Sonatrach: The Political Economy of an Algerian State Institution

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Sonatrach: The Political Economy of an Algerian State Institution
Author(s): John P. Entelis
Source: Middle East Journal, Vol. 53, No. 1 (Winter, 1999), pp. 9-27
Published by: Middle East Institute
Stable URL: http://www.jstor.org/stable/4329281 .
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SONATRACHT: HE POLITICALE CONOMY
OF AN ALGERIANS TATEI NSTITUTION
John P. Entelis
Because of Algeria's overwhelmingf inancial dependence on hydrocarbon re-
sources, no government has been willing to disengage the national oil and gas
company (SONATRACHf)r om its political moorings despite the systematicp res-
sures offoreign economic advisors to restructurer adically the country's misman-
aged socialist system. Thus, while widespread market-orientedr eforms have been
implemented since the late 1980s, none of these efforts has been allowed to
underminet he political imperativest hat continue to dictate Algeria's hydrocarbon
strategy.
"It should be consideredt hat the recoveryo f nationalw ealth and the developmento f
hydrocarbonfos rmp arto f the struggleo f the peopleo f the ThirdW orldf or theire conomic
liberationa ndt he establishmenotf a new internationaecl onomico rder."
-Resolution of 31 December1 980 passedb y the CentralC ommitteeo f the National
LiberationF ront( FLN),a t the timeA lgeria'ss ingleg overningp arty,r egardintgh e country's
long-terme nergyp olicy.
Since its founding in December 1963, only a year and a half after Algeria achieved its
independencei n July 1962, Algeria's nationalo il and gas company, the Societe Nationale
pour la Recherche,l a Production,l e Transportl, a Transformatione t la Commercialisation
des Hydrocarbures( SONATRACH), has been a fully integrated part of the national
governmentals tructureo f the Democratica nd PopularR epublic of Algeria. For the last 35
years, it has served as a crucial instrumenti n the formulationa nd implementationo f the
John P. Entelis is Professor of Political Science and Director of the Middle East Studies Program at Fordham
University (New York). His most recent edited book is Islam, Democracy, and the State in North Africa
(Bloomington,I N: Indiana UniversityP ress, 1997).
MIDDLE EAST JOURNALm V OLUME 53, NO. 1, WINTER 1999
10 * MIDDLE EAST JOURNAL
government's domestic and internationalp olitical economy. Along with the important
economic factors explaining this condition, are deep political considerationsa s well. The
most importanto f these revolve aroundt he ongoing conflict between competing elites in
state and society who have differenta gendas, constituencies, and purposes.
Intra-elitec onflicts have long dominated Algerian politics, within both the civilian
and military sectors of society. These rivalries occur as well in the economy's "golden
goose"-SONATRACH, the world's ninth largest oil company.' The currentc ondition of
civil unrest created by the campaign of Islamic violence directed against the military
government has worked to sustain rather than diminish elite conflict over
SONATRACH-Algeria's largest and most lucrative source of patronage,p rivilege, and
power. The currentc ompetitioni s between the efficiency-mindedm iddle-level managerial
technocrats of the oil and gas industry-who are pushing for greater market-sensitive
reforms, including full-scale privatization-and the bureaucratice lites in the government
and the military, who are fearful of losing control over national authority.A s of this
writing, the latter seem to be winning over the former.H ow this political process operates
can only be understood in the context of five interrelatedf actors: history, ideology,
economics, administration,a nd law.
HISTORY:O VERCOMINGA BITTERL EGACY
Algeria achieved its political independence on 5 July 1962, after a bitter war of
nationall iberationa gainst the French,w ho had colonized the countryb eginning in 1830.2
While the country became free, its polity was fractured,i ts society divided, its culture
ruptured,a nd its economy devastated.O nly one sector showed any promise of growth-
hydrocarbons.T he new leadershipi n Algiers envisioned exploiting this crucial sector as
a way to overcome the vast legacy of political and economic backwardnessl eft by the
colonizing power. Thus, almost from the very beginning, oil and gas production were
envisioned as central to the country's efforts to socialize the economy, expand state
control over civil society, develop civilian and military infrastructures,a nd position
Algeria as a future "great"p ower in the southernM editerraneanr egion. To achieve these
grandiose goals, the state undertook simultaneous political, social, and economic
transformations.
