflicts and exogenous factors such as the instability
of the prices of the raw materials required.
The boom in resources very often has a negative impact
on the local economy. For example, the "Dutch Disease"
after the phenomena below were observed further to the
boom in natural gas in Holland in the 1960s:
The reinforcement of the current account due to this
boom which caused an increase in income, which reinforced the local currency, consequently making other sectors
less competitive, particularly the manufacturing industry
whose contracts led to de-industrialisation.
The swallowing up of local capital and of limited human
resources in the expanding mining sector, thus causing the
underdevelopment of other sectors and, as a knock-on
effect, total economic dependency on the booming sector.
The fiscal instability caused by a sudden fall in the State's
income (boom/depression) at the end of the cycle, which
corresponded to a tightening of public expenditure which,
in turn, entailed State deficits, increased used of debt and
inflationary pressure on the local currency. This, here, is a
real image of what happened in Zambia in the 1980s after
the fall in the price of copper.
One of the commonly used strategies consists of keeping
the income received unexpectedly in an offshore future or
stabilisation fund and not of increasing public expenditu-

re rapidly in line with the increase in revenue. Generally,

these funds then invest in a diversity of instruments (shares, bonds, capital markets, etc.) as they have to build up
reliable sources of income for the future. This is the case of
the Norwegian "Future Fund". However, for those countries
that do not have basic infrastructures, part of these funds
could indeed be invested in long term infrastructural projects, such as roads, railways, ports, energy, water, telecommunications, etc. which could then support competition in the other sectors (diversification).
This would enable the money from the income to be reinvested bit by bit in the economy over a 10- to 20-year period, and theoretically improve the shock effect of large
trade flows on the Balance of Payments (current account)
and the national budget. However, it is extremely difficult
for poor countries to satisfy the immediate and pressing
needs of their populations. Hence, such fiscal policies must
be firmly set down in laws which do not leave a potential
populist government with the possibility of using the offshore funds to pay for short-term popularity.
Such a stabilisation of future funds could also assure transgenerational equity in terms of extracting non-renewable
resources insofar as it is these future generations who
would benefit from the investments aiming to improve the
infrastructural landscape. Reinvesting the revenue made
from this boom would also enable the development of local
companies of the infrastructures' sector (construction and
engineering), as well as supply companies (cement, reinforced concrete bars, equipment, etc.) instead of counting
solely on the foreign companies and suppliers (imports).
For those African countries with no opportunities to have
infrastructures in the long term, part of the offshore funds
could be reinvested in a regional or continental investment
fund, such as the Pan-African Infrastructure Development
Fund (PAIDF) which would allocate future revenue to the
countries. It would also facilitate the development of regional markets for the national products and would reduce the
cost of the regional products and the logistics in view of its
future exports.
Solving Africa's infrastructural problems
A development strategy based on resources is generally
experiencing serious difficulties in a number of African
countries due to the lack of infrastructures (particularly
transport and energy) required for the realisation of their
natural resources' potential. This is particularly true for the
landlocked countries and, in general, the logistics costs
related to Africa represent about 250% of the world average; there are four reasons for this:
Africa is the highest continent in terms of altitude (it has
few navigable rivers), and 93% of the continent is located
in the major precipitation zones(9), which entails higher
costs in terms of constructing, running and maintaining

The bad Balkanisation of Africa by Europe has given rise

to the land-locking of numerous African countries (14);
Africa only has 10% of land inside the coast (compared to
18% for the OECD and 27% for Latin America);
Only 21% of its population live in the 100km of coast
(compared to 69% in the OECD and 42% in Latin
Due to this difficulty, the resources of many African countries are stuck and cannot currently be mined since it is
not permissible to allocate to remote projects the colossal
sums required for the infrastructures due to the lack of
income. Nevertheless, projects groups or even a few largecapital projects (particularly in the domains of mining and
energy) can often collectively support the infrastructural
investments through use-or-pay" type contracts concluded with the project managers. This standardisation of
uses requires cross-border collaboration, insofar as the
issues of resources are not very well adapted to political
borders. Consequently, Africa's vast potential in terms of
resources can indeed be achieved by the multilateral integrated development corridors (Appendix 2), instead of a
rush to the resources.

Action framework
The action framework defines a matrix at the national, subregional and continental level which enables Africa's
Mining Vision to be implemented by 2050. Three implementation stages have been identified, namely a short
term stage (0 to 5 years as of the adoption of the vision), a
medium term stage (5 to 20 years) and a long term stage
(between 20 and 50 years). The attributions of the major
players have been defined each time it was possible. This
action framework must be considered as a dynamic tool
adapted to the local context and as a stage in the development of the mining economy. Hence, the achievement
trajectories of the vision at the national level and at the
sub-regional level will be different. In spite of everything,
Africa can only achieve its ultimate objective of industrialisation and development in a collective action.
APRM: African Peer Review Mechanism
EITI: Extractive Industry Transparency Initiative
UNFCCC: United Nations Framework Convention on Climate
SIA: Social Impact Assessment
SAP: Social Action Plan
SMME: Small, micro and medium-sized enterprises
YOC: Young Operating Company
The PAIDF was created by a group of pension funds in Africa
for the continent's development and to allocate future revenue
to these funds.
ITCZ: Intertropical Convergence Zone

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Actions in progress according to the terms of the vision
Reinforcement of the capacities - HRD (technical, negotiation, business, basic products' market) & institutional (reinforcement of those existing and creation of new ones required at the national, regional and continental levels).

R&D targeting the development of local skills to support the industrialisation process.
Partnership between the State and the private sector, the civil society organisations, the communities and other key
The commitment to development of partners such as the ADB, the UN, the World Bank, etc. as well as other players
at continental level, like the AMP and other producer associations.
A continental review by the ECA/AUC of the performances of the countries or of the sub-region in terms of adherence
to the standards and strategies adopted.

Specific actions

Corresponding actions
National level

Sub-regional level

Continental level

To promote the
governance of
natural resources
(manage the commitment of the
throughout the
mining lifecycle of
the mine; to
improve the management of payments by transfer)

To incorporate the principles of the EITI

and the Kimberley Process Certification
Scheme in the national policies, laws
and national regulations, to encourage
the creation of national supervisory
organisations and to involve politicians
and the independent committees in the
monitoring of the mining projects; to
consider the decentralisation of the distribution of mining revenue, to reinforce
the mining revenue management capacities of the national and sub-regional

To accelerate the harmonisation processes at

the sub-regional level

To include a chapter on
human resources in the

To promote

To consider the use of Future

Generations Funds and Stabilisation
Funds; to incorporate the mining sector
in the national development plans and
the poverty reduction strategies

Short term < 5 years

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