Print Email Comment

To penetrate Algeria’s energy market you need patience, contacts – and an ounce of courage.
by Lukas Becker

Algiers: you’ll need the courage of a lion and the patience of a saint to scale these walls.

Christophe Asselineau made his first trip to Algeria in 1999 to develop closer links with local officials. He was accompanied by four other lawyers from his firm – and 15 bodyguards.

Unluckily for Asselineau, now a partner at Simmons & Simmons, he was travelling right in the middle of Algeria’s civil war. The security situation meant that very few foreign companies were active in the country at the time, let alone law firms.

“When I flew to Algiers a few years later, I was the only person on the plane,” Asselineau recalls.

Thankfully the situation has changed since then. Algeria – once a pariah in the global community – is heading Opec this year. And this recognition sits well with the country’s economic ambitions: it is now constructing a gas pipeline under the Mediterranean Sea to give Europe an alternative supplier to Russia.

Persistence pays

But despite all the modernizing efforts since the civil war, it is still a hard legal market to crack for foreign firms. Sonatrach, the national oil company, is temperamental and prone to blacklisting law firms on a whim, while old-fashioned lobbying is still the best way of getting deals off the ground.

“Algeria is such a very difficult market to work in,” says Asselineau. “It combines features of the old Eastern European companies with the worst of French administration.

“But once you come to realize that you have to work with that, you can do business.”

Simmons & Simmons managed to survive in Algeria in the nineties simply because there was no-one else there. The firm doesn’t have an office on the ground for tax reasons, says Asselineau, but has developed relationships with Sonatrach and the Algerian government by building gradual familiarity.

Try as one might, it is impossible to ignore an organization that appears across the table on large deals year after year.

“I wouldn’t say they love us, but they trust us,” he says.

Hire an insider

Tarik Zahzah of Algerian firm Ghellal & Mekerba says contacts are exactly what newer market entrants lack. If you want to be on an energy deal, says Zahzah, you need a Sonatrach insider at your firm to give you an insight into the workings of the energy market; and only a handful have one.

For example, Hassan Yassine at Thompson & Knight and Amine Ghellal from Ghellal & Mekerba have both served as head of legal at Sonatrach, ensuring their contact books are well stocked. Ghellal, says his colleague Tarik Zahzah, is a well-known figure in the Algerian market and a regular dining guest of foreign firms looking to woo him for an association agreement.

“These firms that work from Paris who say they have experience in Algeria do act on deals, but they have to come through us,” says Zahzah. “It’s extremely difficult to crack this market, and we’re not worried about the other firms – they’re at least 10 years off.”

The inside 'trach

For work in Algeria, it helps to have lawyers with experience at the national oil company, Sonatrach. These lawyers have all brought their inside knowledge of the company to law firms: Amine Ghellal (Ghellal & Mekerba, Algiers) Sid Ali Hadj-Hamou (Cabinet Sid Ali Hadj-Hamou, Algiers) Mehdi Haroun (Herbert Smith, Paris) Sid Ahmed Mekerba (Ghellal & Mekerba, Algiers) Hassan Yassine (Thompson & Knight, Algiers)

On the ground

Gide Loyrette Nouel, one of the leading French firms, took a different tack and opened up an office in Algiers in 2001. (The tax issues which affect the UK firms don’t apply to French firms.)

François Krotoff, the firm’s head of oil, gas and mining, says the development of the office has taken time, but having a presence on the ground has given the firm access to information that gives it a competitive edge over its foreign competitors.

“There are lots of international firms in Algeria without offices, but clearly if you want to provide a good service to clients you need a deep local knowledge,” he says.

And the risks associated with opening an office in Algiers are more than just commercial: the terrorist bombings in December 2007 have brought back old fears. Krotoff says the French embassy advised families to leave Algeria four months ago – meaning that staffing the office with willing lawyers has proved to be a big challenge.

“The security issues are a nightmare,” says Krotoff. “It’s much easier to find people for our Casablanca office than for Algiers.”

But while the price of oil stays high, so do the rewards for fortune-seekers. And you can be sure there will be no more empty flights to Algiers for Christophe Asselineau.

Tags: Project finance, Africa, Expansion and strategy, Algeria, Simmons and Simmons, Features, Gide Loyrette Nouel, Ghellal and Mekerba, Thompson and Knight