In the political realm, a single-party authoritarianr egime was established using
"revolutionary socialism" as the ideology for popular mobilization. While the first
post-independencep resident,A hmed Ben Bella (1962-65), was ambivalenti n this regard,
his successor, Houari Boumedienne (1965-78), fully institutionalized this political
1. The New YorkT imes, 20 January1 998.
2. The following are among the most referencedE nglish-languagep ublications concerning Algeria's
political history: William B. Quandt,R evolution and Political Leadership:A lgeria, 1954-1968 (Cambridge,
MA: MIT Press, 1969); John P. Entelis,A lgeria: TheR evolutionI nstitutionalized( Boulder,C O: Westview Press,
1986); Rachid Tlemcani, State and Revolution in Algeria (Boulder, CO: Westview Press, 1986); John Ruedy,
ModernA lgeria: The Origins and Developmento f a Nation (Bloomington:I ndianaU niversity Press, 1992); and
Helen Chapin Metz, ed., Algeria: A Country Study (Washington, DC: Library of Congress/FederalR esearch
Division, 1994).
ALGERIA 11
project. In the social realm, Boumedienne deepened and expandedt he regime's socialist
characterb y providing broadly-basedn ationalized social services (medicine, schooling,
pensions, etc.). Economically, the regime completely nationalizeda ll "strategic"in terests.
This includedt he importantg as and oil sector, which came fully underg overnmentc ontrol
in February1 971 with the nationalizationo f all Frenchh ydrocarboni nterests.3L astly, in
the area of foreign policy, Algeria assumed a visible if not militant posture in numerous
internationalf orums as parto f its effort to establish a "new internationale conomic order"
in which gas and oil were to be used to coerce fundamentalc hanges in the international
economy, and therebys hift global political power away from the industrializedN orth and
towards the underdevelopedS outh.
While the liberalization policies of Boumedienne's successor, Chadli Benjedid
(1979 -92), significantlya melioratedb oth the militancy of ThirdW orldr evolutionisma nd
the suffocatinge ffects of state bureaucraticc ontrol of the economy, the critical hydrocar-
bon sector remainedf irmly in the hands of the state. SONATRACHs erved the important
function of expanding oil and gas production-in close collaborationw ith multinational
oil companies-while also providingt he governmentw ith the revenue necessary to try to
satisfy the increasing social needs of a young, restless, and expandingp opulationa s well
as to maintain state power in general.
The governmento f Liamine Zeroual (1994-present)4h as acceleratedt he liberaliza-
tion process in several areas simultaneouslyi n an effortt o contain and defeat the Islamist
insurgency which emerged in early 1992, when the army staged a coup d'etat. This coup
occurred on the eve of second round national legislative elections in which the now
banned Islamic Salvation Front (FIS) was about to achieve a decisive victory. Since then
the army-imposedr egime has undergonea n institutionalt ransformationw ith the success-
ful completion of several electoral mandates-a presidentiale lection in 1995, a consti-
tutional referendumi n 1996, and legislative and municipal elections in 1997. Yet, the
countryc ontinues to face daily violence which has cost the lives of nearly 100,000 people
since early 1992.5
None of the violence, however, has slowed the regime's economic transformationi,n
which a socialist economy is graduallyb eing replaced by a market-orientedo ne. Many
sectors of the once nationalized economy are now being privatized, except for one-
hydrocarbons.A nd despite the expansive role now being played by scores of foreign oil
and gas companies in exploiting Algerian resources (discussed below), SONATRACH
remains state-owned. Indeed, while in the past historical, ideological, economic, and
global considerationsw ere once fused to justify maintainingn ationalc ontrolo f oil and gas
3. Algeria fully nationalizedi ts hydrocarbonsi ndustryt hrougha series of separateo rdinances,d ecrees,
and presidentiale dicts in which foreign territorialr ights and resource assets were transferredt o SONATRACH
beginning in mid-1970 and ending in early 1971. See, for example, Ordinance7 1-8 of 24 February 1971 in
SecretariatG enerald u Gouvernement,J ournal Officield e la RepubliqueA lgerienne Democratiquee t Populaire
(Official Journalo f the PopularD emocratic Republic of Algeria) (Algiers).
4. Zeroual has announcedt hat he will leave office following elections due in April 1999.
5. The most authoritativea ccount of the killings can be found in a publicationj ointly sponsored by
Amnesty International,H uman Rights Watch, InternationalF ederationo f the Leagues of Human Rights, and
ReportersW ithout Frontiers,A lgerie: le livre noir (Algeria: The Black Book) (Paris: La Decouverte, 1997).
