Background

Sonatrach began life 50 years ago as Algeria’s first state-owned energy company, taking control of the small stakes the government had in the country’s oil fields, which were operated by French and American firms, and helping to establish the North African state as the first liquefied natural gas (LNG) exporter in the world.

Following the Arab-Israeli war of 1967, Sonatrach nationalised the country’s refining and export facilities, later taking over a minimum stake of 51 per cent of Algeria’s oil and gas fields – a process that at one stage meant France’s Total was the only major international oil company (IOC) operating in the country.

From the mid-1980s onwards, Sonatrach began to work with IOCs on a number of major projects, including a series of huge gas production and export schemes that have helped to make Algeria one of the world’s most important gas exporters. The country is home to the world’s eighth-largest gas reserves, but gas production has been in decline since 2005.

Sonatrach has been hit by both scandal and tragedy in recent years. In 2010, the company’s longtime chief executive officer Mohamed Meziane was abruptly sacked and charged with corruption.

A deadly terrorist attack in 2013 on the firm’s In Amenas facility then led to questions being asked about security at its production sites.

Role in Algeria’s economy

Oil and gas exports are crucial to Algeria’s economy, accounting for more than 98 per cent of all exports, and hence the majority of the country’s foreign currency reserves. More than two thirds of all government revenues come from the hydrocarbons sector.

Much of Algeria’s non-oil growth is driven by state spending, making the money earned by Sonatrach doubly important.

The firm is also Algeria’s primary economic brand. It is the biggest company in Algeria and Africa, earning revenues of $58bn in 2011. Sonatrach employs about 120,000 workers, the vast majority of whom are Algerians.

Role in the global economy

Algeria was the world’s sixth-largest exporter of natural gas in 2012, and the 15th-biggest oil exporter. The bulk of its oil and gas is sold to European markets, meaning Sonatrach is a particularly important partner for the eurozone countries and plays a key role in maintaining the balance of the global gas market.

Strategy

Sonatrach plans to spend $80bn between 2012 and 2016, much of that on exploration for new upstream gas production and on using enhanced production techniques to maintain and increase output from existing facilities. The company also hopes to revamp its refineries at Skikda, Arzew and Algiers.

Overseas ambitions

Sonatrach is well on its way to becoming an international player, with investments in France, Portugal, Spain and Peru, mainly in gas transportation infrastructure and power plants. It is also exploring for oil and gas in Africa; the company has concessions in Libya, Mali, Mauritania and Tunisia.

Sonatrach is well on its way to becoming an international player, with investments in France, Portugal, Spain and Peru