Sonatrach upgrades refining capacity at Skikda and Arzew

25 April 2008
Algeria is to increase its total crude refining capacity by more than 17 per cent, with state energy company Sonatrach pushing ahead with two major upgrade and rehabilitation projects.

A total of eight companies have submitted technical bids for the two schemes, covering the rehabilitation and modernisation of the Arzew and Skikda refineries. Between them, the two projects will increase refining capacity by about 4 million tonnes a year (t/y) of oil, equivalent to more than 80,000 barrels a day (b/d).

The larger of the two projects covers the upgrade of the 15 million-t/y Skikda refinery, Algeria’s largest. The lump-sum engineering, procurement and construction (EPC) contract, which is worth up to $1bn, involves the rehabilitation of existing units and the installation of several new units including a benzene recovery plant and a paraxylene production facility.

The work will add about 3 million t/y of capacity at the refinery, or about 60,000 b/d.

Five contractors are understood to have submitted technical bids on 14 April for the contract. They are Hyundai Engineering and Samsung Engineering Company, both of South Korea, Italy’s Saipem, Paris-based Technip, and Spain’s TR.

The second scheme, worth $300-400m, calls for the rehabilitation of the 2.2 million-t/y Arzew refinery in the west. The scope of works covers the upgrade of process units and the installation of isomerisation units to increase refining capacity by 1 million t/y, or 20,000 b/d.

Three groups submitted technical bids at the end of March for the EPC contract. They are Samsung, TR and a South Korean consortium of Hanwha Engineering & Construction and Hyundai.

Commercial offers are expected to be submitted in August once technical evaluation is complete. Contract awards will be made soon after by Naftec, the refining arm of Sonatrach.

Algeria has a refining capacity of about 21.7 million t/y. Like many countries in the region, it is modernising its refineries to meet regulations on sulphur content, and to take advantage of greater refining margins (MEED 12:10:07).

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