IS SONATRACH AN INSTRUMENT OF DEVELOPMENT OR A PARASITIC ORGANISATION?

Abstract

This article examines the role of Sonatrach, Algeria’s state-owned oil company, in the country’s economic development. It addresses the question of whether Sonatrach, the Algerian oil company and the largest company in Africa, should be considered an instrument for development or a parasitic organisation. The article analyses the economic history of independent Algeria from the perspective of the literature addressing the so-called “oil curse” and the rise of National Oil Companies (NOC). In the context of post-colonial Algeria, the paper argues that the country’s hydrocarbon sector needed to be developed and that the establishment of Sonatrach allowed the country to exert some degree of control that bolstered Algeria’s global position in international negotiations. It also argues that the barriers to the economic development of Algeria were not a direct and unavoidable result of devel-oping its oil industry, as the “oil curse” suggests, but a problem of governance and of international conditions. Furthermore, the paper argues that Sonatrach is ultimately a tool, rather than an actor, in the Algerian development process, and that there is no evidence to suggest that Sonatrach has directly impeded the democratic development of Algeria. The development of democratic institutions could serve, however, to leverage the company as a strategic tool to support the objectives of a green transition, thus reducing Algeria’s dependence on hydrocarbons.