Algerian state energy firm Sonatrach replaces CEO


UPDATE 3-Algerian state energy firm Sonatrach replaces CEO

* CEO replaced by U.S.-educated engineer
    * Algeria increasing oil, gas production
    * Sonatrach seeks more flexibility with deals

 (Adds analyst and source comments)
    By Lamine ChikhiALGIERS, March 20 (Reuters) - Algerian state energy firm
Sonatrach has replaced Chief Executive Amine Mazouzi after less
than two years in the job with Abdelmoumen Ould Kadour, the
energy ministry said on Monday.
    The surprise decision comes at a sensitive time for
Sonatrach and Algeria, which began to increase oil and gas
production last year after a prolonged period of stagnation and
a lack of major foreign investment.
    A statement from the ministry gave no reason for the change.
Ould Kadour is an engineer who graduated from the Massachusetts
Institute of Technology and headed U.S.-Algerian firm Brown &
Root Condor in the 1990s.
    Energy Minister Noureddine Boutarfa called in a statement on
Ould Kadour to "act with full responsibility and confidence to
put in place the qualitative changes that allow Sonatrach to
evolve and prosper in a calm business climate".
    A source close to the new CEO said Sonatrach's priorities
would be reducing production costs and resolving pending
arbitration cases in an amicable way to gain the confidence of
foreign partners.
    Total <TOTF.PA> said last year it had filed a request for
arbitration against Algeria for changing profit-sharing terms on
oil and gas contracts in the mid-2000s, and that attempts to
reach a mutual agreement had failed.
    Before Mazouzi's appointment in May 2015, the energy giant
went through turbulent times with five CEOs in five years,
shaken by a corruption scandal, weak foreign oil interest in
energy bids and pressure from the drop on crude prices.
    On Saturday, Mazouzi hosted the CEO of Eni <ENI.MI> at a
southern oilfield where the two discussed the Italian company's
commitment to Algerian investment.
    "On one hand it is frustrating because the changes are just
another disruption after a series of disruptions over the last
seven years. We need some continuity," said Geoff Porter at
North Africa Risk Consulting.
    "On the other hand we are still looking for that perfect
combination of ministry of energy and Sonatrach leadership that
will be able to respond to the lower-for-longer price
environment," he said.
    Algeria remains dependent on oil and gas earnings which
provide 60 percent of the state budget and Sonatrach's
performance is key to the health of the economy.
    The North African OPEC member nation had struggled to
attract oil investment because of tough terms that made foreign
firms wary, but in 2016 Sonatrach began to take a more flexible
approach to bilateral talks with foreign partners.
    But there have been divergent views within Algeria's ruling
elite over how hard to push for foreign investment and domestic
economic reform to boost revenues and spur growth.
    The sharp fall in oil prices hit Algeria hard, prompting the
government to look at more flexible ways to improve revenues.
Algeria's energy revenues were $27.5 billion in 2016, less than
half the $60 billion it earned in 2014.

 (Writing by Aidan Lewis and Patrick Markey; editing by David
 (( ; +216-29850352;))


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