This year, Algerian NOC Sonatrach celebrates 60 years of operations. More importantly, next month, CEO Toufik Hakkar (see our Personality of the Week) will mark three years in office. On 5 February 2020, Hakkar became the tenth man in the last two decades to lead Sonatrach, Africa’s top company by revenue. His immediate predecessor, Kamel Eddine Chikhi, did not even last three months – another victim of the extensive infighting within Algeria’s political-military elite over the firm that is the country’s lifeblood.
Amid that internal clan warfare, government insiders have often attacked Sonatrach CEOs (known as president director generals or PDGs) by leaking evidence of alleged corruption. Years of such revelations, alongside investigations by authorities in Canada, Italy and elsewhere, as well as public data leaks like the Panama Papers, laid bare the extent of corruption amid Sonatrach’s highest ranks. After a decade of turmoil, stabilizing operations and salvaging the reputation of Algeria’s most critical firm became top priorities for the country’s leaders. Enter Hakkar, who was previously Sonatrach’s vice president for business development and marketing. A technocrat who has spent his entire career at the NOC, Hakkar was considered less politically tainted than many of his predecessors.
Hakkar’s initial mandate was to bring stability to Sonatrach, but the pandemic’s arrival just a month into his tenure upended world energy markets. It plunged Algeria’s Saharan Blend crude to its lowest prices in years and forced Hakkar to drastically curtail planned investments in exploration and infrastructure in order to keep the firm afloat and protect the livelihoods of its 200,000 workers – a key consideration for any company insider. Hakkar proved his mettle by weathering that storm and leading Algeria to its greatest gas output figures in a decade, topping 100 bcm in total production in 2021 and earning $56bn in export revenues.
Dig deeper, however, and it becomes clear that this boom was only made possible by depressed domestic energy consumption (a result of the lingering pandemic’s effect on the Algerian economy) and reduced gas reinjection volumes, owing to lower oil extraction in line with OPEC production cuts. That under-injection is being paid for in today’s lower output figures, with exports falling 10% at a time of sky-high demand amid Russia’s invasion of Ukraine and the resulting energy crunch in Europe. Hakkar may not have expected to last this long and have to face the consequences of his pandemic decisions.
Hakkar definitely wants the job and is working hard to reassure Energy and Mines Minister Mohamed Arkab as well as other figures in the government and military that he remains the right man for it. In an interview published this month by Middle East Economic Survey (MEES), a conspicuous act of self-promotion for a Sonatrach CEO, Hakkar detailed his $40bn five-year investment plan for Sonatrach. It includes $30bn for upstream E&P, $7bn for refining, petrochemicals and gas liquefaction facilities, and nearly $1bn for environmental projects, such as reducing gas flaring and boosting pilot efforts on renewables and green hydrogen. He confirmed reports that new tenders will be forthcoming this year with more to follow, hinting in particular at further blocks for gas production in the country’s southwest. Boosting short- and medium-term production, particularly of gas, remain Hakkar’s top aim – underscoring the pressure on him to at least create a path to greater output before today’s high energy prices decline.
As CEO, Hakkar has faced a level of international scrutiny unfamiliar to him in his previous roles, and which may be his Achilles heel in trying to maintain his position. Days after Russia invaded Ukraine, Hakkar gave an interview in which he appeared overly eager to help Europe replace Russian gas with Algerian supplies, drawing the wrath of Algeria’s pro-Russian military. His subsequent media appearances have been limited and tightly controlled.
In our view, Hakkar will likely hold his seat at least through 2023, in part because he has built and protected a good team. President Abdelmadjid Tebboune and Minister Arkab are keen to see oil and gas output and revenue growth, as well as positive intermediate signs like signature of new contracts under the 2019 hydrocarbons law – for which Hakkar will depend on his right-hand man Fethi Arabi, Sonatrach’s vice president for commercialization. Hakkar will also be pushing Fatiha Neffah, his embattled sole female vice president (for marketing) to lock in long-term supply contracts, including with China and other clients beyond Europe. We meanwhile expect Sonatrach Vice President for Refining and Petrochemicals Batouche Boutouba to achieve a degree of import substitution in refined fuels and petrochemicals, as the Tebboune administration deeply resents having to import any in such an energy-rich country.
That Hakkar has survived three years is a very rare achievement, given that few of his predecessors in the previous decade lasted more than a year. His probable survival to a fourth anniversary points to a real improvement in the political climate within Sonatrach and the Algerian leadership itself after a decade of turbulent factionalism and expiring leaders.
personality of the week
CEO of Sonatrach
Across his 25 years of experience at Sonatrach, Hakkar, aged 52, accumulated a broad view of the firm’s operations. He served as director of economic studies and methods, then as executive director of strategy, planning and economy. In December 2018, he was appointed vice president of business development and marketing, a post that he held for just over a year before his nomination as CEO.
Hakkar earned a diploma in petroleum economics from Algeria’s elite National Hydrocarbons and Chemistry Institute (INHC), a master’s degree in energy and environmental economics from the Enrico Mattei Institute in Milan, and a doctorate in management from Algeria’s Higher Institute of Planning and Management (ISGP).
Among his first acts as CEO, Hakkar cleared out Sonatrach’s 10th-floor C-Suite, replacing seven of the firm’s eight vice presidents with trusted confidants, all fellow Sonatrach insiders. His longtime collaborator and right-hand man, Fethi Arabi, stayed on in Hakkar’s old role as vice president of business development and marketing. To implement his vision for upgrading Sonatrach’s operations, Hakkar is leaning heavily on this team of loyal lieutenants.
While chosen in part because of his relative political neutrality, Hakkar was rumored to have been supported by Abdelghani Rachedi, the powerful head of Algeria’s internal security apparatus and then of the army intelligence service. Rachedi’s ouster in August 2022 amid a shakeup of senior military leaders – and the subsequent opening of an investigation into his dealings – may have left Hakkar without an important patron. Although he is not a consensus figure, the CEO continues to enjoy enough support amid key elites to hold onto his job for now. To maintain their trust, Hakkar must keep the taps flowing.
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