Development of upstream infrastructure to bolster growth of downstream petrochemicals industries in Algeria

State-owned Algerian energy producer Sonatrach has signed a slew of big-budget contracts for the development of upstream infrastructure which should bolster future growth of downstream petrochemicals industries, according to companiesandmarkets.com. However, the industry has not been immune from the global economic downturn and financial crisis with a two-year delay in the Arzew petrochemical complex, which will include a 1.1 mln tpa ethane cracker and units with capacities of 410,000 tpa of MEG, 350,000tpa of HDPE and 450,000tpa of LLDPE. This will be overseen by a 51:49 joint venture (JV) between Total and Sonatrach. Early 2009 reports suggest that the technology and design contract awards for the cracker will be made in H209 and that the completion of the complex would take place in 2014 and not 2012 as originally planned. The Almet consortium was also granted a US$1 bln contract to build a 1 mln tpa methanol plant. As a result of the delays, Algeria’s ethylene and PE capacities are forecast to remain static at 130,000 tpa until 2014, after which they will increase with the addition of new capacity. By 2014, ethylene capacity should be 1.23 mln tpa and PE capacity should reach 930,000 tpa, with new capacity in the production of other derivatives. In July 2009, Sonatrach awarded Samsung Engineering with a US$2.6bn order to expand and improve a refinery facility in Skikda. Samsung Engineering said that the contract size was expanded from the initial US$1.2bn project awarded to the firm in May. The contract will increase the refinery´s capacity by 30,000b/d to up to 330,000b/d. The order also involves plants with capacities of 700,000tpa isomerate, 220,000tpa PX and 200,000tpa benzene. The project is due to be completed within three years and forms part of Sonatrach’s goal of raising refinery capacity from 500,000b/d to 1mn b/d and diversify downstream products. Samsung will perform engineering, procurement and construction (EPC) services on a lump-sum turnkey basis while bulk materials and construction costs will be settled on a reimbursable contract basis. In May 2009, Saipem was awarded an engineering, procurement and construction contract worth about US$265mn to build an export terminal near Arzew for Sonatrach. The marine terminal will handle export of urea and ammonia from new complexes that Sonatrach is building with its joint venture partners. In addition, two major new fertiliser complexes are on track in Arzew. The US$1.9 bln Sorfert Algérie complex, a 51:49 JV between Egypt’s Orascom Construction Industries (OCI) and Sonatrach, is scheduled to complete in 2011. Sorfert was formed in April 2007 to construct two ammonia trains – one designed for 1.2 mln tpa and the other for 800,000 tpa – and a urea production facility designed to produce 3,450 tons/day. Algeria’s ethylene and PE capacities are forecast to remain static at 130,000 tpa until 2014, after which they will increase with the addition of new capacity. By 2014, ethylene capacity should be 1.23 mln tpa and PE capacity should reach 930,000 tpa, with new capacity in the production of other derivatives. This is two years later than we forecast in the previous quarterly report. In the Middle Eastern Petrochemicals Business Environment Rankings matrix, Algeria remains in 10th place with an overall score of 35.2 points, down 2.7 points since the previous quarter due to the two-year delay to the Arzew petrochemical.On nearly every indicator, Algeria comes last by a long margin and is likely to remain that way until the complex comes onstream.