Sonatrach Annual Report 2021: Business Overview and Financial Highlights, Summaries of Law

Download Sonatrach Annual Report 2021: Business Overview and Financial Highlights and more Summaries Law in PDF only on Docsity! 1SONATRACH | Annual Report 2021 | 2021 Annual Report EA A 5SONATRACH | Annual Report 2021 | Huma n Re sourc e s HSE He a lth, Se c urity a nd Environme nt Soc ia l Affa ire s Ne w Re sourc e s Me c e na ts & Sponsorship Fina nc ia l re port of the Soc ia l Ac c ounts Fina nc ia l re port of the Consolida te d Ac c ountsP 60 P 73 P 116 P 70 P 64 P 67 P 57 Annual Report 2021 6 | SONATRACH | Annual Report 2021 « Fully assume our role as a locomotive of the national development » The year 2021 was undeniably marked by a clear recovery of the oil market, under the effect of the decline of the COVID-19 pandemic and the recovery of global demand. This external situation, combined with the efforts made by the Company to optimize its production tool, enabled us to significantly improve our results, both in terms of volumes and financial results. In 2021, we were thus able to meet the challenge of regularly supplying the national market with gas and petroleum products, while placing the maximum volume of hydrocarbons on an international market boosted by strong demand. The export turnover achieved in 2021 amounted to 35.4 billion dollars, boosted by the volume of hydrocarbon exports that has increased to 95.0 million TOE, up to 18% compared to the achievements of 2020. This turnaround notable in ourresults constitutes, for us, a motive of encouragement to carry out our development plan by concentrating on the increase of our capacities of production of hydrocarbons, the control and the reduction of our costs of investment and exploitation, the maintenance of our export market shares and the timely completion of our structuring projects, particularly upstream, but also in downstream industries, particularly refining and petrochemicals. The results recorded in 2021 are, we must remind this, the fruit of the effort of maintenance of fields in operation, and the commissioning of several major projects, A Word from the CHAIRMAN 7SONATRACH | Annual Report 2021 | Toufik HAKKAR President and General Manager of SONATRACH A Word from the CHAIRMAN including the Hassi R’mel boosting project and the gas fields of Tinhert and the outskirts of Gassi Touil, as well as the GPDF gas pipeline expansion project. In the same vein, we will not omit to mention the positive impact of the refinery rehabilitation program as well as the various actions undertaken to optimize production which made it possible in 2021 to satisfy all the national demand in gasoline and diesel and to stop their imports. Upstream, as part of the efforts made to mobilize new hydrocarbon reserves, the 2021 financial year was also marked by the signature of the first exploration and production contract, under the aegis of the new low on hydrocarbons, with the partner ENI for the development of the south Berkine basin. All these efforts are supported by major industrial investments downstream. We can mention, in this respect, the association with the Turkish company “Rönesans Holding” for the realization of a polypropylene complex in Turkey, and the Integrated Phosphates Project which will allow Algeria to be one of the main exporting countries of manures and fertilizers. In the agenda of the highlights of the year 2021, we will also not fail to note the signing of the “General Declaration of the Policy of Local Content and National Integration ‘’ which aims to maximize the use of the goods and services national production tool. This option in favor of national integration is, moreover, already concretized by the attribution of more than 80% of the contracts concluded by SONATRACH to companies with exclusive Algerian right, for the equivalence of a total value of more than 5 Billion Dollars . Concerningthe modernization of the Companies’ management, we have intensified our efforts with a view to completing. The implementation of various structuring projects such as the integrated information system (ERP), the transformation of Human Resources processes, and the optimization of costs. In July 2021, a new SONATRACH code of ethics was signed. It sets out the standards of behavior and ethical principles expected of its managers, employees and other stakeholders. In addition, in December 2021, the SONATRACH Group and IANOR signed two support contracts on the ISO 37001 and ISO 26000 standards, relating respectively to anti- corruption management and social responsibility. Regarding, in particular, the measures adopted in to fight the Covid-19 pandemic which raged for most of the year 2021, the Company has opted to maintain and strengthen vigilance and prevention systems. A vaccination campaign was launched in 2021 for the benefit of SONATRACH staff and their dependents and more than 110,000 doses of vaccines were administered. SONATRACH’s marked interest in safeguarding the health of its employees and the efficiency of HSE practices in general is also attested to by the signing in 2021 of the General Declaration of the HSE Policy which underlines the will of the Company to achieve and maintain the highest standards and performance in Health, Safety and Environmental protection. All these commitments are challenges for the Company, but our conviction is that the competence, the genius, the mobilization of the workers and managers of SONATRACH will allow us to meet these challenges in the near future. 10 | SONATRACH | Annual Report 2021 MACRO FLOW CHART STRUC CORPORATE AFFAIRS DIRECTORATE TRANSFORMATION DIRECTORATE COMMUNICATION DIRECTORATE DC ENGINEERING & PROJECT MANAGEMENT EXPLORATION PRODUCTION ACTIVITY DCP STRATEGY, PLANNING & ECONOMY DCPs DC LEGAL TRANSPORT BY CHANNELING ACTIVITY DCP BUSINESS DEVELOPMENT & MARKETING DC DIGITALIZA & SYSTEM INFORMA LIQUEFACTION AND SEPARA ACTIVITY Chief Executive Officer 11SONATRACH | Annual Report 2021 | STRUCTURE OF SONATRACH ORGANIZATIONAL CHART DC DIGITALIZATION & SYSTEM INFORMATION LIQUEFACTION AND SEPARATION ACTIVITY DCPs HUMAN RESOURCES DC HEALTH SECURITY & ENVIRONMENT REFINING AND PETROCHEMICAL ACTIVITY DC RESEARCH & DEVELOPMENT MARKETING ACTIVITY DC PROCUREMENT & LOGISTICS DC NEW RESOURCES ETHICS COMMITTEE AUDIT AND RISKS DIRECTORATE INSTITUTION INTERNAL SECURITY DIRECTORATE Chief Executive Officer DCPs : Corporate Management DC : Central Management 12 | SONATRACH | Annual Report 2021 G eneral perception With the recovery of the market in 2021, the SONATRACH Group remains more than ever committed to fully assuming its fundamental mission towards the nation ensuring the country’s energy security in the long term and contributing to the revitalization and modernization of the national economy. The favorable evolution of the market, combined with the efforts made by the Company to optimize its production tool, made it possible in 2021 to significantly improve the results of the SONATRACH Group, both in terms of volumes and financial results. Primary hydrocarbon production stood at 185.2 million TOE in 2021, up 5% compared to 2020. Sales of hydrocarbons on the national market during the year 2021 reached 64.3 million TOE, up 9% compared to 2020. The volume of hydrocarbon exports rose to 95.0 million TOE, up 18% compared to the achievements of 2020. A significant increase in the turnover Total turnover reached 5,154 Billion DA versus 2,855 Billion DA in 2020, an increase The net income of 81% was the Company has therefore experienced a Large increase of DA 571 billion From 20 to 591 billion DA. The export turnover achieved in 2021 amounted to 35.4 billion dollars, up 75% compared to 2020 under the effect of rising of the prices (76%) and the volumes (24%). A major development program Consequence of an upward trend prices on the oil market, this significant improvement in results is also the result of the effort to maintain deposits in operation, and the implementation of the development program through the implementation of several major projects, among which the project boosting Hassi R’mel and the Alrar gas fields First-Gas and outskirts Gassi Touil. In the same direction, the realization of the rehabilitation program for refineries and the taken actions for the optimization of the production made it possible in 2021 to satisfy all the national demand for gasoline and Gasoil and stop importing them. On another level, as part of the efforts aimed at mobilizing new hydrocarbon reserves, the year 2021 has been marked by the signing of the first exploration and production contract, under the aegis of the new law on hydrocarbons, with the partner ENI on the Berkine basin. This continuous development effort allows the company to diversify its investment portfolio. Major investments in downstream As part of the flagship projects launched in 2021, figure the Integrated Phosphates Project which will allow Algeria to be one of the main fertilizer exporting countries. This project initiated by Algerian groups ASMIDAL (subsidiary of SONATRACH) and Manadjim El Djazair (MANAL) was the subject of a call for demonstration of an open interest launched in May 2021. 