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* CEO aims to boost OPEC member's gas output

* Mends ties with Statoil, BP, Total and ENI in first year

* Under pressure from budget shortfall, looming election

By Lamine Chikhi

ORAN, Algeria, March 29 (Reuters) - When the U.S.-educatedCEO of Algeria's state energy company Sonatrach ended a speechto staff by seeking questions, an executive sitting next to himquickly picked up the microphone.

"There are no questions," he said, and some 1,000 employeesfiled straight out.

The scene revealed the scale of the challenge facingAbdelmoumen Ould Kadour, who took over Sonatrach a year ago witha mission to improve communication and transparency in a companythat is central to stability in Algeria and beyond.

Sonatrach funds 60 percent of the state budget, and fallingoil prices have created pressure for change, while Algeria'srole as a major gas supplier to Europe means new tension betweenthe continent and gas giant Russia could play into his hands.

He will soon unveil a plan to lift stagnant output and hasrevived ties with European oil majors. But project delays, fraudscandals, secrecy and red tape abound in a country where adultsremember civil war and change is often resisted.

"It's hopeless," he confided to colleagues accompanying himto the company office in the northwestern city of Oran, one ofdozens of such visits by the 66-year-old alumnus of MIT andHarvard to Sonatrach outposts witnessed by Reuters.

On his first day, he said on another occasion, he was givenso much paperwork to sign he feared he would do little else."There was no medium and long term strategy, there was nocommunication, no coordination between Sonatrach’s executives,every single piece of information was confidential."

No stranger to setbacks, he spent two years in an Algerianjail for collaborating with foreigners after a decade in chargeof a joint Algerian-U.S. engineering company co-owned by oilservices firm Halliburton.

He has brought in his own team to lead the revamp atSonatrach, declining requests for an interview but sharing hisviews during his tour of the company.

A company source said his turnaround plan would be unveiled"within weeks, if not days". Designed partly to attract foreigninvestment, it is likely to come during or before a conferencehe hosts on April 16-18 which the CEOs of France'sTotal, Italy's ENI and Norway's Statoilare expected to attend.

FOREIGN PARTNERS

His broad goal is to turn Sonatrach into an integratedenergy company by 2030 from its current sprawling state, whichincludes an aircraft maker and extensive social programmes andexcludes renewables, which come under the environment ministry.

While Western CEOs will expect concrete steps after years ofbold announcements, the plan has spread unease among executives,several of whom told Reuters they feared sweeping managementchanges in Ould Kadour's declared battle with red tape.

In Oran, he told staff that Statoil, set to resume work atthe Hassi Mouina gas field, had previously left because ofbureaucracy. "Better communication, a better environment is keyto convince foreign partners to work in Algeria," he said.

A Sonatrach source said Statoil is expected to invest $500mln in gas, a figure described by a Statoil source as"speculation". Last month Statoil and Britain's BP agreedto strengthen cooperation in upstream oil exploration andexplore solar energy to allow Algeria to export more of its gas.

In December Ould Kadour revived ties in December with Total,ENI and Saipem, but his ability to nurture thoserelationships and reverse years of stalling production willdepend on how his company's 40,000 employees respond to hismessage of change.

He is an unlikely manager in a country known for secrecy anda suspicion of Westerners dating from ties to the Soviet Unionand the trauma of the 1954-1962 independence war with France.

But energy revenues have halved since 2014 and PresidentAbdelaziz Bouteflika, the 81-year old leader who might run for afifth term next year, is struggling to maintain a welfare statenecessary for social stability.

The government has launched austerity measures, banning theimport of 900 goods and freezing public sector hiring anddevelopment projects.

Doctors and teachers have been on strike in several citiesfor three months demanding better pay and conditions and thestate has been unable to end dissent by paying out as it didwhen a barrel of crude cost $100 instead of $70 as now.

This has turned improving the efficiency of the state oilcompany into a political imperative. "Ould Kaddour has no choicebut to succeed as Sonatrach's CEO," a former energy ministertold Reuters.

Critics of the CEO say he has only been appointed because ofBouteflika and will last no longer than his many predecessors.

"If Bouteflika quits, Ould Kaddour would be sacked in thenext five minutes," a former Sonatrach executive said.

BALANCING ACT

With the presidential election looming, Ould Kadour hassought to cut Algeria's import bill by recruiting oil traderVitoil to swap crude for the petrol in growing need at home.

"The strategy was to show that Algeria, which is a big oilproducer, is not spending gigantic sums on imports of products,"an oil insider said.

One delayed gas field was brought online last year withthree more slated to start producing this year, lifting annualgas output of 94 billion cubic metres by 9 billion cubic metres.

Sonatrach has signed a $1 billion deal with Turkey to builda petrochemical facility, discovered crude in Niger and exploredcooperation with Iraq. It is also considering shale, butprotests in 2015 from Algerians fearing environmental damagehave made that politically unpalatable for now.

In further signs of a balancing act, company sources saySonatrach will offer more flexible short-term gas contracts onterms of 10-15 years or less instead of 20-25 and invest $250million in the Tinhert gas field project using Algerian firms.

Ould Kadour's sentencing by a military court in 2007 oncharges working for a foreign country was part of an internalregime conflict typical for Algeria, observers say.

An elite made up of the ruling FLN party, army and securityhas controlled Algeria since independence, with officials orexecutives of state firms sometimes losing jobs when a newfaction takes over in power plays behind closed doors.

After serving his two-year jail term, he worked in Qatar,France, Senegal and the United Arab Emirates before Bouteflikamade him Sonatrach CEO in March 2017.

Anis Rahmani, owner of private Ennahar TV station, said theCEO had told him he was devastated by being branded a traitor."But the man has vision, a plan to transform the company into amodern and performing one, which is not the case now," he said.

He is more powerful than the energy minister, one insidersaid, but must also win backing from politicians resistant toopening up the country too much. A key energy law has beenstalled for years but a draft is now due in July.

It is likely to retain Sonatrach's majority stake in allenergy projects but offer tax incentives for investors, aSonatrach executive said. "The law needs to be attractive," hesaid. "If not it will be useless."

(Additional reporting by Dmitry Zhdannikov in LondonEditing byUlf Laessing and Philippa Fletcher)