The 20-year project at Zarzaitine will raise output at the field to 50 per cent of reserves from 40 per cent at present. Production is now 38,900 barrels a day. Sinopec will drill 41 wells over a five-year period, replace seven production centres at a rate of two a year and install a water treatment unit with a capacity of 11,000 cubic metres a day (cm/d) and a 25,000-cm/d water injection unit.

A total of $525 million will be invested in the project, with Sinopec contributing 75 per cent of the amount and Sonatrach making up the remaining $131 million. The project will be implemented in two phases. An initial amount of $156 million will be invested in bringing the water injection unit into production by 2006. The second phase will see the installation of gas injection units requiring $369 million in investment.

The project will be Sinopec's first ever venture in Algeria. It beat off competition for the contract from Spain's Repsol YPF, which has accumulated some 16 years' experience in oil and gas exploration in the North African country.