15SONATRACH | Annual Report 2021 | 16 | SONATRACH | Annual Report 2021 M ain Highlights The put into Production of perimeters Oil scopes • Oued Merabia (Hassi R’Mel), El M’zaid (Haoud Berkaoui), In Ekker (In Amenas), North Nezla (Gassi Touil), Tamadanet North and Taouratine South (Ohanet), in own effort. • Hassi Touiza East (North Berkine), in association. Gas scopes • Dimeta South East (Ohanet), Hassi Imoulaye and Ifefane Tehert North (Stah), Horst North In Amenas and Meksem/ TRIAS (Rhourde Nouss), in effort own. Acceptance and commissioning of projects: • Development of the Tinhert fields to Ohanet (First Gas). • Realization of a Separation Center and Compression Upside Nord-HMD. • Development of gas fields Gassi Touil to Rhourde Nouss. • Development of gas fields Gassi Touil to Gassi Touil. • Development of the Tinrhert fields –Alrar – First Gas. • Revamping South Hassi Satellite Units Messaoud. • Boosting Hassi R’Mel Phase III, Stations Center and North. • Reinforcement at Amenas, Phase III. • Compression and reinjection station of MLN gas. • Gas pipeline extension GPDF from El Aricha to the Beni Saf Terminal. • Gas pipeline extension 12” Tiguentourine - Assekaifaf. • Condensate storage tank at the Terminal Arrival from Skikda. Signing of the 1st Exploration & Production of hydrocarbons under the aegis of law 19-13: on the Berkine perimeter South with the Italian partner ENI. Signing of contracts for the performance of the following projects: • Development of the production of polypropylene in Ceyhan city in Turkey with the company RÖNESANS. • Development of the Tinhert field - Alrar - Complete development (Network bundle of collect). • Rehabilitation of the OB1 24”/22” pipeline (TD HEH - SP1 Bis Djemaa). • Rehabilitation of the OH1 30” oil pipeline 46 km section. • Replacement of the OD1-140 pipeline 16 km route. • Replacement of the SP1 starting stationHEH from STC OK1 34. • Rehabilitation of the GZ2 40” gas pipeline (SC4/Nador- Arrival Terminal/Arzew). • Expertise of the foundations for the project Studies, supply and replacement of four (04) main interchanges at GL1Z complex Arzew. 17SONATRACH | Annual Report 2021 | Main Highlights Memorandums of Agreement and Memorandums of Understanding (MoU) Signature of three agreements with ENI • The first agreement is part of the process of concluding a new hydrocarbons contract under the aegis of the new hydrocarbons law 19-13. It aims to carry out an ambitious program for the revival of the exploration and development activities in the Berkine basin region and foresees for the creation of a gas and crude oil development hub through synergy with the already existing facilities. • The second is a memorandum of understanding concerning the development of bio-refining, the production of hydrogen and the promotion of renewable energies. • The third agreement concerns the field of training and expertise, through cooperation between ENI Corporate University and the Algerian Petroleum Institute. • Signature of a memorandum of understanding with SHELL international trading and shipping company limited to explore ways of cooperation on the supply and trading of crude oil, natural gas and petroleum derivatives as well as on the trading of environmental products. • Signature of a memorandum of understanding with EQUINOR allowing the two partners to examine the opportunities for cooperation in the fields of exploration and production of hydrocarbons in Algeria and abroad, environmental protection and new technologies. • Signature of a Memorandum of Agreement and a Memorandum of Understanding with SINOPEC aiming to strengthen the historical partnership on the contractual perimeter of Zarzaitine in the Illizi basin beyond 2023 and to identify new joint investment opportunities. • Signature of a cooperation agreement with ANADE on the development of micro- enterprises and support of young entrepreneurs with projects. • Signature of a framework agreement with the National Center for Cleaner Production Technologies (CNTPP) with the aim of establishing a partnership in terms of environmental management and clean technologies. • Signing of a framework agreement with the Algerian Institute for Standardization allowing the adoption of international standards dealing with social responsibility and business ethics. Local content development • Signature of the General Declaration of the Policy of Local Content and National Integration aiming to promot the industrial fabric of SMEs / SMIs, micro- enterprises and Algerian startups. Modernization of the Group management • Installation of the Company Ethics Committee which aims to strengthen the image of the Company, trust with its workers and the business climate with its partners. • Signature of the new general HSE policy. • Standardization of gasoline grades and manufacture of a single unleaded grade starting from 1st July 2021. 20 | SONATRACH | Annual Report 2021 Exploration Production Activity The E&P Activity occupies a central place in the basic businesses of SONATRACH. It covers prospecting, research, development and exploitation of oil and gas deposits. This activity is carried out by SONATRACH and its partners present in Algeria, in accordance with the laws governing hydrocarbon activities and in compliance with the principles of conservation of deposits and preservation of the environment. 21SONATRACH | Annual Report 2021 | Exploration - Production activity Algeria, by virtue of its geographical situation and its rich subsoil in hydrocarbons, have a vast mining area of more than 1.5 Million Km2, still largely unexplored, offering significant resource potential, both in the conventional, the non conventional and offshore. Three major objectives are attributed to the Exploration-Production Activity: • The constant renewal and increasing of the reservations portfolio. • Development and operation deposits for an optimal resource valuation. • Research and development of new projects on the national territory. To achieve these goals, the recourse to partnership constitutes for SONATRACH a strategic option which share the risks associated to prospecting operations, insure a renewal of reserves and strengthen the country’s energy security in the medium and long term. The adoption of the new Hydrocarbons Law 19-13, aims to increase the attractiveness of the national mining area and give a new impetus to the partnership option. Still sustained Investments In an international context marked by the high prices of hydrocarbon and the continued strong demand, both nationally and internationally, SONATRACH sticks to on concentrating its efforts on the development of the Activity Exploration- Production (EP). Main achievements • Discoveries of hydrocarbons: - 13 discoveries made in own effort • Primary production of hydrocarbons: 185.2 Million TOE. - Crude oil: 42.5 million tons. - Natural gas: 132.2 billion Sm3. - Condensate: 7.8 Million Tons. - LPG: 7.8 Million Tons. • Drilling: 113 wells drilled - 21 exploration wells. - 92 development wells. • Investment: 4.4 billion US$ equivalents. As in 2020, the exploration effort has been focused, in accordance with the stopped strategy , on the best prospects that meet the volume criteria, economics and geological risks. Hydrocarbon discoveries Completion of thirteen (13) short stories discoveries, in own effort, allowing highlighting a proved hydrocarbons volume in the area with a probability of 70.4 million TOE, of which 86% is oil and 14% is gas. 22 | SONATRACH | Annual Report 2021 Primary production of hydrocarbons (in million TOE) 2020 2021 Total production 175.9 185.2 Own effort production 134.7 143.9 in partnership Production 41.2 41.3 Primary production of hydrocarbons Primary hydrocarbon production stood at 185.2 million TOE in 2021, up 5% compared to 2020. Development Main drilling indicators 2020 2021 Activity volume (Drilled meter) 321 003 285 164 In Own effort 272 517 215 666 In partnership 48 486 69 498 Drilling (number of wells completed) 119 92 In Own effort 105 73 In partnership 14 19 DEVELOPMENT DRILLING 25 Pipeline Transport Activity Transport Pipeline Activity is in charge of the operation of facilities and equipment for the transport of liquid and gaseous hydrocarbons, the maintenance and development of the transport network, and this in accordance with the rules of the art in terms of safety, cost and quality. SONATRACH | Annual Report 2021 | 26 | SONATRACH | Annual Report 2021 The Activity has three main missions A tool for transporting and regulating the flow of liquid and gaseous hydrocarbons The pipeline transport activity has the strategic objective of ensuring the availability and integrity of the pipeline transport network in order to evacuate and deliver all planned production under optimal safety, quality and cost conditions. The pipeline transport network consists mainly of: • 21,189 km total length of the network. • 43 pipelines (23 gas pipelines and 20 oil pipelines). • 85 pumping and compression stations and 387 machines installed along the network. • 128 liquid hydrocarbon storage tanks with a useful capacity of 4.3 million TOE. • (03) Three oil ports in Arzew, Skikda and Bejaïa, with a loading capacity of 1.3 million tons. The oil ports have 05 loading buoys on the high seas. • (02) two main hubs at: - Hassi R’Mel: National Gas Dispatching Center (CNDG) with a capacity of 390 million Sm3/day. - Hassi Messaoud: Dispatch Center Liquid Hydrocarbons (CDHL) with a capacity of 1.4 million barrels/day. • (02) two international gas pipelines linking Algeria and Europe, with a transport capacity of more than 43 billion m3 per year: - The Gaspipe Enrico Mattei (GEM), linking Algeria to Italy via Tunisia. - The MEDGAZ gas pipeline, linking Algeria directly to