Sonatrach Preserved Its Production Capacities & Avoided Losses

Source: 12/21/2020, Location: Africa

The CEO of SONATRACH, Toufik Hakkar, affirmed that the Group's production capacities had not been affected by the difficulties encountered due to the spread of the Covid-19 pandemic, stressing that the National Hydrocarbons Company had avoided significant losses and maintained financial balances in the medium term, thanks to the various measures taken for this purpose.

“Since the start of the novel coronavirus pandemic, SONATRACH has taken a number of urgent measures to preserve the safety of its workers and continue to supply the national market and to fulfill its contractual obligations with its partners abroad, but this does not mean not that the Group has not encountered any difficulties ”, declared Mr. Hakkar in an interview published in the review“ Echaab-economics ”.

Faced with these difficulties, the same manager stressed that thanks to the organizational capacities through the mobilization of executives and the deployment of all the capacities and means, “the situation could be controlled”, adding that: “Our production capacities do not were not affected, while our ongoing projects experienced some disruption, especially after the departure of foreign executives ”.

According to Mr. Hakkar, the competent national capacities have been mobilized and the conditions favorable to the return of executives from foreign subcontracting companies, brought together in permanent coordination with the public authorities. In accordance with the directives of the President of the Republic, SONATRACH has also taken strict measures, in particular the revision of the plan of short and medium term investment projects, and the launch of the reduction of operating costs in an attempt to rationalize them. '' on the one hand, and the use of national production and services to save foreign exchange, on the other. In this regard, Mr. Hakkar specified that the emphasis had been placed on the review of all programmed projects and the priority given to maintaining the main investment projects aimed at preserving production or those registered within the framework of the improved production.

This review led to “the reduction of the investment budget for 2020 by around 35%, including more than 54% of planned expenditure in foreign currency”.

Regarding operating expenses, Sonatrach has created a department responsible for rationalizing and reducing expenses to 30%.

According to Hakkar, these measures have enabled the company to establish a balance between revenue and expenditure, despite a significant drop in turnover of almost 40%, stressing that “this figure relates to the decline of turnover, due to the fall in oil prices and does not represent a loss which cannot be identified from an accounting point of view before the end of the financial year ”. The Group's initial assessment is “rather reassuring”, with investment and operating expenses having fallen to nearly 54% compared to forecasts, in addition to the reduction in foreign currency transfers of around USD 5 billion. he explains.

The same official said, in this sense, that these results will allow "to make profits, although modest, but the most important is to avoid considerable losses in order to preserve the financial balance of the company in the medium term".

-Examination of new investment opportunities in several regions of the world

Regarding the partnership in the gas sector, Mr. Hakkar affirmed that the Group had concluded new contracts and renewed contracts which were coming to an end with its traditional partners, notably Italy and Spain, adding that SONATRACH was proceeding to reviewing several investment opportunities in Africa, South America and the Middle East.

The SONATRACH Group has also intensified its contacts with several international oil companies in order to examine the possibility of establishing a partnership in the field of exploration and production of hydrocarbons in Algeria as well as on the international scene. As for the management of the SONATRACH Group's maintenance plan, the same manager indicated that it was carried out “efficiently” at the level of all the programmed units.

Regarding the Hassi R'mel gas injection station, the CEO indicated that this project aimed to increase the recovery rate of the reserves of the Hassi R'mel natural gas field with an additional volume of nearly 400 billion euros. m3.

This project, which comes in the third phase to increase the gas compression of this field, has three stations, the southern one commissioned last November and two other northern and central stations whose rate of progress of the work has exceeded 99%. . Their commissioning is scheduled for the first quarter of 2021.

As for SONATRACH's plan for the economy in the short and medium term, it is based, according to Mr. Hakkar, on the rehabilitation of six refineries with an annual processing capacity of 30 million tonnes, in addition to improving the output of production units through periodic maintenance and finally carrying out new scheduled projects.

Mr Hakkar announced the coverage of the gasoline deficit at the start of 2021 by injecting 4 million tonnes / year into the national market.

To a question on the execution of the instructions of the President of the Republic with regard to cost accounting, the CEO declared that the latter tended “to concretize the legal commitment of Sonatrach and recalls the pressing need in relation to society as a as a global group to equip itself with this accounting system which constitutes a control tool par excellence ”.

Cost accounting also aims to define and explain the charges and costs of the various functions of the company and to assess the profit margin in each activity or subsidiary.

Mr Hakkar specified that the Group is currently working to put in place the necessary mechanisms to better control the analytical operation through the establishment of central data processing bases as well as the launch of the process of digitization of cost accounting by the use of a series of integrated management program.

Regarding recruitment, the 2021 annual employment plan is being evaluated, he said, adding that a 2021-2025 medium term plan will be decided by the board of directors of the company. .

In conclusion, the CEO of SONATRACH reaffirmed the group's commitment to social responsibility through the support of the State's social policy and the establishment of a link between the economic growth of companies under the Group and strict compliance with safety and environmental criteria (APS)

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