OCI signs up for Arzew fertiliser plant

24 February 2006

Egypt's Orascom Construction Industries (OCI) has signed a memorandum of understanding to form a joint venture (JV) with state energy company Sonatrach for the development of a greenfield 1 million-tonne-a-year ammonia and urea plant near Arzew in the northwest. Total project costs are estimated at $746 million.

Under the terms of the agreement, OCI will take a 51 per cent stake in the project company, with the balance to be held by Sonatrach. A formal JV agreement is expected to be signed in April. Construction work is set to begin in mid-May and is expected to take about three years. OCI is understood to be likely to undertake the civils package. A technology provider is yet to be selected. Sonatrach will enter into a 20-year gas supply agreement with the new venture and expressions of interest (EoIs) are being invited for long-term offtake agreements for the plant's output, at least 80 per cent of which will be exported.

The scheme will be financed by a 70:30 debt/equity split, with the debt element coming from local and international banks.

Algeria launched in 2005 a multi-billion-dollar programme for five world-scale petrochemicals projects at Skikda and Arzew. Awards are due in the first quarter of the year (MEED 23:12:05).

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