Le Quotidien d’Oran, Algeria

Shame on Algerian Officials for Payout to U.S. Oil Firm Anadarko

“The $4.4 million will be awarded to the American oil company and be checked off in Sonatrach’s profit and loss boxes - all to suppress the need for accountability. For in this case, the chain of responsibility rises up to the highest level of state. … Indeed, nothing at state-run oil company Sonatrach, the country’s central provider of financial resources, is done before being agreed to or ordered by those at the highest echelons of power.”

By Kharroubi Habib

Translated By Jill Naeem

March 15, 2012

Algeria - Le Quotidien d’Oran - Original Article (French)

The sum of $4.4 million is the bonanza that the American oil company Anadarko will pocket from Sonatrac in return for renouncing arbitration by an international tribunal over a dispute that has had the two companies at loggerheads since 2006.

[Editor’s Note: According to the Wall Street Journal, the tax dispute between Anadarko and state-owned Sonatrach was sparked by a 2006 Algerian tax law on windfall profits. At the time, oil-rich governments from Russia to Venezuela, emboldened by rising prices for energy, sought to recast the terms of the deals they had signed with foreign oil companies when crude was cheap. ... Anadarko maintained that its contract with Sonatrach required the state oil company to bear the tax burden. After years of back-and-forth, Anadarko began arbitration proceedings against Sonatrach in 2009.]

The directors of Sonatrach were more than content to assert to the majority of Algerians, who have no experience with this type of dispute, that the deal is in the best interests of the nation. But experts in the field have been speaking out, denouncing the agreement as “fraud on a large scale,” arguing that if Sonatrach had pursued international arbitration, it would never have been forced to pay more than $1.5 million in damages. The controversy continues and shows no signs of dying down.     

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For the layperson, one question remains: why, either by continuing with international arbitration or by paying compensation to bring the matter to a close, has Sonatrach found itself in a position that it must suffer this enormous financial loss? What we can be sure of is that this situation is the result of a failure on the part of decision makers to understand the consequences of their actions. At the time they were made, these decisions were justified under the sacred cloak of national sovereignty - and the right of Algerians to impose rules for taxing profits earned by foreign oil companies exploiting its oil resources. 

It seems that the authorities preferred to have Sonatrach and Anadarko reach a deal between themselves so as to keep such decisions from being exposed before an international tribunal, which would force them to simply revise the provisions that created the dispute in the first place. 

Algeria will therefore pay Anadarko $4.4 million. But will those who took the decisions that resulted in this astronomical bill be held accountable? For far less than the amount in question in this case, managers of state-run companies in other sectors have been taken to court and convicted for the damage they supposedly caused the country. Will those incriminated by Sonatrach’s misfortune be called to justice? It seems not, as the knock-on effect from such exposure could well extend beyond the sphere of the Sonatrach executives when the Anadarko dispute began. 

The $4.4 million will be awarded to the American oil company and be checked off in Sonatrach’s profit and loss boxes - all to suppress the need for accountability. For in this case, the chain of responsibility rises up to the highest level of state. Indeed, nothing at Sonatrach, the country’s central provider of financial resources, is done before being agreed to or ordered by those at the highest echelons of power. 

Such is the opaque manner of governance of our national affairs, and the untouchability enjoyed by those who practice it.