Spain from Béni Saf. Transportation Activity by Pipeline covers a network of oil and gas pipelines with a total length of more than 21,000 km, enabling hydrocarbon products from deposits in the South to be evacuated to storage and distribution centers in the North. A strategic link and regulator of the hydrocarbon chain The pipeline transportation segment plays an important role in regulating the flow of liquid and gaseous hydrocarbons according to fluctuating domestic and international market demand. This role gives the Company the virtue of a safe, reliable and quality supplier to its domestic and foreign customers. TRC’s transport network is divided into two complementary parts: • The Southern Network Which departs from the fields and transports the effluents to the Haoud El Hamra Liquid Hydrocarbons Dispatching Center (CDHL) for crude oil and condensate and to the “National Center of Gaz Dispatching” located in Hassi R’Mel (CNDG) for natural gas and LPG. • The Northern Network Who provides transport: - Crude oil from CDHL to refineries and export ports. Pipeline Transport Activity 27SONATRACH | Annual Report 2021 | - Condensate from the CDHL and the Hassi R’mel deposit to the Skikda refinery and export ports. - Natural gas from the CNDG to the gas pipelines for export and liquefaction complexes on the national market. - LPG from Hassi R’Mel to separation complexes. Main achievements The main achievements, in 2021, of the pipeline transport segment are as follows: • Volume transported on the Northern network: 155.1 Million TOE. • Investment: an equivalence of 264 Million US$ . South network The quantity of hydrocarbons transported on the North network, in 2021, amounted to 155.1 million TOE, up 14% compared to 2020, a consequence of the recovery in demand on the oil market, following the decline of the COVID-19 pandemic. Quantities of hydrocarbons transported by pipeline Quantity of hydrocarbons transported (in millions of toe) 2020 2021 North network 136.3 155.1 South network 72.7 80.3 30 | SONATRACH | Annual Report 2021 Liquefaction & Separation Activity The Liquefaction and Separation segment covers the activities of natural gas liquefaction and separation of LPG into propane and butane. These activities are carried out through four LNG complexes and two LPG complexes. This segment is also responsible for the management of two large industrial zones in Arzew and Skikda which host major industrial, oil and gas assets. Liquefaction & Separation activity 31SONATRACH | Annual Report 2021 | The Liquefaction and Separation segment is a strategic tool, a guarantee of export flexibility, making it possible to seize the best opportunities offered by the market. Since the commissioning of the first LNG complex in Arzew in 1964, the first in the world, the liquefaction industry constitutes for Algeria a decisive asset allowing a better valorization of its gas resources and a major asset to meet the demand of its customers. The current gas liquefaction asset is composed of the following 04 complexes GL1Z (Bethioua) Commissioning 1977 Design capacity (Million m3 LNG) 17.56 GL2Z (Bethioua) Commissioning 1981 Capacité design (Million m3 LNG) 17.82 GP1Z (Mers El Hadjadj) Commissioning 1983 Design Capacity (Million Tons) 9 GP2Z (Arzew) Commissioning 1973 Design Capacity (Million Tons) 1.4 GL3Z (Bethioua) Commissioning 2014 Design capacity (Million m3 LNG) 10.5 GL1K (Skikda) Commissioning 2013 Design capacity (Million m3 LNG) 10 For the separation of LPG, two complexes in operation make it possible to supply the national market and foreign customers with propane and butane: Main achievements The main achievements, in 2021, of the Liquefaction and Separation Activity are as follows: • LNG production: 26.3 million m3 LNG • Propane production: 4.4 million tons • Butane production: 3.4 million tons • Investment: equivalence of 202 million US$. 32 | SONATRACH | Annual Report 2021 The production of LNG complexes in 2021 reached 26.3 million m3 LNG, up 14% compared to 2020. This increase is mainly due to the revival of demand on the gas markets. In terms of separated LPG, the volume of propane and butane produced stood at 8.1 million tons, an increase of 8% compared to 2020. These volumes come from the northern separation complexes GP1Z and GP2Z (92 %), LNG complexes (6%) and separation in the South (3%). The quantity of propane produced in 2021 amounted to 4.5 million tons against 3.6 million tons of butane. Separation of LPG Natural gas liquefaction Production of LPG (106tons) 2020 2021 Total 7.5 8.1 Of which propane 4.2 4.5 Of which Butane 3.3 3.6 Investments Investments made in 2021 in the Liquefaction and Separation segment amounted to more than 28 billion DA (equivalence of 202 million US$). Refining & Petrochemicals activity 35SONATRACH | Annual Report 2021 | The industrial assets of this segment are made up of : • Five crude oil refineries, with a processing capacity of 25 million tons per year. • A condensate refinery with a treatment capacity of 5 million tons per year. • Two petrochemical complexes for the production mainly of methanol and polyethylene. Satisfy the needs of the national market in petroleum and petrochemical products and capture export value. During the last decade, SONATRACH has undertaken an important program Of investment, aimed at rehabilitating and modernizing the refining tool and optimizing fuel production. These investments, granted, in particular at the level of the three refineries of Skikda, Arzew and Algiers, have today made it possible to meet the needs of the national market to the tune of 14.2 million tons per year and to export nearly 13.6 Million tons per year of refined products. The asset of refining is composed of the six (06) refineries: RA1K (Skikda) Commissioning 1980 Capacity (million tons) 16.5 RA1Z (Arzew) Commissioning 1973 Capacity (million tons) 3.75 RA1G (Alger) Commissioning 1964 Capacity (million tons) 3.65 RA2K/Condensat Commissioning 2009 Capacity (million tons) 5 RA1D (Adrar) Commissioning 2007 Capacity (million tons) 0.6 RHM2 (Hassi Messaoud) Commissioning 1979 Capacity (million tons) 1.07 In terms of petrochemicals, the production tool aims to transform and enhance hydrocarbon products through the two complexes operated on their own: 36 | SONATRACH | Annual Report 2021 CP1Z (Arzew) Commissioning 1976/1978 Capacity (million tons) 152 CP2K (Skikda) Commissioning 2005 Capacity (million tons) 130 Condensate treatment The volume of condensate processed by the Skikda RA2K refinery reached 4.3 million tons. SONATRACH also operates on other petrochemical complexes in partnership, mainly for the production of ammonia, urea, helium and nitrogen Main achievements The main achievements, in 2021, of the Refining and Petrochemicals Activity, in own effort, are as follows: • Overall production of refineries: 28 million tons. • Production of petrochemical complexes: 137,433 Tons • Investment: equivalence of 82 Millions US$. Refinery processing The volume of crude oil processed by refineries in Algeria reached 25 million tons, up 0.1% compared to 2020. Crude oil treatment Condensate Treatment 23,5 25,0 25,0 M il li o n T o n s 3,7 4,2 4,3 M il li o n T o n s Refining & Petrochemicals activity 37SONATRACH | Annual Report 2021 | Refinery production Overall refinery production in petroleum products has increased at: 28 Million Tons, which is an increase of 0.8% compared to 2020. Refinery Production Petrochemicals Concerning the Petrochemical Activity, the production of the CP1Z complex in Arzew reached a volume of 114,724 Tons. The complex’s sales reached 8,530 Tons on the national market and 95,153 Tons for export. The turnover of these exports reached 31 Million Dollars. The Skikda CP2K petrochemical complex recorded a production level of 22,709 tons of HDPE. Sales of this product amounted to 25,686 tons. Investments in the Refining and Petrochemicals segment Investments made in the Refining and Petrochemicals segment amounted to more than11 billion DA (an equivalence of 82 million US$), or 2% of total investments. The essential of the achievements concerned the works of the new Hassi Messaoud refinery as well as investments in maintenance, reliability and safety. The Hassi Messaoud refinery, with a processing capacity of 5 million tons per year, will increase the refining capacity in Algeria to 35 million tons per year. 26,0 27,8 28,0 M il li o n T o n s 40 | SONATRACH | Annual Report 2021 SONATRACH, a safe and reliable partner on the international energy scene The significant potential of its hydrocarbon reserves, the sustained investments throughout the oil and gas chain, the proximity of the European market associated to the flexibility of export infrastructure (gas pipeline, LNG, hydrocarbon transport service) are the major advantages that make SONATRACH a safe and reliable partner on the international energy scene. Significant increase in export turnover After 2020 which was characterized by the double health and oil crisis, 2021 was a year of the revival of economic activity in the world, with in its wake a sharp increase in demand for energy products, thus leading to an increase in hydrocarbon prices. This favorable external context, combined with the development efforts made by the Company, has enabled SONATRACH to significantly improve its performance, both in terms of volumes and financial results. Thus, the Company achieved in 2021 an export turnover exceeding 35 billion