Corruption investigation delays Algeria refinery plans

23 March 2010

More than $6bn of refinery projects face delays in Sonatrach corruption probe

Two major refinery developments in Algeria have been put on hold as corruption investigations continue to cause a series of delays to oil and gas projects in the country.

The two projects affected are the $6bn export refinery at Tiaret on the central Algerian coast, and the $300m refurbishment of the Algiers refinery.

Sources at engineering firms bidding on the deals tell MEED that neither project has progressed since the government removed the chief executive of state energy company Sonatrach, Mohamed Meziane, along with up to 15 other senior Sonatrach officials as part of a corruption investigation on 12 January (MEED 17:1:10)

“They are in deep freeze,” says a source at one engineering firm. “They not going to move ahead this year at all.”

On the first contract, four companies were due to submit final commercial bids in 2010. The deal covers a front end engineering and design (Feed) study for a new 450,000 barrel a day (b/d) export refinery at Tiaret.

The bidders are Paris-based Technip, Chinese state refiner Sinopec, the US’ CB&I (Chicago Bridge & Iron) Lummus, and a consortium of Italy’s Saipem with Japan’s Chiyoda Corporation.

On the second contract, eight contractors were to proceed to the final bidding round in 2010 on the engineering, procurement, and construction (EPC) deal to refurbish the existing 60,000 barrel-a-day Algiers refinery.

South Korea’s Hyundai Engineering & Construction, Samsung Engineering, and GS Engineering & Construction all passed through to the finalbid round, along with the UK’s Petrofac, Saipem, Spain’s Tecnicas Reunidas, Technip, and Sinopec.

The status of a $3bn project to develop a 1.4m tonne-a-year ethane cracker is also in doubt. France’s Total agreed to develop the plant in 2007. Total insists it is still in talks with Sonatrach, but the lack of progress has led contractors to question Algiers’ ability to move forward with the project.

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