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Algeria signs $4 billion in downstream oil and gas deals

by Patricia Short
July 23, 2007 | A version of this story appeared in Volume 85, Issue 30

The Algerian government has awarded two petrochemical project contracts worth a total of roughly $4 billion, as the country works to develop businesses downstream from the oil and gas sector. The contracts are part of a grand, $12 billion package of 10 petrochemical plants that the country plans for the Arzew industrial zone near Oran, on Algeria's northwest coast.

The larger contract has gone to France's Total, which is to build a $3 billion ethane cracker and three polyethylene plants. The complex will be built in partnership with Sonatrach, Algeria's national oil and gas company. A 1.4 million-metric-ton-per-year ethane cracker will produce ethylene for ethylene glycol, high-density polyethylene, and linear-low-density polyethylene. Feed gas will come from southern Algerian fields. According to Total, commissioning of the units is scheduled in about five years. Total will hold a 51% share of the project, and Sonatrach, 49%.

The second contract has gone to a consortium of Algerian and foreign companies to build a $1 billion methanol plant. Capacity is planned at 1 million metric tons per year, and the output is planned for export. The consortium is made up of Japan's Mitsui, German engineering firm Lurgi, Kuwaiti company Qurain Petrochemical, Trinidad's PPSL, and Algerian company Sotraco. The consortium will hold a 51% stake in the project, and Sonatrach will hold the minority share.

In an unrelated development, South Korea's SK Corp. confirms that it is in talks with China Petroleum & Chemical (Sinopec) to build a $1.9 billion 800,000-metric-ton-per-year ethylene plant in China's Hubei province.


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