dollars, against 20 billion dollars in 2020, consequence of the increase, in particular of export volumes with an increase of 18% compared to 2020. The stop of gasoline and diesel imports The total volume of hydrocarbons sold (including to SONATRACH units) has raised to 159.4 million TOE, i.e an increase of 14% comparing to 2020. The volume of hydrocarbon exports stood at 95.0 million TOE, up 18% compared to the achievements of 2020. Sales of hydrocarbons on the national market during the year 2021 reached 64.3 million TOE, an increase of +9% compared to 2020. Notably, in the context of satisfying the national fuel market, the completion of the refinery rehabilitation program and the Company actions to optimize production, made it possible in 2021 to meet all of the demand for gasoline and diesel and stop importing them. Main achievements • Marketed production: 159.4 million TOE • Export: 95 Million TOE • National market: 64.3 million TOE • Export turnover: 35.4 billion US$ • Average price of Sahara Blend: $72.3/bbl Total volume of the sales The total volume of hydrocarbons sold (including to SONATRACH units) amounted to 159.4 Million TOE, i.e. an increase of 14% compared to 2020. Total Sales Volume 149,8 139,9 159,4 M il li o n T O E Marketing activity 41SONATRACH | Annual Report 2021 | Exports The volume of hydrocarbon exports stood at 95.0 Million TOE, up 18% from 2020 achievements. The export turnover achieved in 2021 amounted to 35.4 billion dollars, oup 75% compared to 2020 under the combined effect of rising prices (76%) and volumes (24%). Volume of exports Unit 2020 2021 Evolution Rates Crude oil 106 tons 16.7 17.1 +2% Condensate 106 tons 3.3 3.1 -3% LPG 106 tons 5.6 5.9 +5% Refined Products 106 tons 14.6 13.6 -7% Natural gas 109 m3 25.6 35.9 +54% LNG 106 m3 LNG 22.9 25.9 +13% Total 106TOE 80.7 95.0 +18% For Natural Gas and LNG The sharp increase in exports compared to 2020 is mainly due to the recovery in demand on the international market and to the Company’s effort to increase primary production to honor its commitments and maximize its turnover in export In the case of refined products The decline in exports of refined products is explained by the orientation of the refining tool towards the maximization of products in high demand on the national market, namely diesel and gasoline. This strategy, combined with other measures, has made it possible to not import fuels during the whole of 2021. By product, exports in 2021 break down as follows: 42 | SONATRACH | Annual Report 2021 The Domestic Market Sales of hydrocarbons on the national market during the year 2021 have Achieved 64.3 Million TOE, an increase of +9% compared to 2020. 59,5 59,2 64,3 M il li o n T O E Domestic Market Sales on the domestic market by product are as follows: National Market Sales Volume Unit 2020 2021 Evolution Rates Natural gas 109 m3 44.8 48.4 +8% LPG 106 tons 2.4 2.6 +10% Refined Products 106 tons 12.9 14.2 +10% Total 106 TOE 59.2 64.3 +9% • Natural gas The increase in sales is explained by the increase in demand from large national companies. • Sonelgaz: + 9% compared to 2020, i.e. 3.2 billion cm3. • Fertial: + 52% compared to 2020. • Sorfert: + 12% compared to 2020. • LPG LPG consumption increased by 10% compared to 2020. This increase is explained by the strong demand for propane intended for use as LPG fuel. • Refined products An increase of 10% compared to 2020 is observed under the effect of a revival of the demand for land fuels (gasoline and diesel) and this following the revival of the country’s economic activities. Import of petroleum products In terms of imports of petroleum products, a volume of 254,741 Tons was achieved in 2021 compared to 858,939 tons in 2020, i.e. a significant drop of 70%. This decrease is explained by the satisfaction of the national production tool of the domestic need for gasoline and diesel, which led to a total stoppage of land fuel imports. Local Content Promotion and National Integration Policy 45SONATRACH | Annual Report 2021 | Maximize the participation of the national production tool The text of the general declaration for the Promotion of Local Content and National Integration opens up new perspectives allowing SONATRACH to better assume its role as the locomotive of the national economy and outlines a series of strategic objectives aimed at: • Maximize the participation of the national production tool in the hydrocarbon value chain. • Control expenses related to the importation of goods and services. • Encourage the emergence of new Algerian companies based on innovation, competitiveness, quality and knowledge. • Reach a high degree of technological mastery in the various activities related to the hydrocarbon chain. 46 | SONATRACH | Annual Report 2021 Nine commitments solemn for promote local content To reach these fundamental objectives, nine solemn commitments are set out in the text of the Declaration by which Sonatrach undertakes to: 1/ Integrate in its procurement procedure of the modalities contracts of imposing on the operational and functional structures of SONATRACH to resort, in priority, to the Local Content, when it is able to meet the need. 2/ Adapt the contractual strategy to promote the priority use of the national production tool. 3/ Require to foreign contracting parties, the recourse to local subcontracting, following there availability and qualification. 4/ Accaccompany Algerian companies for the manufacture of goods and/or the realization of projects likely to constitute an alternative to importation, including in terms of international certification and standardization. 5/ Sustain companies governed by Algerian law with State institutions, in order to facilitate the implementation of actions relating to the promotion of local content and national integration. 6/ Communicate regularly, in particular with Small and Medium Enterprises, Startups and Universities, on the needs and business opportunities offered in SONATRACH’s Procurement plans. Local Content Promotion and National Integration Policy 47SONATRACH | Annual Report 2021 | 7/ Associate companies affiliated with SONATRACH in the actions of development and promotion of local content and national integration. 8/ Contribute to the development of national capacities in terms of technological mastery in SONATRACH’s professions, through collaboration with national and foreign partners, universities, research & development centers, start-ups and professional training organizations 9/ Encourage partnerships between Algerian public and private companies set up in an organized framework, in order to enhance competitiveness and federate their implementation capacities. 50 | SONATRACH | Annual Report 2021 The requirement of technological mastery primarily concerns all the Subsidiaries of SONATRACH which intervene on the entire value chain of hydrocarbons. The companies affiliated with SONATRACH play a central role in the actions of development and promotion of local content. Promotion of local content: remarkable progress in 2021 The technological mastery and promotion of local content component saw significant progress in 2021, attested to by the implementation of structuring projects using national means, the adoption of incentive measures in favor of national production and the management of major projects. Many contracts signed • Contract concluded between the Pipeline Transport Activity and the ENGCB - ENGTP - SARPI Consortium, relating to «Replacement of the SP1/OK1 departure station at Haoud El Hamra (HEH) of the STC OK1/34". • Conclusion of 5 contracts relating to the realization of structuring projects of SONATRACH. • Conclusion of a pilot service contract between the Exploration-Production Activity and the Start-up Oil Steam Services (OSS) in the Berkine basin. • Signature of around ten agreements between SONATRACH and Universities and great schools to encourage scientific and technological research in the field of the hydrocarbons industry. • Signing of agreements to launch seawater desalination projects on July 29, 2021 at the headquarters of the General Management of SONATRACH. Incentives in favor of the national production tool • The year 2021 saw the pre-qualification of 22 companies under Algerian law for the design and manufacture of precision mechanical parts for all SONATRACH structures. • The signing, on March 9, 2021, of a cooperation agreement with the National Agency for Support and Development of Entrepreneurship (ANADE ex ANSEJ), relating to the development of micro- enterprises and support for young entrepreneurs. • The development by the Central Research & Development Department of several promising projects (SH-Valve Controler, PEP-PGPR-Enhanced Phytoremediation, bioremediation of drilling sloughs) that can contribute effectively to the creation of new local activities. • The pre-qualification of the «House of the filter» for the needs of SONATRACH in air filters for gas turbines. Local Content Promotion and National Integration Policy 51SONATRACH | Annual Report 2021 | The establishment of a local innovation ecosystem • Management of an EPF (Early Production Facility) manufacturing project in Algeria, through the establishment of a local innovation ecosystem in which interact Subsidiaries of the SONATRACH Group, companies under Algerian law, universities and world-renowned foreign partners. • The development by ENGCB, a subsidiary of the SONATRACH Group, of a preliminary catalog of equipment likely to be manufactured in Algeria (fittings, cathodic protection, electricity, scraper station, etc.) and the production of prototypes of certain equipment, such as scraper stations and solar energy supply system masts. 