Doubts deepen over future of downstream energy projects

05 January 2010

Contractors complain of lack of progress on refinery and petrochemicals deals

The ability of Algeria to develop its downstream oil and gas sector is in jeopardy, according to contractors, who complain about a lack of progress on refinery and petrochemicals projects worth more than $10bn.

Companies interested in a multi-billion-dollar project to build a 300,000-barrel-a-day (b/d) refinery at Tiaret say they have had no information from Algiers about the project in months.

Feasibility studies for the refinery were completed in 2007. In October 2009, France’s Technip, China’s Sinopec, CB&I of the US and a team of Italy’s Saipem and Japan’s Chiyoda prequalified. However, bidders have heard nothing since, leaving the project facing further delays, at best.

“We have no information from the client and we haven’t received a schedule for technical clarification,” says one bidder.

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 state energy company Sonatrach, but the lack of progress has led contractors to question the ability of Algiers to move forward with it.

“We have been following this project for a year and half, but there is no news,” says one contractor likely to bid for work.

A $700m contract to develop a methanol plant, awarded to the Algerian Methanol Company (Almet) in late 2007, has also effectively been shelved by Algiers, say contractors, although no announcement has been made.

Delays are also anticipated with bidding on a contract to upgrade the 58,000-b/d refinery at Algiers, according to project sources. Eight companies (see table) have submitted technical bids but are still waiting to be told when their commercial bids should be submitted.

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