How Do Sonatrach And French Total Resolve Their Dispute?

Less than a week after the visit of the French Prime Minister, Bernard Cazeneuve, to Algeria, the two countries resolved a dispute between Sonatrach and its French rival “Total”, a dispute that started by the French company before it developed into a total conflict between the two sides, due to the contracts for energy projects that were not respected.

It dates back to May 2016, when France’s Total filed a lawsuit against Sonatrach at the Geneva International Court of Arbitration, Switzerland, in which it demanded compensations worth hundreds of millions of dollars, in response to the Algerian legislation that imposed a tax on extraordinary profits of foreign companies that are operating in Algeria.
Algerian response was quick and it was represented by Sonatrach’s decision to fill a lawsuit against Total at the level of the same court, because of the latter’s failure to comply with the terms of the contract that was signed between the two parties and which forces the French Total to develop Ahnit field in the south of the country.
This was the reason behind the visit of the General Manager of Total, Patrick Pouyanné, to Algeria in the autumn of last year, during which he met with the Prime Minister, Abdelmalek Sallal, proposing a negotiated solution to resolve the outstanding issues between his company and Sonatrach, according to a report by Le Monde French newspaper.
In this effort, a meeting was held between the above-mentioned French official and the former head and General Manager of Sonatrach, Amin Mazouzi, in December 2016, then Pouyaniné returned to France and then to Algeria again a month later, but the dispute remained unresolved until the visit of the French Prime Minister, Bernard Cazeneuve to Algeria last weekend, which provided the political cover for a complex judicial dispute of an economic nature, despite the removal of one of the contributors of this solution, Amin Maazouzi, from the management of the largest oil institution in Algeria and Africa.
Political cover that was provided by Sellal and Cazeneuve appeared to be crucial in shaping the agreement that was signed on Monday by the first man in Sonatrach, Abdelmoumene Ould Kaddour, and his counterpart in the French “Total”, an agreement that halted the judicial proceedings of both parties, with the French company’s commitment to continue to exploit its remaining commitments in Algeria, and it is related to the oil field in the region of Tin Foui Tabencot, where Total’s commitments are expected to expire in 2019, while the negotiations remain on a new framework for the field of Timimoun, in which the French company holds 38% of the shares.
According to the same source, the French company will receive under this settlement, the new projects in Algeria, including the exploitation of a field that was identified but did not disclose the whereabouts, a project that was described by Total director saying: “We won in some points and lost in others, and the end was balanced for both parties”.