NARCO Analysis: North Africa Oil & Gas Summit After Action

It was great to catch up with so many of you in person last week in Algiers at the oil and gas conference and in Casablanca and Rabat.

The below is a little bit of a departure from the usual NARCO Notes and NARCO Closeholds. Just wanted to briefly touch on some salient points from the Algiers event.

The good

Those of you who know Algeria well recognize how significant it was that Sonatrach sponsored the event and followed through. This would be true even under normal circumstances and it’s especially so given Sonatrach’s current conditions. The event was by no means a grand slam, but it also wasn’t a strike out. Sonatrach itself was very pleased with the results and while it’s not likely to suddenly start holding events every couple of months, babysteps like this one could eventually lead to a more accessible and forthcoming institutional culture. But at the end of the day Sonatrach is not ONHYM or ETAP and will always behave a little enigmatically.

The bad

Strong IOC turnout could have been stronger. Some key players were conspicuously absent even though they are active in North Africa. This may have been deliberate – ie they have no interest in expanding their North Africa operations or may even be actively looking to exit them. Or it could have been political – relations between some North African countries are particularly strained at this junction. Or it could have been merely bureaucratic – Algeria visas can be tricky. And while no one expected earth-shattering announcements from any of the NOCs present, their tone was still overwhelming restrained. A lot of that has to do with the indeterminate political situations in each country (which are, of course, indeterminate for very different reasons.) 

The ugly

A Libyan delegation was present, but representing only western Libya and the Islamist National Salvation Government in Tripoli. The delegation openly declared its support for Mustafa Sanalla as NOC chairman and claimed that everything was fine even if there were small problems here and there. In private, it acknowledged Mashallah Zwai as the Minister of Oil and Gas (even though the government in Tobruk dissolved that portfolio), it blamed Khalifa Haftar for “ruining the country,” and when posing for photographs with yours truly joked about “taking hostages.”

On the horizon

The summit didn’t offer any surprises looking forward in North Africa into 2015. Morocco is holding its cards very close to its vest. To borrow from Texas Hold’em, Morocco will be “on the river” in 2015 and Rabat is doing its best to hedge its bets. Algeria allegedly still intends to hold another bid round in the next twelve months, but it’s easy to foresee that timeline getting thrown off by Minister of Energy Youcef Yousfi’s eventual departure, the appointment of a permanent Sonatrach CEO, or President Abdelaziz Bouteflika’s death. Tunisia is approaching an inflection point with the emphasis on getting shale gas legislation passed in the new parliament. Doing so would have a transformative impact on Tunisia’s O&G sector and the country’s FDI profile as a whole. At risk of sounding glib, Libya is done, at least for now. Political institutions are bankrupt, violence is escalating, and the oil sector is squarely in the crosshairs. It’s a risk not just for itself but for its neighbors as well.

Lastly, something completely off topic. I stopped in at Rabat’s brand-new Museum of Modern and Contemporary Art in last week between meetings. Polemical, even edgy art. Bravo!

Wishing you all the best for the holiday season and the New Year.