12 * MIDDLEE ASTJ OURNAL
production, today's rationale is pure political economy. The narrowly based army-
supportedr egime depends almost exclusively on the rents that oil and gas production
provide in order to remain in power-these along with corruption, coercion, and
cooptation. As long as the regime is viewed by the majorityo f its citizens as illegitimate
if not dangerous, it seems unlikely that SONATRACH will at any time in the near or
intermediatef uture be privatized or spun off as an independente nterpriseu nit.
Elite Competition
Almost from the beginning of its modem political history, Algeria has been racked
by deep cleavages among its dominante lites. Rather than creating unity and a sense of
common nationalp urposea mong these elites, the bloody war of independence( November
1954 - July 1962) exacerbateda nd extended existing tensions, rivalries, and differences.
As one noted scholar of the subject has written: "[T]he [Algerian] revolution not only
perpetuatedo ld antagonisms but also created new sources of strain and tension among
political leaders... .Rathert han developing into a 'political class' thatj ealously guardsi ts
prerogativesa nd power, the Algerianp olitical elite has been composed of numerousc lans,
factions, and cliques, none of which has been powerful enough to dominate the entire
political system."6
In the last three decades these intra-elitec onflicts have not completely disappeared,
but have only been submergedw ithin ruling state institutions,o f which the armyh as been
the most dominant.I n practice this has meant that competitiono ver power, privilege, and
patronageo perates at the highest level of authorityi n a continuous, albeit opaque, way.
This applies in particulart o the revenue-rich hydrocarbonss ector, from which flows
valuable state patronage.U nderstandingt he contested nature of elite political power in
Algeria helps explain the ambiguousa nd sometimes contradictoryn atureo f public policy
towards economic enterprises.
During nearly all of Algeria's post-independencep eriod, both ideology and public
policy converged to keep SONATRACH squarelyu nder the control of state. When faced
with serious economic crises, however, reformm easuresw ere introducedt o overcome the
vast legacy of bureaucraticm ismanagement.Y et even these reforms,i ncluding the efforts
to improve SONATRACH's financial performance, did not go forward unchallenged.
While alternating elite interests continue to influence decision making in Algeria's
political economy, including determining the fate of SONATRACH, no single elite
constituency either in the military or the bureaucracyh as gone so far as to call for
SONATRACH's total privatization.I ndeed, as long as Algeria continues to be governed
by the army in an authoritarianm anner, it seems unlikely that the state will formally
relinquish control over the most valuable resource of its political economic power.
6. Quandt,R evolution and Political Leadership:A lgeria, 1954-1968, p. 11.
ALGERIA* 13
IDEOLOGYO R PRAGMATISMB Y OTHERM EANS
Algeria possesses the world's fifth-largestp roven naturalg as reserves,7a nd substan-
tial reserves of crudeo il. The developmento f these resourcesh as been centralt o economic
planning since independence.T his planning has included financing the creation of other
industries as well as providing essential services intended to improve living standards.
More than any others, these socio-political considerations govern hydrocarbons
strategy in Algeria and explain why Algeria is determinedt o obtain as high a price as
possible on world marketsf or its naturalr esources. For this reason, Algeria has adhered
to productionq uotas set by the Organizationo f PetroleumE xportingC ountries( OPEC)
and has participatedi n other cartelizationm echanisms. The ideological underpinningo f
this strategyw as reconfirmeda nd reinforceda t the 29-31 December 1980 meeting of the
Central Committee of the National LiberationF ront (FLN). Despite major political and
institutionalt urmoil since then, the ideological configurationo f Algeria's energy policy
put into place nearly two decades ago is still in effect today.
The 1980 meeting laid down specific principles which have had major implications
for the country's energy policy. The first of these was that hydrocarbons are a
non-renewable resource. The second was that the "most effective guarantee for the
development of the country lies in a permanentm obilization of the workers in order to
develop other sectors and thus achieve a more diversified and more integratede conomy,
which is therefore less vulnerablei n its relations with the outside world."8
This recognition of the limited nature of resources and the importanceo f creating
other industriest hat will be self-generatingl ed the FLN to formulatec arefully identified
aims. These include:
* increasede mphasis on domestic use of naturalg as-i.e., to supply households and
industry;
* greatere fforts to conserve energy by preventingw aste;
* more intensive explorationt o determinet he full extent of naturale nergy resources,
and development of national expertise;
* diversificationo f the nationale nergy supply by researchi nto otherf orms of energy,
such as wind, geothermale nergy, and solar power, and by the mining of coal and nuclear
raw materials;
* more efficient and extensive capacity for storage, distribution,a nd transporto f
hydrocarbons;
* ensuring the adequate security of (i.e., the physical defense of) energy and
petrochemicali nstallations;
* careful matching of hydrocarbonso utput to world market supply and demand
balance;
* "firmnessa nd determination"in pursuingp rice increases for hydrocarbons;
