Algiers plans $10bn extension to midstream pipeline network

23 May 2008
Project to increase oil and gas transportation capacity by almost 30 per cent.

Algeria is planning a major midstream pipeline investment programme that will increase its total pipeline network length by more than 30 per cent and its oil and gas transportation capacity by 29 per cent.

The programme, which is expected to require up to $10bn in investment, is aimed primarily at providing extra quantities of gas to meet the country’s export and power generation requirements.

Algeria has 29 main oil, gas, condensate and liquefied petroleum gas (LPG) pipelines, covering a total distance of 16,200 kilometres, and with a total transportation capacity of 322 million tonnes of oil equivalent.

By 2010, it plans to install an additional 10 main pipelines, including six gas pipelines, two for LPG and one each for condensate and crude.

This will increase the total network length to 21,475km and its capacity to 415 million tonnes of oil equivalent.

As part of the programme, state energy company Sonatrach is due to issue three major tenders to increase the length of its gas pipeline network by more than 1,400 kilometres.

The $5bn-plus project covers the installation of 48-inch-diameter pipelines from the country’s central oil and gas fields to gas processing and export facilities at Skikda and Arzew on the northern coast. The pipe itself will procured made by Sonatrach.

The first engineering, proc-urement and construction contract covers the construction of a 275km pipeline from the giant Hassi R’Mel oil and gas gathering complex to Chaiba in the northwest, and a 310km pipeline between Chaiba and the liquefied natural gas terminal at Skikda.

The package also calls for the construction of a 261km road between Ain Djasser and El-Kala, and the installation of a major gas compression station at Chaiba.

Known as GK3, the pipeline will provide gas for export from the Skikda terminal, as well as feedstock for the Koudiat Edrouche power plant and the planned Galsi sub-sea export pipeline to Europe.

The second pipeline deal, called GR4, involves the construction of a 532km pipeline between the Rhourde Nouss oil and gas field, near the Libyan border, and Hassi R’Mel.

The pipeline will transport new gas production from both Rhourde Nouss and the planned Gassi Touil mega gas development to the northwest.

The third package covers the installation of a pipeline between Hassi R’Mel and the town of Sougueur, half way between Algiers and Oran. Known as GZ5, it will connect with the existing pipeline network at Sougueur before going on to the Arzew gas export terminals.

Sonatrach has prequalified a total of 15 local and international contractors for the pipeline installation. They are: Amec Spie Capag, a part of France’s Entrepose Contracting, which is also prequalified in its own right; Bechtel and Wilbros, both of the US; UAE-based Petrofac International; Techint and Saipem, both of Italy; Stroytransgaz of Russia; India’s Punj Lloyd; a consortium of Dubai-based Dodsal with Italy’s Bonatti; Egypt’s Petrojet; the local Cosider with Germany’s Dorsch Gruppe; and the local Enac, also with Dorsch Gruppe.

In addition, eight companies have been shortlisted for the compressor package. They are Europe’s ABB, Amec Spie Capag, Bechtel, Entrepose, Petrofac, Saipem, Techint and Wilbros.

Technical bids for each contract are likely to be submitted by the end of the year, with awards scheduled for early 2009.

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