Energy Ministry

Reading the runes of the oil market, this power portfolio comes with a heavy responsibility

The New York Times, October 28, 2002

WHEN THE Algerian government fixes its annual budget, the biggest single factor it has to take into account is the world price of a barrel of oil. But as no one can know in advance exactly what that will be, the best that can be done is intelligent guesswork, based on a deep knowledge of global market conditions. Hence the crucial importance of having the right person in the job of Minister of Energy and Mines - a portfolio that currently brings with it the presidency of the giant state hydrocarbons company, Sonatrach.

Since 1999, that powerful position has been held by Dr. Chakib Khelil, who has a Ph.D. in Petroleum Engineering from Texas A&M University. President Bouteflika head-hunted Dr. Khelil in Washington, where he had been working with distinction at the World Bank on oil issues and energy policy in Latin America.

His mandate now includes developing Sonatrach's international business strategy, as well as seeing the company through a period of radical reform that will lead to a separation of its commercial activities from the more regulatory functions associated with government.

This will lead to a deliberate weakening of Sonatrach's monopoly position in a number of its activities, as well as the opening up of more upstream and downstream activities to outside capital and participation. In fact, compared with several other OPEC member states, Algeria already allows far more direct foreign involvement - not least from the United States - thanks to legal changes in 1991. New laws will take that process much further.

Dr. Khelil has already served a term as President of OPEC, so he is a past master at oil diplomacy. One of his current aims is to get his colleagues around the world to agree to allow Algeria to increase its production quota. However, he also believes that other sectors need more investment funds - not all of which can be raised abroad. The government's ambitious program to modernize the economy and bring social benefits to the country's growing population will be extremely costly.