7. TheN ew YorkT imes, 23 July 1997; and Petronet:A lgeria (availableo n the Internet),6 March 1998.
8. The Economist Intelligence Unit (EIU), Algeria: The Giant Marketo f North Africa (London:E IU,
1982), p. 55.
14 * MIDDLEE ASTJ OURNAL
* diversifying the destinationso f hydrocarbonse xports;
* coordinationa nd cooperationw ith other hydrocarbonsp roducersa nd exporterst o
achieve fair pricing for naturalg as exports;
* strengtheningt he managemento f SONATRACH;
* greatere mphasis on masteringo il and gas technology, with a consequentr eduction
of reliance on foreign technical assistance;
* more training of Algerians in specialized hydrocarbonss kills;
* greaterc oordinationb etween scientific, technical, diplomatic,s ecurity,a nd defense
institutionsi n the matter of hydrocarbons;
* creationo f a High Energy Institutet o coordinatee nergy policy and its effect on the
economy as a whole; and
* greatere fficiency in existing investments.9
What is remarkablea bout this hydrocarbonsb lueprint, articulated nearly twenty
years ago, is how very much it remains in effect today. Only the addition of extensive
foreign investment and participationi n the oil and gas industry constitutes a new but
complementarya spect of the original plan.
ECONOMICS:T HE GLOBALI MPERATIVE
The first majord iscovery of oil in Algeria was made in 1948 in the Sidi Aissa region
located in the pre-Saharans outh east, and by 1958 the country's main oil field-Hassi
Messaoud, in the east central region-was coming onstream. In 1961, gas production
began at Hassi R'Mel, in centralA lgeria 500 kilometerss outh of Algiers. Not surprisingly,
these developmentsl ed France,t he colonial power, to reassess its view of Algeria's future.
Shortly before it finally conceded on the issue of full independence,P aris was preparedt o
give up the three northernd epartements-previously thought the only part of the vast
territory worth economic exploitation-but hoped to hold onto the territoires du sud
(southern territories), where oil and gas interests were at stake. However, the French
Saharaw as not to be, and with independence,A lgeria secured the region's hydrocarbons
wealth for itself.
In the 1960s and 1970s, Algeria became increasingly dependent on oil and gas to
finance its investmenti n industrya nd the social welfare of a fast-growingp opulation.T he
centralized socialist state that Boumedienne created was constructed on a sea of
hydrocarbonsr evenues, allowing Algeria to push ahead with its social experiments and
industrialization-a strategy labeled "industrializingi ndustries."10
Algeria is one of the majoro il and gas producingc ountrieso f Africa. In 1994, 1995,
and 1996, it set the record for the most oil discovered of all oil producingc ountries. Yet,
the country's full hydrocarbonp otential has still to be fully and reliably established. In
additiont o its upstreams trength,A lgeria has a strong downstreams ector which includes
refining, distribution,m arketing,a nd chemicals.
9. Ibid., pp. 55-57.
10. Jon Marks,A lgeria: TowardsM arketS ocialism (London:M iddle East Economic Digest, 1989), p. 45.
ALGERIA* 15
More than ever, the hydrocarbonsi ndustryi s key to the Algerian economy, earning
nearly $11 billion in 1996, or 97 percent of its foreign exchange revenue. Its current
proven hydrocarbonr eserves are estimated at 1.2 billion tons of crude oil (9.2 billion
barrels) and 3.6 trillion cubic meters (tcm) of naturalg as. This represents0 .9 percent of
the world's crude oil reserves and 2.6 percent of the world's natural gas reserves. At
currentp roductionl evels, its reserve-to-productionr atio is 22 years for crude oil and 80
years for naturalg as.1'
There are currently about 35 major producing oil fields in the country. The main
fields are located at Hassi Messaoud and around In Amenas, near the Libyan border.
Recently a cluster of new fields with commercialp otentialh ave been discovered at Hassi
Berkine, east of Hassi Messaoud towards the Tunisian border.
