Algerian aggressive resource nationalism and cosy relationship with China and Russia is a serious threat to Western oil gas companies

  • A threat of secretively approved expropriations by powers in Algeria may spell doom for the long-embattled foreign investors holding concession rights for the country’s most lucrative oil & gas assets
  • Elaborate plans exist for the nationalisation of Occidental Petroleum, Neptune and Wintershall Dea assets in Algeria

With the recent expropriation of Sunny Hill Energy (formerly Petroceltic) Ain Tsila asset by Algerian authorities via its national oil company Sonatrach, the secretive power circle of army generals controlling Algeria has opened the door to what is likely going to be a multi-year degradation of the relationship between the Western oil & gas companies and Algeria.

The policy shift signalling that the Western companies are not welcome in the Algerian natural resources space became evident in the recent years, with a plethora of Chinese (CNPC, CNOOC, Sinopec) and Russian (Gazprom, Rosneft, Lukoil) being granted access to projects in Algeria.

Emboldened by the recent developments in Afghanistan that showed Western countries’ impotence to protect their citizens and businesses abroad, the clique of generals controlling Algeria are planning next moves in their aggressive resource nationalism agenda.
Having seen that Sonatrach’s expropriation of Sunny Hill Energy’s asset produced no backlash from the UK and US governments, the list of new targets and the strategy how to nationalise their interest was put in place. The key instrument in their tool box is Sonatrach CEO Mr. Hakkar, who will soon launch an attack towards Occidental Petroleum, Neptune and Wintershall Dea, accusing the companies for the alleged corruption and breaches of safety
and environmental standards. It will open doors for terminating their licenses and seeking damages on Sonatrach’s behalf as reparations for the alleged breaches. To add weight to the corruption allegations, Mr. Hakkar would use charges that are fabricated against a former CEO of Sonatrach Mr. Abdelmoumen Ould Kaddour who is awaiting trial over corruption after being arrested in the UAE earlier this year.
This would send a further signal to the investment community that no company from the West can be protected by the law and agreements with Sonatrach.

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