BCG and Big Four compete for large consultancy contract at Sonatrach

13 December 2017 Authored by Consultancy.africa

Public oil company Sonatrach has launched a competitive tender process for consultancy services in the area of financial management and restructuring. Four international consulting firms, including three of the Big Four professional services firms, are in the running for the lucrative contract.

Founded in 1963 in Algeria, Sonatrach is the first ever oil company in Africa. Alongside oil, the firm also deals in Hydrocarbon research, production, transportation, and marketing. Over the years, the state-owned company has evolved in stature to become one of the leading suppliers of energy across Africa and beyond. In 2016, the firms operations included 154 subsidiaries, with 120,000 employees, and revenues of $28.8 billion.

However, much like oil companies across the globe, the firm has seen troubled times of late. A dip in oil prices has seen much of the African economy suffer in recent times, although some sectors appear to be on the mend. Sonatrach and other oil companies, on the other hand, are still navigating their way through hard times.

In the last five years, the organisation has seen a colossal dip of around $44 billion in petroleum revenues. In 2011, Sonatrach’s revenues from petroleum stood at $73.4 billion, following which the period of decline kicked in. Up to 2013 the decline was relatively modest, yet, following the plunge in oil prices in 2014, a year which saw the price of oil drop from $115 per barrel to below $70, and a further dip in 2015 to under $35 per barrel, revenues of Sonatrach nearly halved, falling from $62.8 billion to $34.6 billion.

Revenue of Algerian oil company Sonatrach

Urgent and effective measures were the need of the hour, and the Ministry of Energy responded ealier this year with a change of leadership at the firm. With less than two years at Sonatrach under his belt, incumbent CEO Amine Mazouzi was replaced by engineer Abdelmoumen Ould Kadour, with the objective of providing impetus to the firm’s strategy for recovery.

Kadour’s background lies in engineering, having obtained a Bachelor’s in Chemical Engineering from the National School of Polytechnics in Alrgeria and then a Masters from the renowned Massachusets Institute of Technology (MIT) in the US. Professionally, Kadour spent 12 years as the President and Director General of Brown & Root-Condor, a petroleum engineering company that is partly owned by Sonatrach itself.

After his first 100 days, Kadour launched a major plan for transformation of the firm, which includes, among other measures, a revised corporate strategy, and structural reformation to improve agility, financial performance, and asset management efficiency. To help with delivering on the plan, the oil company has turned to the consulting industry for expertise and support.

A number of major consulting firms have heeded this call, and submitted bids to win the multi-million dollar tender. Among the contenders is the Boston Consulting Group (BCG), an international management consultancy that has a broad presence globally, stretching across 46 countries. BCG doesn’t have an office in Algeria, although it has completed several engagements in the country in recent years through its offices in the region, including in Casablanca (Morocco) and Johannesburg (South Africa), its headquarters in Africa.

In addition, three members of the Big Four group of accounting and advisory firms are also pitching to win the deal. Deloitte, the world’s largest professional services firm, PwC, the globe’s largest consulting firm (together with Strategy&, formerly Booz & Company) and EY all have prominent operations on the African continent, based in Mohammadia (Deloitte and EY) and Algiers (PwC).

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