20100529

ALGIERS (Reuters) - Algerian Energy Minister Chakib Khelil has been removed from his post and replaced by former energy official and diplomat Youcef Yousfi in the biggest upheaval in the OPEC member's energy industry in a decade.

The man who takes over supervision of Algeria's energy sector, which supplies about a fifth of Europe's gas needs, is a technocrat who had a previous stint as energy minister in the 1990s and is also a past boss of state energy firm Sonatrach.

Yousfi faces the challenge of dealing with falling international gas prices, delays in projects aimed at increasing export capacity and lacklustre interest in new energy permits from oil majors which say the financial terms are not attractive.

One analyst said Khelil's removal was part of a political re-alignment in Algeria, where President Abdelaziz Bouteflika has been in power for 11 years. Khelil, a U.S.-educated former World Bank official, is a Bouteflika ally.

"With the pressure that was coming down on Khelil and the political pressure on Bouteflika, it was only a matter of time before Khelil was replaced by somebody more suited to the political environment," said Geoff Porter, Managing Director of K2 Global Consulting in New York.

But he added that Khelil's replacement is a competent industry manager. "Yousfi .. has the bone fides to actually run the energy ministry," he said.

Appointed in 1999, Khelil was removed as part of a government reshuffle ordered by Bouteflika. He was "called to other duties," official media said, but there were no details on what these were or any explanation of why he was removed.

CORRUPTION INVESTIGATION

Algerian media had reported Khelil's position was fragile after the chief executive of state energy firm Sonatrach was removed in a corruption investigation this year, though there has been no suggestion of any wrongdoing by Khelil.

"After the scandals at Sonatrach, we were expecting Bouteflika to sack Khelil. It is a logical decision," Mohamed Lagab, professor of political science at Algiers University, told Reuters.

"His replacement is an energy specialist who can bring stability to the oil and gas sector," he said.

Yousfi, who is 68, has spent most of the last decade outside the energy sector, with posts as Algeria's ambassador to Canada and permanent representative to the United Nations in New York.

Khelil's political position was further weakened this month when industry veteran Nourredine Cherouati was named as Sonatrach's new CEO.

A source close to Sonatrach said that a list of candidates Khelil had put forward to take over the CEO's post had been rejected by the presidential administration.

The other major change in the reshuffle was the promotion of influential Interor Minister Nourredine Zerhouni to the newly created post of deputy prime minister.

Zerhouni played an important role in Algeria's campaign against Islamist militants affiliated to al Qaeda. He is replaced as interior minister by his deputy, Dahou Ould Kablia.

Telecommunications Minister Hamid Bessalah was also removed from his post. His ministry played a part in the Algerian government's row with Egyptian firm Orascom Telecom over the future ownership of it Algerian unit.

The minister's job is taken over by Moussa Benhamadi, chief executive of state-owned telephone operator Algerie Telecom.