Inside Sisi’s Prisons

It’s no secret that Hosni Mubarak’s regime was repressive. Yet although in its treatment of prisoners and many other ways besides, Abdel Fattah el-Sisi’s is worse, statesmen around the world praise its role in Egypt’s ‘democratic transition’…

February 19

Fahmy and supporters call for his swift deportation from Egypt

Canadian journalist Mohamed Fahmy is taking his first breaths of freedom in more than 400 days, but his supporters say he must quickly be deported to Canada from Egypt because it is too risky to gamble his fate on another court decision…

February 13

Joy for Greste, but little hope for Egyptian journalists

Al Jazeera journalist Peter Greste was finally released from Cairo’s Tora prison on Sunday (01.02.2015) and is now on his way home to Brisbane, but for 11 other reporters who remain imprisoned in Egypt’s jails there is little to no hope of reprieve…

February 2

Strong push for Fahmy’s release as Egypt frees Al Jazeera colleague

Canadian diplomats will meet again Monday with Egyptian officials in Cairo to press the case of imprisoned journalist Mohamed Fahmy, one day after his Australian colleague was released and Canada was told Egypt is actively considering Mr. Fahmy’s situation…

February 1

Eyewitnesses to murder of Egyptian activist arrested

Five eyewitnesses to the murder of a prominent activist shot dead in Cairo last weekend were arrested and charged after offering to give evidence to a public prosecutor investigating the case…

January 29

Canada to train Egyptian police

On 14 and 15 January, Canada’s Foreign Minister John Baird visited Egypt with the intention of securing the release of imprisoned Al Jazeera journalist Mohammed Fahmy, a dual Canadian-Egyptian national.

While in Cairo, however, the minister announced a set of new co-operation agreements between Canada and the Egyptian government, which Baird’s officials told journalists were designed to “support stability and prosperity in Egypt”…

January 26

What’s wrong in Algiers?

Even inside the labyrinthine central circle of Algeria’s governing regime, the magnitude of last month’s failure to auction off shares in the country’s energy reserves has not been lost.

While the officials that head the Agence Nationale pour la Valorisation des Ressources en Hydrocarbures (Alnaft) frantically try to determine why just four of the 31 oil and natural gas concessions the country offered to international energy companies this year were taken, former state energy executives are openly expressing their dismay.

Algeria is home to the second largest natural gas reserves in Africa and the fourth largest proven oil reserves. It is not only by far the biggest country by area on the continent, but also in the whole of the Mediterranean basin. Its state energy company, Sonatrach, is the largest in Africa.

Nevertheless, failure to attract international investors is not new in Algeria. This is the fourth attempt in six years to attract the oil majors that has has proved disappointing. But the extent of this failure is new. None of the previous licensing rounds offered anything like this number of concessions and news that just a handful of companies would actually sign deals fell hard.

This time was supposed to be different. A new law was in place offering more favourable terms to foreign companies and fears in European capitals about the declining security of Russian gas supplies were driving interest in alternative exporters like Algeria. Abdelmalek Sellal, the prime minister, had been hard at work meeting with high level European officials, including Federica Guidi, the Italian industry minister, whose country derives almost half its energy from natural gas.

What went wrong, and where were BP, Anadarko, Spain’s CEPSA, or French giant Total?

A common explanation for the low level of interest in Algeria among international investors is political uncertainty generated by the combination of 77 year old President Abdelaziz Bouteflika’s poor health and the supposed lack of a clear successor.

But Bouteflika has been ill for years without dramatic consequences for political stability. And as Dalia Ghanem-Yazbeck of the Carnegie Endownment for International Peace has argued, the number of possible successors to Bouteflika is small. Aside from the president’s brother, Said Bouteflika, the likely favourite is Ahmed Ouyahiya, minister of state and director of the president’s office. Both are members of le pouvoir, the secretive and inscrutable elite that runs Algeria, and of the close coterie that surrounds the current president. So there is little reason to fear sudden changes in direction at the top.

Another explanation may be security concerns. The opportunities that were offered to international companies included blocks in the vast southern deserts, which in January 2013 were the site of the In Amenas attack where – after months of labour unrest and with lax security – Mokhtar Belmokhtar’s militant group attacked an energy installation and took 800 hostages, 40 of whom were subsequently killed.

But the security explanation fails to take into account the high level of initial interest in the concessions when they were first unveiled this year. According to one European diplomat in Algiers, more than 50 companies expressed interest with full knowledge of the security situation and the locations of the reserves.

The answer may instead lie in the nature of the impenetrable system of rules, delays and procedure that Algeria’s ruling elite has built around it and which certainly operates in the energy industry. Even those with deep knowledge of Algerian politics find the system difficult to navigate. “I put it down to the old bureaucratic headaches here,” the diplomat said, in support of this thesis.

Much of what goes on in Algeria does so in the shadows. A prime example came during the auction when Abdelhamid Zerguine, chief executive of the state energy company Sonatrach (which by law must have at least a 51 per cent share in any project in Algeria), was sacked in favour of interim appointee Said Sahnoun on July 26.

Depending on who you ask, Zerguine was fired at the behest either of the energy minister Youcef Yousfi, or the powerful businessman Ali Haddad whose conglomerate Groupe ETRHB is rumoured to be looking for a way into the hydrocarbons sector and had found the previous CEO unsympathetic.

Either way, Zerguine’s dismissal was less ignominious than that of his predecessor, Mohamed Meziane, who lost the job after being arrested along with his two sons on corruption charges in 2010.

“Algeria continues to fare poorly compared with other emerging hydrocarbon producers in terms of operating costs, bureaucratic delays, insurance costs, labour regulations, and profit repatriation,” said Riccardo Fabiani, a Middle East and north Africa analyst at Eurasia Group who specializes in Algeria.

“In the current global hydrocarbon environment, with emerging oil and gas markets in Africa and other areas and the shale revolution under way, it’s hard for an IOC to justify why it should invest in a place like Algeria, where business operations border the impossible,” he told beyondbrics.

In all likelihood it is precisely the closed, sclerotic nature of Algeria’s political system that is holding international energy companies back.

There have been some positive signs for the country’s energy industry. On October 8 Russia’s Gazprom said it had made its third find after successful drilling in the Berkin basin and this month the energy ministry claimed natural gas production had returned to growth for the first time in 18 months. Meanwhile, the state itself has announced a massive expansion in energy investment which may amount to as much as $100bn.

However, Algeria relies on hydrocarbon exports for 60 per cent of its revenue and those exports have been falling hard. Production has slowed and domestic demand is rising, leading to a loss of $5bn in revenue in 2013 as exports dropped 7.5 per cent. In the first quarter of 2014 exports fell a further 9 per cent.

Global oil prices dropped to multiple year lows last week and, with plans to bring in international capital to develop the reserves falling flat, even large scale state investment may not be enough to cushion the blow. An incomprehensible political system run by an entrenched, ageing elite may soon become too expensive a luxury to maintain.

This article was originally published with the Financial Times on October 21 2014.


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