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Despite an enigmatic and seemingly shy personality, Abdelhak Bouhafs, the president of Algerian state-owned company Sonatrach, has personal qualities that the country needs most to shake up its oil industry and conduct business with overseas players.
Bouhafs comes from the western city of Tlemcen, regarded as the cultural capital of Algeria because of its deep roots in Islamic philosophy and literary heritage.
His appointment as Sonatrach president last year must have sent a shiver up the spines of bureaucrats at Sonatrach. The 55-year-old mathematician has set himself the task of streamlining the company to put it on an equal footing with its foreign peers, both in Algeria and abroad.
He has a dedication to work that borders on obsession and he rarely relaxes, often being seen with a mobile phone pressed to his ear. Bouhafs is honest and speaks his mind. Staff hold him in deep respect despite his serious character.
"He is very serious but polite. He does not like incompetent people," says one Sonatrach employee. Bouhafs, oil executives say, is a visionary who is intent on shaking up Sonatrach's management structure to speed up decision-making. He also aims to curtail its governmental functions by ending its guardianship role.
This is no simple task, given the fact that Sonatrach is Algeria's largest company . It has 120,000 employees and accounts for more than 95% of the country's hard currency earnings.
"My ambition is simple," Bouhafs says. "It is to pave the way for the emergence of a dedicated oil and gas group." Explaining exactly what he means, he says: "In the Algerian market, Sonatrach is an impartial referee and biased at the same time. Not only does Sonatrach grant licences to companies involved in the upstream side, these companies can only do it in association with Sonatrach because it is the only company that can qualify for a licence.
"So we have two hats. We control on behalf of the state and make sure that everything is going according to standards and regulations and at the same time we care for our profit. As a result, we find ourselves different from our associates with whom we share the same views regarding profits but not the same attitude.
"Our task of controlling, monitoring and law-enforcing generates a lot of delays. So we want to become a simple operator. Even more so now that we are going to open the mining and hydrocarbon sector to international competition."
The move to cut delays and streamline the top tiers of management is well under way. There will be no big job cuts as this is a sensitive issue in a country that has an unemployment rate of about 30%. However, efficiency can come from shedding unnecessary senior posts and possibly selling non-core businesses.
Sonatrach last month named four new vice presidents to replace the previous 12. The new posts centre on Sonatrach's core activities like exploration and production, gas liquefaction, transportation and commercialisation. Other departments have been downgraded in line with the restructuring.
A new draft hydrocarbon law, expected to be approved this year, will relieve Sonatrach of its legislative role and transfer responsibilities for the granting of exploration and production licences to a new body called Alnaft. The changes, on which Bouhafs has worked closely with Oil Minister Chakib Khelil, will enable the company to focus on its commercial activities at home and abroad.
Khelil, a former World Bank energy specialist, shares the same dislike of bureaucrats and is an advocate of reform. He says he picked Bouhafs as head of Sonatrach because "he is experienced and has good ideas".
Once the legislation has been passed, Sonatrach will lose the automatic right to a share of concessions given to foreign oil companies. The reform process is bearing fruit with the company launching an international tender for six exploration blocks that it intends to offer to the highest bidder rather than resorting to the traditional course of lengthy bilateral negotiations.
Once Sonatrach is relived of its legislative shackles, Bouhafs wants to take advantage of deregulation in Europe by seeking alliances with European retail outfits to market Algerian gas on the continent. Sonatrach's aim is also to invest in gas-fired power-generating companies in Europe.
Casting its net outside Algeria could cushion against risks at the wellhead. "There are brutal changes that can be more detrimental at the wellhead operations than at the final selling phase or vice versa. The fact that we are involved in both segments will cushion the effects," Bouhafs says.
Once Algeria's upstream sector is fully thrown open to foreign competition, with Sonatrach being treated as an equal, the company aims to continue seeking partnerships with firms winning contracts in the North African country. Bouhafs says Sonatrach's local expertise and numerous domestic subsidiaries and assets make it an attractive partner. The company is also gearing up to play a bigger role in upstream activities outside Algeria.
Bouhafs is a veteran of the Algerian oil scene, having headed Sonatrach from 1989 to 1995. This period witnessed a burst of exploration activity as he doled out more than two dozen contracts. Some of the agreements were later abandoned but exploration activity is again picking up.
Sonatrach has just clinched a major deal with Petronas of Malaysia and Gaz de France that could see $2.5 billion being spent on the development of gas fields in the Sahara Desert. Bouhafs' return had been widely predicted following the appointment of Algeria's reformist Prime Minister Ahmed Benbitour in 1999.
Bouhaf's, who first joined Sonatrach in 1974, used to enjoy gardening before his new, high-profile job. "I used to prune my garden," he says, but adds: "I don't do that any more."
Its seems that his task at the head of Sonatrach will deprive Bouhafs of his favourite pastime for a long time to come. But he enjoys pruning.
Bouhafs' background:
Age: 55
Family: married with one child
Home town: Tlemcen
Education: graduated in mathematics from the University of Algiers; degree in energy economics from the University of Grenoble, France
Employment: joined Sonatrach in 1974. Headed the company from 1989 to 1995 and again from 1999
Hobby: gardening, especially pruning
Elect;
It´s possible,
that one of SLM´s partners is in the bidding. SLM´s part is small and if it is to bid it would improve this situation greatly. A major step.. |
