Oil Contracts Expert Adam Mokrani: Government Confused Over Energy Sector and Natural Resources

2020-04-11    |   

Oil Contracts Expert Adam Mokrani: Government Confused Over Energy Sector and Natural Resources

During the last five years, the issue of energy and natural resources was a theme of Tunisia’s most significant and violent protest movements. The first of these movements was the “Where’s the Petrol?” campaign in 2015 and the violent protests that Douz and El Faouar in Kebili Governorate witnessed the same year. Then came the Kerkennah Islands clashes, which halted production in the Petrofac oil company in 2016, and the El Kamour sit-in in the far south of Tunisia in 2017, and dozens of sit-ins in the mining basin. One of these sit-ins (El Kamour) resulted in the death of one of the protestors and prompted late president Beji Caid Essebsi to charge the army with protecting the region’s oil establishments. These protest movements put the governments of Habib Essid and Youssef Chahed in predicaments, calling for a review of the contracts for exploiting natural resources, the mechanisms for distributing the proceeds, and the development paradigm and extraction model as a whole. On the other hand, the government’s confused handling of this issue and the political and security authorities’ spasmodic and violent reactions fueled a general belief that this issue has a dark side that the state is trying to keep secret, especially after the Truth and Dignity Commission published, in March 2018, a number of historical agreements and legislations pertaining to the exploitation of Tunisia’s underground resources that were signed before independence with the French occupier. This thorny issue became a life raft in the minds of a segment of Tunisians amidst the escalating economic crisis, deteriorating social situation, and absence of any government proposal heralding relief. This climate was capitalized on by a number of political forces, which made returning Tunisia’s natural resources to Tunisians a slogan and theme of their electoral campaigns. Thanks to this issue, they managed to find a place in the political landscape.


Amidst the mass assumptions, The Legal Agenda interviewed lawyer and expert in oil contracts Adam Mokrani about the political usage of the natural resources issue, as well as the government’s handling of this issue and the issue of energy security.


The Legal Agenda: During the last five years, the energy issue has been one of the major themes of political competition and tussles, and a fuse for many protest movements. How can we deconstruct the unique nature of these movements, and what is your analysis of the government’s handling of them?

Adam Mokrani: Tunisia has not been an exception with regard to protests concerning the energy sector and natural resources. Several countries have, in periods following independence or the collapse of dictatorships and during periods of democratic transition, witnessed large protests usually accompanied by questions about exploitation contracts and the outcome and distribution of the proceeds. This we can call “the curse of resources”. This traces back primarily to the blackout that totalitarian regimes impose over this issue, which is what the regimes of Habib Bourguiba and Zine El Abidine Ben Ali practiced. The issue is also connected to development and regional justice because in Tunisia, the oilfields and phosphate mines are concentrated in the southeast and southwest and the El Watan El Qibli region. These regions suffer from terrible underdevelopment that does not concord with the resources they contain, which causes resentment and a sense of injustice among the populace. Of course, in the eras of the previous regimes, protesting mouths were gagged and protests suppressed, as occurred in the mining basis in 2008. However, the political opening-up after 2011 opened the door for expressions of the rage that the inhabitants of the regions rich with natural resources live, which took the form of large and occasionally violent protests. On the other side, none of the Tunisian governments since 2011 have had a clear communication strategy to handle the waves of protests, and this has caused more problems to accumulate. The most prominent example here may be the El Kamour protests in 2017, where the state offered commitments it could not fulfill, leading to renewed disturbances and sit-ins in the region at the beginning of 2020. Hence, the problem in general is that the various Tunisian governments after 2011 did not have the courage needed to be honest with the citizens about the true situation or to take radical and bold decisions concerning the energy issue in Tunisia.


LA: You mentioned that the successive governments did not have enough courage to be honest with the people, so what is the true situation surrounding this issue?

Mokrani: The fundamental problem in the energy sector around the whole world is that, from a technical perspective, it’s a very complicated sector. The various ministries in Tunisia, particularly the Ministry of Energy, have not developed a successful communication strategy capable of explaining the true situation in this sector to the citizens and ending the controversy over it. The Ministry of Energy, which has seen ten ministers come and go since 2011, has failed to explain to the public that Tunisia is not an oil country and that it has extremely limited oil capacities. True, Tunisia is between two countries with significant natural resources, namely Algeria and Libya, but nature did not bless us with the oil reserve we imagine. The government today must tell the Tunisian citizen honestly that Tunisia, which in 2011 was producing 80,000 barrels of oil per day and hence not meeting our consumption needs of 100,000 barrels per day, has seen its production capacity decrease to 40,000 barrels per day because of political and social disturbances that repelled foreign energy sector investors and pushed the large oil companies to leave the Tunisian market. Hence, we find ourselves compelled to deal with small companies that lack sufficient technological resources, while Tunisia is today in dire need of developing energy prospecting and research.