52 | SONATRACH | Annual Report 2021 Volume of contracts signed with Algerian companies (Fiscal year 2021) Figures for the 2021 financial year + 1 700 ≈ 81% ≈ 67% ≈ 33% Contracts signed with companies under Algerian law Of all contracts signed by SONATRACH Contracts with private companies Contracts with public companies ≈ 438 Billion DA ( ≈ 3,2 Billion $) Number of contracts Contractual commitment The performances recorded by SONATRACH in the promotion of local content are perfectly illustrated by the large volume of contracts signed with companies under Algerian law. Research and development 55SONATRACH | Annual Report 2021 | Convincing results and projects in the implementation phase The year 2021 saw the finalization of several projects initiated in own effort by SONATRACH. More than 08 projects have been finalized after validation and verification of the result’s veracity. Three of these finalized projects have been in the implementation phase in the field and have already given convincing results. The finalized projects include: • The valve controller implementation in order to increase the production of the HMD field (2000 barrels/day produced additionally for the 43 cards installed on the 300 planned. • The new improved Duse equation, specific to SONATRACH with the aim of accurately calculating back allocation production and reducing gauging costs, ensuring the preservation of nearly 40% of the cost of these operations. • The app for blowout control in oil drilling (in the test phase) with the aim of preventing in advance uncontrolled gas eruptions thus increasing safety in oil drilling. • The implementation of the water treatment pilot at TFT, in order to treat the necessary water according to the prerequisites of the SWCTT without additional costs. • The realization of a SKID injection of chemical products locally with more than 70% integration rate. • The development of a Cathodic protection monitoring remote map for the purpose of continuous monitoring of the protection of the structures on site. • The welding procedure in service for certification of welding operations. Highlights Among the significant achievements to be recorded as assets of the Central R&D Department, we note the signing of more than fifty agreements and contracts with various research and teaching centers, the launch of numerous research projects, Including nearly 65% are being finalized, and finally the filing of several patents with INAPI. Important point to underline all these research work has been undertaken in response to the concerns expressed by the operational structures. Framework Convention Number of signed agreements Percentage % University 40 70 Research Center 4 7 School 3 5 Specific contracts 6 11 Various 4 7 Total 57 100 56 | SONATRACH | Annual Report 2021 Finalized projects 35% Current projects 65% Patents filed with INAPI Patent title Applicant Process for the Characterization of Reservoir Rocks by CT-Scan based on Learning. SONATRACH/Research and Development Department. Advanced Technologies Development Center, Baba Hassen, Algiers. Identification of Minerals and Estimation of the Porosity of Rocks Reservoir Process by CT-Scan at Low Resolution. SONATRACH / Central Department for Research and Development. Advanced Technologies Development Center, Baba Hassen, Algiers. Prediction of total organic carbon in shale gas reservoirs using the Passey model combined with prestack simultaneous seismic inversion and genetic systems. SONATRACH / Algerian Petroleum Institute, Boumerdès. reakdown of finalized and ongoing R&D projects 57 HUMAN RESOURCES SONATRACH has listed, in 2021, the development of its human resources at the top of its priorities. To achieve the objectives of managerial and operational excellence, the Company has invested heavily in the development of its human capital through the implementation of a structuring project called Human Resources Transformation (HRT). A real turning point in the life of the Company, the latter aims for a qualitative transformation of the management of human resources by targeting four important processes: recruitment, skills development, performance management and career management. SONATRACH | Annual Report 2021 | 60 | SONATRACH | Annual Report 2021Rapport Annuel 2021 Achieving and maintaining the best standards and performance in terms of health, safety and environmental protection, these are the objectives assigned to the Central HSE Department. In its preamble, the General Declaration of the HSE policy, adopted by SONATRACH in 2021, underlines «that in reference to its status as an energy actor and locomotive of the national economy, as well as to its strategic objectives, SONATRACH invests in its desire to achieve and maintain the best standards and performance in terms of Health, Safety and Environmental protection. Signed by the CEO of SONATRACH, Mr. Toufik Hakkar, on March 16, 2021, this document specifies that the Company “aims for excellence in the HSE field to create added value and meet the expectations of all its internal stakeholders and external”. HSE Health, Safety and Environment HSE Health, Safety and Environment 61SONATRACH | Annual Report 2021 | Three Core Values For SONATRACH, its strong HSE commitment is explained by the conviction that the effective management of Health, Safety and the Environment produces economic value, improves the productivity of assets and people and makes it possible to establish good relations with all stakeholders. To achieve its objectives in the HSE fields, SONATRACH relies on three fundamental values: • The Human Resource. • Communication. • Transparency. Action plan and commitments The HSE General Declaration adopted in 2021 outlines a real action plan to achieve excellence in this area. A series of commitments are set out in the document by which the Company undertakes, in particular to: • Giving priority to health, worker Safety and Environmental Protection. • Develop a system for the identification and continuous assessment of risks and implement provisions for their mitigation. • Ensure the security of its assets and ensure that all risk management systems are constantly functional and effective. • Develop the leadership and commitment of all its Managers to improve its performance related to the HSE component. • Involve all its employees, by developing an HSE culture based on information, training and feedback. • Comply, wherever it operates, with legal and regulatory HSE requirements. • Ensure that no project is launched before assessing its environmental impacts and social acceptability. • To improve self-emergency plans and commit the appropriate means and resources to ensure a rapid, effective and integrated response to the risk of an accident. • Reduce its carbon footprint by improving its energy and operational performance. Prevention of workplace accidents: a major priority SONATRACH places the health and safety of its personnel at the top of its managerial priorities. This commitment is reflected, in particular, in the establishment of an accident prevention system at the workplace which targets SONATRACH workers as well as those of partner companies and subcontractors working on its sites. A range of other measures has also been implemented in this area, in particular those concerning the regulatory compliance of hydrocarbon facilities and structures, the management of experience feedback, the establishment of an occupational risks, road risk management, etc. Record of work accidents In 2021, occupational accidents recorded at SONATRACH sites experienced a slight Increase compared to 2020, in terms of frequency and severity. The Company recorded 02 deaths in2021 following two road accidents. 373 work accidents were recorded in 2021 compared to 305 accidents recorded in 2020, for an average workforce of 61,196 workers and 140,477,951 hours worked. 62 | SONATRACH | Annual Report 2021 The nature of these accidents is as follows: • 311 Workplace accidents including 177 accidents with work stoppage. • 62 Commuting accidents including 29 Lost time accidents. The indicators relating to work accidents in 2021 are as follows: • A frequency rate (FR) of 1.55, up 22%; • A severity rate (TG) of 0.12. The increase in the TF frequency rate recorded during 2021 is mainly due to the occurrence of accidents caused by falls. in the workplace and those concerning road traffic. This slight upturn, compared to the previous year, can however be explained by the re-launch of activities in 2021, following the observed decline in the COVID-19 pandemic. A clear reduction of material and environmental accidents The number of material and environmental accidents recorded during the year 2021 amounts to 398 accidents. This figure marks a drop of 12% compared to the balance sheet of material accidents recorded during the year 2020. This drop translates into a 26% decrease in the number of hydrocarbon leaks on pipelines to 144 leaks during 2021. Environnment management A slight decrease in the quantity of gas flared observed The quantities of flared gas in 2021 recorded a slight decrease compared to 2020. 