Algerian oil fields generally produce light crude oils with a low sulfur content. The
principalc rudesa re SaharaB lend and Zarzaitine.E xportso f crudeo il and refinedp roducts
from Algeria have varied in recent years, reflecting the highly competitive oil market,
erratic global weather patterns,a nd a weakened Asian economy. In 1994, for example,
over 1.2 million bpd were exported,w hile in 1997 only about 850,000 bpd were exported,
18 percent of which were in the form of crude oil, 24 percent condensates,'22 5 percent
gas, and 19 percent refined products.T he bulk of Algeria's exports of crude oil goes to
Western Europe (85 percent), with about five percent going to the United States.
The Importanceo f Natural Gas
Algeria is particularlyr ich in condensates and naturalg as, and the governmenth as
instituteda strategyo f investing in facilities that exploit these resources.T he countryh as
now become one of the world's leading exporterso f condensates,w ith a volume of some
400,000 bpd. While Algeria's crude oil constitutes3 0 percento f the country'sr ecoverable
hydrocarbonr eserves, its naturalg as constitutes7 0 percent.A lgeria also ranksf ifth in the
world-after Russia, Iran, Qatar, and the UAE-in terms of gas reserves. Output of
naturalg as in Algeria has grown steadily over the years, from 36.5 bcm in 1986, to 49.2
bcm in 1990, and to 65.9 bcm in 1996. By the year 2000, conservative analysts say this
figure could approach7 0 bcm annually; some more optimistic SONATRACH officials
forecast the volume to reach as high as 170 bcm.'3 Apart from encouragingf oreign oil
companies to develop Algeria's gas fields (see below), the governmenti s also promoting
the use of naturalg as in the domestic market-especially in the industrials ector, where
plants can easily be converted from fuel oil to gas.
Commercial production of natural gas began in 1961. Proven reserves, which are
11. In 1997, oil production averaged 846,000 barrels per day (bpd); In 1996, naturalg as production
totaled 65.9 billion cubic meters (bcm). See Algeria: Country Profile 1997-1998 (London: The Economist
Intelligence Unit, 1998), pp. 28-33.
12. Condensatesa re liquid hydrocarbonsp roducedw ith naturalg as which are separatedf rom the gas by
cooling and various other means. Condensatei s also referredt o as naturalg asoline and distillate.
13. Algeria: CountryP rofile 1997-1998, p. 32.
16 * MIDDLE EAST JOURNAL
mainly wet,14s tand at 5.1 billion tons, althougha ctualr eserves are probablym uch higher.
According to SONATRACH,n aturalg as represented5 7 percento f Algeria's total proven
hydrocarbonr eserves in 1996. Algeria accounts for 25 percent of EuropeanU nion gas
imports.15T wo-thirds of known reserves are contained at Hassi R'Mel. Other important
fields include RhourdeN ouss, Alrar, RhourdeE l Chouff, RhourdeE l Adra, Gassi Touil,
and Bassin d'Illizi. Fourp lants at Arzew and Skikda,a ll owned by SONATRACH,l iquefy
gas for export. Liquefied Natural Gas (LNG) productionf rom these complexes was 18
bcm in 1994, but is expected to rise to about 49 bcm by 1999, when a radical but
protractedo verhaul is completed.16
The estimated$ 1.5 billion revampinga nd upgradingo f the Arzew liquefactionp lants
is nearly complete and furtherp rogress is expected at Skikda. Revamping and expansion
at Arzew and Skikda will bring their productiont o around2 9 bcm a year by the end of
1998. Of this, 21.2 bcm is to be producedb y the GL1-Z and GL2-Z plants at Arzew. The
Skikda gas liquefactionp lant is now expected back on streami n late 1998 or early 1999.
A network of export pipelines link the oil and gas fields to terminals and refineries
on the Mediterraneanc oast. There are seven terminals for the export of Algerian
hydrocarbonsa t Algiers, Annaba, Oran, Arzew, Skikda and Bejaia, and at La Skhirrai n
neighboring Tunisia. The most importantt erminal is at Arzew, which handles over 40
percent of all hydrocarbone xports and 100 percent of condensate exports.