LA: Besides the two points of the government’s poor communication and the limitedness of resources, can the rumored rampant corruption in the energy issue be confirmed?

Mokrani: I cannot deny or say for sure that there is corruption. However, I can draw attention to a few things. When the protests concerning this issue expanded and a state of tension prevailed and the repeated accusations of corruption in the oil sector arose, we asked – as activists, persons concerned, and researchers in this sector – for the oil contracts to be published, which occurred in 2016 after unjustified government procrastination. We have also asked for Tunisia to join the global Extractive Industries Transparency Initiative since the era of former minister of energy Abderrahman Ladgham in 2011. Although he promised this at the time, we are still taking slow steps.

Intuitively, the corruption would encompass the energy sector, as with all the other sectors in the country. However, is it immense, as some people promote, along the lines of the presence of companies exploiting our resources arbitrarily outside of state oversight? This doesn’t exist at all. Does the Tunisian state excel at negotiating with investors with regard to its underground resources? It is known that the Tunisians, on the regional level, are good at negotiating over their natural resources and that the Tunisian Company of Petroleum Activities, as the primary public operator in the fuel sector, usually retains for itself more than 50% of the proceeds from exploiting the oilfields with the contracted companies.

Hence, it cannot be denied that there are practices that rise to the level of suspected corruption, especially as Report no. 27 by the Court of Auditors mentions misuse and misconduct in this sector. However, the circulating accusations contending that the Tunisia state does not assert its control over its resources are untrue. This takes us back to the starting point, namely that the government today is unable to deliver information clearly with specific and definitive responses because of officials’ political calculations and politicians’ aversion to confronting public opinion and enduring the consequences of honesty.


LA: The government’s reactions to energy sector issues have been spasmodic and occasionally impromptu. Here, we can mention the dissolution of the Ministry of Energy and Mines following what was known as the unlicensed oil exploitation issue in the Halk El Menzel field in 2018. To this day, there is no ministry concerned with the energy and mines sector, so what are the repercussions of such decisions?

Mokrani: Unfortunately, most of the discussions today focus on quotas in the next government and do not address the issue of energy security, which is directly connected to our national security, especially as our energy production has declined by approximately 55% over a decade. As for the decision to abolish the Ministry of Energy, it was part of a populist display by Youssef Chahed’s government. How can the Ministry of Energy and those overseeing it be accused of corruption when, and according to officially published records, the extension of the Halk El Menzel field’s license was approved by the Hydrocarbons Advisory Committee with the consent of the Tunisian Prime Minister’s Office at the time? Hence, the issue relates to a contradiction within the Prime Minister’s Office and a difference in the interpretation of the legal text that Chahed handled by abolishing the entire Ministry of Energy.

Today, we find ourselves facing urgencies such as the need to diversify partners in the natural gas sector. We are still tied to Algeria as the only source of natural gas imports. We must also find a solution to the rising cost of electricity production, 97% of which depends on natural gas. The Ministry of Energy developed a plan to expand our dependence on renewable energies [to] 30% by 2030 to produce electricity cheaper. There is only one decade left and our dependence on renewable energies has not exceeded 3%. And we cannot reach the goal set in the absence of the ministry concerned with overseeing the energy transition process.


LA: What has been achieved during the past five years with regard to strengthening energy security?

Mokrani: On the theoretical level, the law on supporting the production of renewable energies was passed in 2015, and the applicatory orders pertaining to it were later issued in 2017. Additionally, the tender process has been opened with regard to wind power as a mechanism to increase energy security and dependence on alternative energies.