3.28 3.80 3.03 3.47 3.72 4.27 Billion m3 Evolution of Flared Gases quantities TOTAL 2016 2017 2018 2019 2020 2021 News Resources 65SONATRACH | Annual Report 2021 | Renewable energies In terms of renewable energies, SONATRACH’s strategy is based on two essential axes: • The implementation of photovoltaic power plants in SONATRACH sites leading to the reduction of electrical energy production and consumption costs, generating gas savings that will be used in other sectors or for export. • Reducing the environmental footprint by switching from the use of carbon energy to clean energy. Achievements for 2021 Completion of Photovoltaic Solar Power Plant projects, to which are added the actions undertaken in the prospecting of Lithium, the development of green hydrogen and the bio- refining: • Photovoltaic Solar Power Plants The launch of the second photovoltaic solar power plant with a capacity of 10 MW at Bir Rebaa North. This project, being carried out in partnership with ENI, will allow a reduction in the cost of electricity of 100,000 USD/ month and a gas saving of 180MMm3, with an estimated reduction in greenhouse gas emissions of 300Ktons of CO2 equivalent throughout the life of the project. • Lithium prospecting project This project undertaken in partnership with ENI in the North Berkine region aims in its first phase to assess the potential in Lithium in brackish water from end-of-life oil wells at production sites. Sampling campaigns on several sites have been initiated in order to collect a representative set of data to be subsequently analyzed at the level of the SONATRACH laboratories. • Hydrogen Contribution to the roadmap on the national strategy for the development of the Hydrogen sector. Identification of two green hydrogen pilot projects. • Bio-raffinage Creation of a roadmap for the realization of a pilot project for the cultivation of oilseeds as part of the transition to bio- refining. Offshore prospecting program The prospecting program in the Algerian offshore domain in the medium term aims to identify prospective areas to define the opportunity for a first offshore drilling. For the year 2021, several works were carried out on the OAZE perimeter in partnership with ENI and Total Energies. The main actions undertaken in this area include: • The renewal of the prospecting authorization for a period of two years. • The elaboration of the summary report of the Geoscience works, carried out within the framework of the two prospecting authorizations OAZE & OAZO and geophysical studies for the identification of new prospects on the central part of the Algerian offshore. • The launch of seismic data reprocessing, with the National Geophysical Society ENAGEO as part of the promotion of the national tool. 66 | SONATRACH | Annual Report 2021 Ressources Non Conventionnelles The Non-Conventional Resources program has the following medium-term objectives: • Self-assessment of the potential for unconventional resources in the various Algerian basins and Identification of potential areas of interest for future development • The commitment to contact and discuss with the various partners with a view to sign new contracts under the aegis of the new law for the development of these resources. The main works carried out in 2021 the evaluation of the potential in Non-Conventional Resources and its development, concern: Data acquisition • Acquisition of data through drilling dedicated to the evaluation of the unconventional potential in the South- West basins. • Data acquisition through exploration drilling in basins and prospective areas. The Proppant Project As part of the work to assess sand deposits suitable for use as a «natural propping agent» in hydraulic fracturing operations, three (03) field missions for prospecting and sampling sand sites were carried out in the zones of interest, at the level of the basins of the South-West, South-East and central zone. In total, 30 sites were visited and more than 80 samples taken. These samples will be subject to specific analyzes in the SONATRACH laboratories. Synthesis efforts: • Launch of study reports on the potential of Frasnian and Silurian unconventional resources in the areas of interest and preparation of the conceptual development plan for the projects. Discussions and workshops were held during the year 2021, relating to the opportunity for partnership in the field of research and development of unconventional resources. 67 The Department of Social Affairs plays a central role in the implementation of the social policy of the SONATRACH Group. It is, in particular, responsible for ensuring the constant improvement of life conditions and also the working conditions of employees, the social situation of retirees, their families and other dependents. Among its main missions are: - The management of the Budget of the funds and the heritage of the Social Affairs. - Participation in the development of occupational health policies and procedures. SOCIAL AFFAIRS SONATRACH | Annual Report 2021 | 70 | SONATRACH | Annual Report 2021 SPONSORSHIP & MECENATS SONATRACH, the country’s leading company, the locomotive of the national economy, has always fully assumed its role as a corporate citizen. Through the implementation of its strategy in terms of sponsorship, patronage and social investment, SONATRACH is fully involved in the financial support of a multitude of events and/or actions: scientific projects, economic, sporting, cultural events, Environmental Protection… Sponsorship and mecenat 71SONATRACH | Annual Report 2021 | Sports sponsorship Sport is the ideal medium to provide positive values to the image of a Company. SONATRACH attaches paramount importance to sports sponsorship, which represents more than 50% of the SPM budget for the 2021 financial year. In this section, we can mention, in particular: • Sponsorship of the SSPA MCA for the 2021 sports year. • Coverage of SSPA-JSK air transport costs to Lusaka (Zambia as part of the Confederation of African Football (CAF) Cup. • Financial support for the travel of Algerian fans during the African Cup of Nations in Egypt in 2019. • Recognition of athletes who obtained medals at the TOKYO 2020 Paralympic Games. Cultural and Artistic Activities SONATRACH has always invested in the promotion of culture and art. This commitment was reflected in 2021 by multiple supports: • Sponsorship of the national competitionfor the promotion of tourism organized on July 05, 2021 in Algiers. • The sponsorship of two shows in tribute to the legendary voices of Algerian song, for the benefit of the Opera of Algiers on December 10 & 16, 2021. • Support for the printing of two (02) volumes of the Algerian Toponymic Dictionary. • Sponsorship of the award ceremony for the winners of the 26th edition of the November 1, 1954 prize. Scientific Activities Concerning the support to scientific activities, we will retain: • The sponsorship of the closing ceremony of the event «one Project one Patent», on June 19, 2021 at the University of Science and Technology of Oran. • The sponsorship (CRNA) of the 1st National Meeting relating to New Modalities of Radiotherapy in Algeria «NMRT 2021», in October 2021. Economic Events Various economic events have benefited from the sponsorship of SONATRACH: • Sponsorship of the 1st edition of the National Exhibition of Innovation in Training and Vocational Education in Algiers. • Sponsorship of the 5th Edition of the National Seminar on Energy Saving and Energy Efficiency “SNEE5”. • Sponsorship of the Algerian-Libyan Business Forum and Commercial Exhibition, May 2021. 72 | SONATRACH | Annual Report 2021 • Sponsorship of the Forum on the contribution of Algerian women in economic development, December 2021. • Sponsorship of the 2nd International Industrial Maintenance Exhibition. December 2021. • Sponsorship of the celebration of the 60th anniversary of the creation of APS. December 2021. Sponsorship actions Social Action The subsidized operations targeted primarily to assist associations and companies that want to improve the living conditions of underprivileged populations. • Donation of twenty (20) tablets and twenty (20) wheelchairs for children with reduced mobility. • Donation for the development of a reading room for children at the Office Riadh El-Fateh. Social Investment The support actions were mainly oriented towards the health sector given the health context of the year 2021. As such, SONATRACH contributed to finance: • The acquisition of medical equipment for an RT-PCR Unit for the benefit of the Public Hospital Establishment of the Wilaya of Relizane. • Donation of two (02) hemodialysis machines for the health services of the municipality of Debdeb / Willaya d’Illizi. • The purchase of ten (10) oxygen plants for the benefit of hospital structures in the health sector. Environment Environmental protection also received special attention through multiple actions: • Continued sponsorship of the operation to restore degraded land because of the forest fires (2019 and 2020). • Partial financing of expenses related to the “My Space is Green” Environmental Awareness and Education Program. • Sponsorship of the 1st edition of the National Competition for the Best OASIS for the year 2020. • Financing of the awareness campaign on the ecological importance of Gouraya National Park. Financial Report of the Consolidated Accounts 75SONATRACH | Annual Report 2021 | accordance with the consolidation rules, and according to the importance of the entity to be consolidated (turnover, results and total balance sheet) or in the case where the parent company the financial years a direct and strategic influence on the participation. 