Algeria signs up Snamprogetti and Chiyoda for Arzew plant

27 July 2008
The Italian/ Japanese team of Snamprogetti and Chiyoda Corporation signed on 26 July the contract with state energy company Sonatrach to build the new liquefied gas (LNG) plant at Arzew in the northwest.

The group will build an LNG facility over a period of 48 months, with capacity of 4.7 million tonnes a year (t/y) at a guaranteed LNG construction cost per tonne of AD55,071 ($893).

This equates to a total lump-sum price of AD277bn ($4.5bn).

The award is likely to be controversial; it comes only days after Sonatrach disqualified the first-ranked bidding group of UAE-based Petrofac International and Indonesia's IKPT.

Sonatrach said it disqualified the low bidders because they and their equipment provider could not guarantee a production capacity of 4.3 million t/y within its specified price.

The commercial offers were opened on 12 July. Subsequent to the decision, Petrofac says it is seeking clarifications with Sonatrach (MEED 24:7:08).

But with the contract now signed, it now seems difficult for the award to be reversed.

A more in-depth examination of the situation will be published in MEED on 1 August.

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