Despite gas liquefaction facilities producing below capacity during an extended
period of renovation and expansion work, SONATRACH became the world's fourth
biggest gas exporter-after Gazprom of Russia, Shell, and Exxon-when the taps were
opened to a new pipeline in late 1996. Algeria has built two major gas pipelines to
facilitate exports to Europe. The $1.3 billion Maghreb-Europeg asline (GME) was
completed in November 1996, allowing the transportationo f 10 bcm per year to Spain,
Portugal, and Morocco. The existing 2,100-km Trans-Mediterraneanga sline (TME) to
Italy via Sicily has been expanded, providing throughputc apacity of 25 bcm per year to
Italy and neighboringm arkets.B oth pipelines run from Hassi R'Mel throughn eighboring
countries-the TME through Tunisia and the GME through Morocco-before crossing
the Mediterraneans eabed.
Increasesi n exportp ipeline capacity are necessaryf or a projectedg as export capacity
of 75 bcm a year in the early 21st century.T here are plans to boost the GME's throughput
capacity to some 11 bcm a year, and to add a furtherf ive bcm capacity to the TME line
through the constructiono f new compression stations. Other projects include: develop-
ment of the Alrar-HassiR 'Mel pipeline, consisting of a gasline 42-48 inches in diameter
with four compression stations;c ompletion of the 42-inch Hassi R'Mel-Skikdag asline to
14. Wet gas is a naturalg as from a well that contains some of the heavier hydrocarbonm olecules which,
under surface conditions, form a liquid.
15. See "North African Gas Alters Balance of European Supply," Petroleum Economist (London),
March 1997, pp. 28-29.
16. "Algeria May Reorganize Hydrocarbon Industry," Middle East Executive Reports 17, no. 12
(December 1994), p. 5.
ALGERIA* 17
come on stream in 1998; and constructiono f the 521-km In Salah-HassiR 'Mel gasline,
with a capacity of seven million cubic meters per year.
Given the centralityo f the hydrocarbonsi ndustryt o Algeria's political economy of
development now and into the future, SONATRACH, which is both the state-owned
operator and the parent company of the industry, continues to serve as the country's
institutionalb ulwarka gainst autonomousp olitical and economic interests.S ONATRACH
retains overall responsibility for hydrocarbonp olicy, exploration,p roduction,t ransport,
and export. Over the period 1996-2000, SONATRACHp lans to invest nearly $30 billion
to increase explorationa nd furtherd evelop reserves. It remainst he country's main export
earner.
The chief planks in SONATRACH's currentd evelopmentp rograma re its multibil-
lion dollar strategic alliances formed with overseas operators.S ince 1991, international
companies have been allowed to work in or even buy into existing oil fields. By the end
of 1996, for example, 23 explorationa nd production-sharingc ontractsw ere in place with
18 internationalc ompanies, involving investments worth $1.5 billion. The foreign firms
involved in Algeria's hydrocarbonss ector take a long-termv iew of the political risks, and
major investments are underwayo r planned in all areas of production.T o protect foreign
installationsa gainsta ttackb y Islamic militants,p rivates ecuritya rrangementsa nd a strong
army presence have been put in place.
ADMINISTRATIONT: HE POLITICALN ETWORK
SONATRACH's relationshipt o the state is direct, intimate,a nd long-standing.H igh
government officials and their counterpartsi n the national company exchange positions
regularly.S uch a patternh as been in existence virtuallys ince SONATRACHw as formed,
but has been reinforcedi n the last decade or so as the countryh as struggledt o transform
its socialist economy into one based on marketp rinciples. Although names of ministries
have changed, been reshuffled,o r eliminated altogether,t hose in charge of the hydrocar-
bons sector have remainedk ey actorsi n the managementa nd directiono f SONATRACH.
In the government of Abdelhamid Brahimi formed on 15 February 1988, for
example, Belkacem Nabi was appointedm inistero f energy, chemicals and petrochemicals
while Youcef Yousfi (who, in 1998, is minister of energy), continued as directorg eneral
of SONATRACH.T he governmento f the reformistP rime MinisterM ouloud Hamrouche
was formed on 16 September 1989, following the disastrousn ationwider iots of the year
before. There was a marked shift in the composition of this government away from
ministers with military and party backgrounds towards professional technocrats. The
energy sector was folded into a reconstitutedM inistry of Mines and Industryw ith Sadek
Boussena as its new head. Boussena had replaced Yousfi in the general directorshipo f
SONATRACHi n 1987, and was later made chairmano f the state energy company before
his appointmenta s minister of mines. As minister,B oussena was responsiblef or the first
of several major restructuringso f SONATRACH undertaken after the company had
divested some of its specialized divisions to form separate companies in the early and
mid-1980s. Although a new general manager, Abdelhaq Bouhafs, was appointedt o run