1.3.3. Conversion methods The accounts of subsidiaries and holdings are established in the currency of the country in which they are located: • The balance sheet accounts of subsidiaries and holdings abroad are converted into Algerian Dinars on the basis of the exchange rates in force on the closing date, thus generating “Conversion reserves”. • The income and expense account is converted at the average rate for the year. Conversion differences are recorded in the item ‘’conversion result’’. 76 | SONATRACH | Annual Report 2021 2.CONSOLIDATED FINANCIAL STATEMENTS 2.1. Balance sheet 2.1.1. Asset (In millions of DZD) NOTES 2021 2020 2019 NON-CURRENT ASSETS Goodwill - Goodwill 3.1.1 14 403 14 897 17 266 Intangible assets 3.1.2 100 167 99 545 88 141 Tangible assets 3.1.3 3 900 827 3 846 187 3 784 339 Land & facilities 50 583 51 503 52 247 Buildings 345 043 349 551 346 314 Other property, plant and equipment 577 282 592 194 527 551 Assets under concession 819 782 615 Fixed equipment and production complexes 2 927 100 2 852 157 2 857 612 Assets in progress 3.1.4 2 345 744 2 393 626 2 310 544 Financial fixed assets 3.1.5 1 490 864 1 348 475 1 502 858 Financial assets Equity method 404 276 410 164 223 200 Shareholdings and receivables related to shareholdings 26 495 142 250 311 884 Other financial assets 1 058 545 792 981 967 683 Other non-current receivables 1 548 3 081 91 Total fixed assets 7 852 004 7 702 731 7 703 148 Deferred tax asset NC 3.1.6 54 913 45 975 37 997 Total Non-Current Assets 7 906 917 7 748 706 7 741 146 CURRENT ASSETS Inventory and work in progress 3.2.1 837 840 796 506 715 063 Receivables and similar uses 3.2.2 4 173 673 4 424 370 4 358 543 Immo. financial 2 004 2 0 Clients 725 135 524 444 608 752 Other debtors 2 367 897 2 131 333 2 170 669 Taxes 1 067 503 1 758 113 1 554 037 Other current assets 11 133 10 479 25 086 Availabilities and similar 3.2.3 1 362 905 693 679 707 595 Investments and other financial assets 1 185 647 127 Treasury 1 361 719 693 032 707 468 Total Current Assets 6 374 418 5 914 556 5 781 201 Total Asset 14 281 335 13 663 262 13 522 346 Financial Report of the Consolidated Accounts 77SONATRACH | Annual Report 2021 | 2.1.2. Passive (In millions of DZD) NOTES 2021 2020 2019 EQUITY 4.1 Share capital 1 000 000 1 000 000 1 000 000 Subscribed capital not called Valuation difference - - 1 940 Premiums and Reserves 82 678 187 888 124 590 Other equity - Retained earnings 5 750 648 5 728 884 5 310 162 Equity excluding parent company income (A) Consoli- dated reserves (B) 2 309 1 602 - Group reserves 6 835 634 6 918 373 6 436 693 Minority reserves Equivalence difference (C) 985 209 1 011 275 1 106 077 Result for the financial year (D) 972 094 1 005 386 1 091 790 Translation differences on Group results Net result of the consolidated group Group result 13 115 5 889 14 287 Minority results 18 722 (34 287) (7 124) Minority result 813 645 (6 598) 373 581 Conversion differences on minos result 1 373 (2 382) (13) Résultat Net de l’ensemble consolidé 812 272 (4 216) 373 594 Résultat Groupe 801 915 (13 971) 373 135 Résultats minoritaires 10 357 9 754 459 Résultat minoritaires 10 514 8 888 459 Ecarts de conversion sur résultat minos (157) 867 - Total equity (A)+(B)+(C)+(D) 8 653 211 7 888 763 7 909 228 NON-CURRENT LIABILITIES 4.2 Borrowings & financial debts NC 215 937 235 255 186 820 Taxes (deferred and provisioned) 216 446 219 789 201 361 Other debts & regulation accounts. CN 13 920 15 107 12 074 Derivative liability financial instruments NC (0) (0) (0) Provisions and deferred income 395 004 362 342 318 033 Total non-current liabilities 841 308 832 492 718 288 CURRENT LIABILITIES 4.3 Suppliers & related accounts 355 013 499 861 372 894 Taxes 515 364 666 301 787 725 Other debts 3 914 018 3 773 696 3 713 653 Liability cash 2 422 2 148 20 558 Total current liabilities 4 786 817 4 942 007 4 894 830 Total liabilities 14 281 335 13 663 262 13 522 346 80 | SONATRACH | Annual Report 2021 Unexplained discrepancies - perimeter entry 126 (17 522) 1 074 Unexplained discrepancies - output (0) - 2 837 Unexplained discrepancies (D) 155 222 (29 687) 42 026 Cash - movement (calculated) 668 687 (14 436) (1 015 460) Cash - closing (calculated) 1 361 719 693 032 707 468 Cash - opening 693 032 707 468 1 722 928 Variation de trésorerie (A)+(B)+( C )+(D) 668 687 (14 436) (1 015 460) 2.4. Statement of Change in Consolidated Equity (In millions of DZD) Share capital Premiums, reserves & conso- lidated results Valuation spread Total equity Group equity Minority interests As at December 31, 2019 1 000 000 6 784 711 124 590 7 909 301 7 894 555 14 746 Assignment results - 80 712 - 80 712 80 712 (0) Dividends - 14 198 - 14 198 14 265 (67) Interim dividend - - - - - - Results - (5 079) - (5 079) (13 967) 8 888 Increase - 397 643 64 199 461 842 448 337 13 505 Decrease - (540 082) (902) (540 983) (523 565) (17 419) Translation difference on opening - 83 232 - 83 232 83 747 (514) Translation difference on stream - (17 463) - (17 463) (18 253) 791 Reclassification - (6 177) - (6 177) (6 177) - Change in scope - (216 114) - (216 114) (211 904) (4 210) Perimeter entrance - 125 293 - 125 293 125 370 (76) As at December 31, 2020 1 000 000 6 700 875 187 888 7 888 763 7 873 119 15 644 Assignment results - (0) - (0) 0 (0) Dividends - (8 854) - (8 854) (1 666) (7 188) Interim dividend - (16 302) - (16 302) (8 314) (7 988) Results - 812 433 - 812 433 801 919 10 514 Increase - 253 797 (100 885) 152 912 141 940 10 972 Decrease - (325 583) (4 326) (329 909) (327 930) (1 979) Translation difference on opening - (733) - (733) (878) 145 Translation differenceon stream - 1 617 - 1 617 2 639 (1 022) Reclassification - - - - - - Change in scope - 149 597 - 149 597 145 809 3 788 Perimeter entrance - 2 183 - 2 183 1 598 586 Perimeter exit - 1 503 - 1 503 1 503 - As of December 31, 2021 1 000 000 7 570 533 82 678 8 653 211 8 629 739 23 472 Financial Report of the Consolidated Accounts 81SONATRACH | Annual Report 2021 | 3.1.2. Intangible assets Net intangible fixed assets increased by 6.24%, i.e. amount of 621 MDZD. These are mainly made up of capitalized development costs at SIPEX LIBYA (35,833 MDZD), SIPEX NIGER (18 340 MDZD) and the SONATRACH Petroleum Engineering and Development unit (78,640 MDZD). The increase in concessions, patents & licenses & trademarks mainly concerns SPC BVI (40,327 MDZD), the unit of SONATRACH Petroleum Engineering and Development (2,168 MDZD) and the Boumerdes Exploration Division for an amount of (1,028 MDZD). 3.1.2.1. Change in gross of intangible assets 3. ANALYSIS OF ASSETS ACCOUNTS 3.1. Non-current assets 3.1.1. Goodwill - Goodwill Goodwill or positive goodwill corresponding to the excess of the acquisition cost, when taking participation or merger, on the share part of the buyerin the fair value of identifiable assets and liabilities. In 2021, following the amortization applied, the goodwill shows a net amount of 14,403 MDZD (i.e. 91,717,135 EUR). (In millions of DZD) 2021 2020 SONATRACH RAFFINERIA ITALIANA (SRI) 14 403 14 897 Total GW net acquisition eq. 14 403 14 897 (In millions of DZD) 2020 Increase Decrease Translation difference Reclassification Others variations 2021 Establishment costs (Gross) 0 - - - - - 0 Development costs fixed assets (Gross) 218 609 (940) 0 1 178 5 997 0 224 845 Concessions, patents & licenses & trademarks (gross) 40 521 4 966 55 1 830 1 0 47 263 Commercial funds & right to lease (Gross) 4 - - - - - 4 Other fixed assets intangible (gross) 50 576 1 025 183 (29) 426 1 51 815 Total fixed assetsintangible (gross) 309 711 5 050 238 2 979 6 424 1 323 926 82 | SONATRACH | Annual Report 2021 3.1.2.2. Amortization of intangible assets Net intangible assets by entity are broken down as follows: (In millions of DZD) 2020 Operating allowances Operating takeovers Translation difference Other Variations 2021 Capitalized development costs (Depreciation) 164 076 6 481 0 9 (0) 170 568 Concessions, patents, licenses & trademarks (Depreciation) 16 772 3 506 15 683 (0) 20 946 Goodwill, right to lease (depreciation) - - - - - - Other intangible assets (Depreciation) 29 318 3 795 166 (12) 0 32 236 Total Intangible assets (Amortization) 210 165 13 783 181 680 0 223 751 (In millions of DZD) 2021 2020 SIPEX LIBYA 35 833 34 065 SPC BVI 24 688 21 585 SIPEX NIGER 18 525 18 963 SONATRACH Spa 13 241 17 935 OTHER ENTITIES 7 880 6 998 ToTal 100 167 99 546 Including SONATRACH Spa 13% 18% Financial Report of the Consolidated Accounts 85SONATRACH | Annual Report 2021 | 3.1.3.3. Impairment losses on property, plant and equipment (In millions of DZD) 2020 Operating allowances Operating takeovers Deviation from- conversion Othersva- riations 2021 Land & facilities (Loss of values) 0 43 - - - 44 Constructions (Impairments) 123 -1 1 - - 121 Install. tech, hardware, tool, industrial (Impairments) 150 112 59 - 0 203 Transport equipment (Impairment losses) 12 4 6 - -0 10 Fixtures and installations (Loss of value) 10 0 - - - 10 Other real estate. (losses of values) 1 269 1 286 1 0 - 2 553 Instruments for treatment, transformation and manufacturing (POS) 1 801 - - - - 1 801 Ancillary production instruments (losses of value) 342 16 2 - -0 356 Instruments for reception, storage and shipping(Impairments) 745 - - - - 745 Total Tangible fixed assets (Impairment losses) 4 455 1 488 71 0 -0 5 872 Net tangible fixed assets, by entity, are as follows: (In millions of DZD) 2021 2020 SONATRACH Spa 3 258 426 3 199 939 MEDGAZ 75 033 85 720 SONATRACH RAFFINERIA ITALIANA (SRI) 79 337 81 954 NAFTAL 71 025 74 191 HYPROC SC 59 971 63 272 G-CCO 46 598 48 285 NLP 35 371 37 953 ENAFOR 29 553 32 542 GCB 30 929 32 059 ENTP 28 547 28 157 SH PERU 21 303 20 303 ENSP 17 547 16 898 ENGTP 15 566 15 359 KAHRAMA 12 519 14 083 ENAGEO 10 699 10 327 OTHER ENTITIES 108 403 85 145 Total Net Tangible Assets 3 900 827 3 846 187 Including SONATRACH Spa 84% 83% 86 | SONATRACH | Annual Report 2021 3.1.6. Deferred tax assets by entity Deferred tax assets experwhich meansnced a net increase of 8,047 MDZD in 2021, which means. a variation of 17.50% compared to the 2020 financial year. 3.1.5. Financial fixed assets Financial fixed assets increased by 10.56%, Mainly due to the increase in accounts receivable linked to equity investments (MDZ2,542) and other locked-in receivables (MDZ252,610). 