EXCLUSIVE: Work continues on $1bn Algeria refinery project

31 October 2017
Sonatrach team preparing to travel to Spain for meetings

Front end engineering design (feed) work is continuing on Algeria’s Skikda Refinery expansion project, according to sources close to the project.

The feed contract was signed by Spain’s Technicas Reunidas in the last quarter of 2016.

The project was originally designed to boost the refined product capacity of Algeria’s national oil company Sonatrach, who is the client.

“Work on the feed contract is ongoing and a team from Sonatrach are preparing to travel to Spain for meetings with Technicas Reunidas over coming weeks,” said a source close to the project.

The expansion of the refinery has been divided into two packages that are scheduled to be built over a period of 34 months.

One package is a hydrocracking unit with a capacity of 4.5 million tonnes.

The other is a naphtha reforming unit with a capacity of 4 million tonnes.

Each of the engineering, procurement and construction (EPC) contracts has been estimated to be worth $500m.

The prequalification process for both packages was launched in earlier this year and more than 20 companies submitted prequalification documents in April, according to industry sources.

Since submitting documents in April companies haven’t heard any feedback from Sonatrach – leading to concerns amongst contractors that the project will see delays and the prequalification process may be relaunched at some point in the future.

Due to budget constraints connected to the low oil price environment Algeria has put several downstream projects on hold recently.

Planned refinery projects that have been put on hold over recent years include the $2bn Biskra Refinery, the $3bn Ghardaia Refinery and another facility with an estimated budget of $2bn that was lined up to be constructed on the coast.

Algeria’s planned $2.5bn Hassi Messaoud Refinery project and the $2.5bn Tiaret Export Refinery project are not on hold and are currently seeing progress.

Sonatrach has prequalified EPC contractors for the $2.5bn Hassi Messaoud Refinery, and is currently preparing to issue the invitation to bid (ITB).

Sonatrach is planning to tender the contract to build the Tiaret Export Refinery during 2018, according to industry sources.

The Tiaret Export refinery will be located around 270km south-west of Algiers, near the Hauts Plateau mountains.

The refinery will process Saharan Blend crude and is part of a larger scheme to increase Algeria’s total refinery capacity.

Under current plans, the Tiaret refinery is expected to produce 2.7 MTPA of diesel, 1.4 MTPA of gasoline, 300,000 tonnes of naptha, 280,000 tonnes of LPG and 93,000 tonnes of bitumen.

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