However, the transition from legislations to practical application is occurring slowly. At the same time, the number of prospection and research licenses is sharply declining because of the state’s inability to market its oil and gas fields or attract investors for drilling. As for the projects being announced today, such as the Nawara field, which recently entered the production phase, work on it began 15 years ago. It takes a long time for oil and gas fields to become operational, perhaps more than a decade from drilling to digging to the exploitation phase. What I wanted to clarify is that we are relying on old projects that go back to the pre-2011 era, and we haven’t developed a new vision for the energy sector in Tunisia to guarantee our energy security. The real problem pertains not to the Hydrocarbons Code or the legal texts but to the scarcity of resources, which requires us to be open to new resources like alternative energies or shale gas, which we have not yet reached a decision on because of its environmental repercussions. However, there is no way to avoid putting the topic to the public and placing all options onto the discussion table. And if there is no escaping a turn to extracting shale gas, then we must agree on the nature of the regulatory law and thoroughly study its effects on the environment and sustainable growth.


LA: The energy and natural resources issue featured prominently in the latest electoral campaigns and was able to grant new political forces, such as the Dignity Coalition, a considerable presence in Parliament. How was this issue exploited in politics and what are the dangers of embroiling this sensitive sector in the political game?

Mokrani: There is a close connection between politics and energy, but we must be rational and objective. I monitored the way the various sides competing in the legislative elections handled this issue. There are some parties that handled the natural resources issue in a balanced manner by holding scientific seminars, hosting specialists in the field, and trying to think of the prospects and challenges of the energy situation in Tunisia. However, unfortunately, this discourse usually isn’t enticing for the street and public opinion. Citizens are more attracted to simple discourse close to their feelings than to realistic and scientific discourse that refutes the narratives contending that Tunisia is floating on a sea of oil or that deprives them of their dream of a magic solution to their economic problems buried under their feet.

On the other side, there were political actors that came without clear electoral platforms and exploited the ambiguity surrounding the energy issue, the government’s disastrous communication, and the growth of protests that found no conclusive answers to their questions in order to fuel the narrative of international forces plundering our supply of gas and oil and the state covering up the enormous supplies of underground resources. They exploited the climate of hopelessness and the difficult economic situation to present promises of prosperity after their election because they would return to the people its stolen resources. Today, more than four months have passed since these political actors made it to Parliament, and they have so far not raised this issue. Rather, they shirked away from the presidency of the Energy Committee.[1]

The exploitation of this issue in political tussles or to serve temporal and narrow goals is extremely dangerous, and its negative consequences will extend to coming generations. The best example of what I’m saying is the phosphate sector. Until 2010, the Gafsa Phosphate Company was bringing the Tunisian state a net profit of TND1 billion each year, which is more than any loan installment that the International Monetary Fund has granted us. But today, it is on the verge of bankruptcy because of poor governance. It has been ranked as the worst institution in the realm of governance on the regional and national level in connection with [protecting the environment] and hidden unemployment. After 2011, this company was exploited to absorb the popular anger and inundated with arbitrary recruitments that exceeded its capacity and needs. Hence, to maintain immediate political stability for the various successive governments, one of the most important national companies was undermined and pushed to the brink of bankruptcy.

The more this sector is politicized, the more disastrous the consequences on investment will be. That’s because foreign companies are averse to such climates and refuse to operate in an insecure, unstable environment or to be subject to the caprices of political conflict. Politicians must also comprehend that Tunisia isn’t Congo, Libya, Algeria, or Nigeria, and our oil capacities are extremely limited, and that any chance to increase our production is a step toward reducing the pressure of the economic crisis and should not be squandered on account of narrow calculations. The added value of the energy sector is not paralleled by any other sector except for the modern technologies sector. For when the Nawara field reaches the stage of full exploitation, it will achieve one additional percentage point of growth, which is what the governments have been unable to achieve for a decade despite an arsenal of laws, economic reform programs, and investment conferences. Similarly, it will somewhat reduce the size of the deficit arising from the decline in production.


While the energy security issue seems to be at the bottom of politicians’ list of priorities, it is a vital issue for the future of the country and survival of the state. If this sector continues to decline and the deficit continues to escalate, we will find ourselves completely dependent on foreign countries in connection with importation and differential fuel pricing, especially as we import our fuel needs using hard currency. During previous international crises in the oil sector, we learned well that a rise in the cost of a barrel by a single dollar is enough to turn our public budgets upside down. The true key to guaranteeing our energy security and improving the profitability of our limited resources is political stability, for in the oil sector and in all feasibility studies, security is the first and foremost condition.


This interview is an edited translation from Arabic.


Keywords: Tunisia, Protests, Natural resources, Energy security, Energy, Oil, Ministry of Energy 


[1] A reference to the Dignity Coalition.

Share the article

Mapped through:

Articles, Economy, Industry and Agriculture, Tunisia

For Your Comments

Your email address will not be published. Required fields are marked *