3.1.4. Assets in progress The level of fixed assets under construction fell slightly by 2% compared to the 2020 financial year, they are as follows: (In millions of DZD) 2020 Increase Decrease Operating allowances Operating takeovers deviations conversion Reclassification 2021 Tangible fixed assets in pro- gress (Gross) 2 545 911 1 068 760 353 793 - - -378 -765 126 2 495 373 Intangible assets in progress (Gross) 61 889 10 029 122 - - -1 -10 802 60 993 Advances & ac- counts on fixed assets (Raw) 71 378 26 818 39 795 - - 58 44 58 503 Fixed assets in progress (Raw) 2 679 178 1 105 606 393 710 - - -321 -775 884 2 614 870 Intangible assets in gross (Impair- ment losses) 284 138 - - -12 455 4 082 - - 267 602 Fixed assets as- sets in progress (Impairment losses) 1 253 - - 38 19 - - 1 273 Advances & ac- counts on fixed as- sets (Impairment) 160 - - 91 1 - - 250 Assets in pro- gress (Losses valuable) 285 552 - - -12 325 4 102 - - 269 125 Total assets under construction (Net) 2 393 626 1 105 606 393 710 12 325 -4 102 -321 -775 884 2 345 744 Financial Report of the Consolidated Accounts 87SONATRACH | Annual Report 2021 | (In millions of DZD) 2021 2020 SONATRACH Spa 27 268 21 258 NAFTAL 8 312 8 372 ENTP 5 285 4 841 ENGTP 3 358 2 914 ENSP 1 260 1 212 SGS HOLDING 1 726 1 037 NLP 1 053 1 023 OTHER ENTITIES 6 651 5 318 Total 54 913 45 975 Including SONATRACH Spa 50% 46% 3.2. Current Assets 3.2.1. Inventory and in progress The net consolidated stock and work-in- progress heading is around 837,840 MDZD for the 2021 financial year, Including 73% belong to the parent company. Inventories and work- in-progress showed a net increase of 5.19% during the year. (In millions of DZD) 2020 Movement Translation difference Perimeter entrance Change in scope 2021 Goods(gross) raw materials 26 525 1 589 (30) - 0 28 084 (Raw) 67 711 (567) (1 279) - - 65 865 Others supplies (Raw) 543 356 (22 231) 33 64 - 521 222 In production. of goods (Gross) 4 164 (276) (17) - - 3 872 In progress. of services (Gross) 1 951 (115) - - - 1 836 Finished products (gross) 224 129 45 429 (1 204) - (0) 268 355 Intermediate products (Gross) 15 619 (51) (509) - - 15 059 Stock from real estate (Gross) 92 - - - - 92 Stock outside (Gross) 7 456 (4 052) (1) - - 3 403 Total 891 002 19 727 (3 006) 64 (0) 907 788 90 | SONATRACH | Annual Report 2021 (In millions of DZD) 2021 2020 SONATRACH Spa 773 865 152 272 NAFTAL 191 522 204 974 IRS 41 482 57 733 SIHC 67 447 29 989 SPC BVI 20 544 27 041 ENAGEO 22 546 21 369 ENSP 18 106 20 336 SIPEX 12 149 15 027 KAHRAMA 13 092 12 981 ENAFOR 11 660 11 068 HYPROC SHIPPING COMPANY 17 212 10 718 HOLDING SOALKIM 37 957 9 925 AEC 12 444 8 689 SH PERU 12 452 6 334 Other entities 109 241 104 576 TOTAL 1 361 719 693 032 Including SONATRACH Spa 57% 22% The breakdown of net cash by entity is as follows: Financial Report of the Consolidated Accounts 91SONATRACH | Annual Report 2021 | 4. ANALYSIS OF LIABILITIES ACCOUNTS 4.1. Equity (In millions of DZD) 2021 2020 Variation Share capital 1 000 000 1 000 000 0% Valuation spread 82 678 187 888 -56% Premiums and Reserves 5 750 648 5 728 884 0% Other equity - Retained earnings 2 309 1 602 44% Parent company equity excluding income (A) 6 835 634 6 918 373 -1% Consolidated reserves (B) 985 209 1 011 275 -3% Group reservations 972 094 1 005 386 -3% Minority reserves 13 115 5 889 123% Equity difference (C) Profit for the year (D) 18 722 (34 287) -155% Conversion differences on group result 813 645 (6 598) -12 431% Ecarts de conversion sur résultat groupe 1 373 (2 382) -15 8% Net result of the consolidated group 812 272 (4 216) -19 364% Group result 801 915 (13 971) -5 840% Minority results 10 357 9 754 6% Minority result 10 514 8 888 18% Conversion differences on minos result (157) 867 -118% Total equity (A)+(B)+(C)+(D) 8 653 211 7 888 763 10% Consolidated shareholders’ equity is around 8,653 MDZD and is made up of: • Share capital 1,000 MDZD. • Consolidated reserves which amount to 985 MDZD consist of: • Group reserves 972 MDZD. • Minority reserves: 13 MDZD. • Equivalence difference: 19 MDZD. • Consolidated net income which amounts to 812MDZD, comprising the headings: • Group share: 802 MDZD. • Minority share: 10 MDZD. • Conversion differences on group results: -1 MDZD. • Conversion differences on minority results: -0.1 MDZD. 92 | SONATRACH | Annual Report 2021 4.2. Non-current liabilitwhich meanss Non-current liabilitwhich meanss total 841308 MDZD in 2021 and 832,492 MDZD in 2020, which means. an increase of 1.06%. Non-current liabilities by entity are as follows: (In millions of DZD) 2021 2020 Borrowings & financial debts NC 215 937 235 255 Taxes (deferred and provisioned) 216 446 219 789 Other debts & regul. CN 13 920 15 107 Provisions and deferred income 395 004 362 342 Total non-current liabilities 841 308 832 492 (In millions of DZD) 2021 2020 SONATRACH SPA 515 746 485 813 NAFTAL 125 962 125 284 MEDGAZ 49 415 53 429 SNTM HYPROC 32 847 35 793 ENAFOR 16 078 19 955 GCB 13 170 14 957 SIPEX LIBYE 12 088 11 490 ENGTP 11 455 12 771 SONATRACH-Ré 10 107 10 095 ENTP 9 951 7 929 HELIOS 7 373 3 791 SBAC 6 472 7 108 SONATRACH RAFFINERIA ITALIANA (SRI) 4 447 5 732 ENSP 4 395 4 190 OTHERS 22 070 34 154 Total Non-Current Liabilities 841 308 832 492 Including SONATRACH Spa 61% 58% Financial Report of the Consolidated Accounts 95SONATRACH | Annual Report 2021 | 5.1. Products 5.1.1. Production of the the financial year The production of the financial year increased by 58.80% compared to the previous financial year, ie 2,547,036 MDZD. The Production item for the year is subdivided as follows: • Sales of goods, manufactured products, services and ancillary products. • Production stored or destocked. • Immobilised production. • Operating grants. 5.1.2. Turnover The consolidated turnover is of the order of 6,494,387 MDZD, whereas it recorded 3,980 MDZD in 2020, an increase of 63.16%. The parent company SONATRACH participates in this item for 73.43%. The increase in turnover is linked to the increase in the price of a crude barrel, the average price Including rose from US$41.9 in 2020 to US$72.3 in 2021. Consolidated revenue by entity is presented as follows: (In millions of DZD) 2021 2020 SONATRACH SPA 4 768 933 2 852 658 SONATRACH RAFFINERIA ITALIANA (SRI) 668 475 338 379 NAFTAL 497 005 435 451 SPC BVI 147 189 131 991 SGM 110 698 22 420 SH PEROU 56 044 24 699 GCB 46 294 10 067 ENGTP 28 615 31 071 SGC 28 518 13 642 MEDGAZ 21 316 34 232 ENSP 15 115 21 799 KAHRAMA 11 016 10 079 ENAC 9 630 69 Tassili Airlines TAL 9 341 6 742 OTHERS 76 198 47 149 Total 6 494 386 3 980 445 Including SONATRACH Spa 73,43% 71,67% 96 | SONATRACH | Annual Report 2021 5.1.3. Financial products Financial products decreased by 16%. They recorded an amount of 81,075 MDZD in the year 2021 against 96,601 MDZD in the year 2020. Financial income essentially represents income from the various securities shareholdings, exchange gains, and interest on various investments made with cash surpluses. Consolidated revenue 2021 SONATRACH Spa 73% Subsidiaries and Participations 27% SONATRACH Spa 73,43% 71,67% Subsidiaries and Participations 26,57% 28,33% (In millions of DZD) 2021 2020 Interest income on loans & other debts 6 380 6 155 Received dividends 3 305 - Income from other financial assets 38 971 25 144 Income from operating receivables 1 320 1 464 Exchange gains & forward transactions 19 691 47 064 Other financial incomes 8 102 15 872 Financial income from participation 77 769 95 700 Net income from disposal of non-current financial assets 3 306 902 Financial incomes 81 075 96 601 Financial Report of the Consolidated Accounts 97SONATRACH | Annual Report 2021 | 5.2. The charges Expenses reached an amount of 6,506,862MDZD, for the 2021 financial year against an amount of 4,677,229 MDZD for the 2020 financial year. 5.2.1. The financial year consumption Consumption for the year reached 2,500,521 MDZD, an increase of 22.47%. The latter includes purchases consumed as well as services. 5.2.2. Staff costs Staff costs rose slightly by 3.27% compared to the previous year, ie 12,795 MDZD, mainly at the parent company. (In millions of DZD) 2021 2020 Achats consommés 1 112 982 1 077 691 Services extérieurs 1 254 553 862 461 Autres services extérieurs 132 986 101 507 Consommation de l’exercice 2 500 521 2 041 659 (In millions of DZD) 2021 2020 Staff remuneration 301 129 287 370 Staff remuneration 50 333 48 926 Pension expenses 9 627 9 401 Pension contributions 15 275 14 564 Other social charges 9 293 8 569 Other staff costs 10 137 8 774 Incentive & participation 7 915 13 310 Staff costs 403 709 390 914