Total signs US$1.4 bn deal with Sonatrach in Algeria

French oil and gas major Total has signed a US$1.4 billion deal with Sonatrach to build a 550,00-tonne/year polypropylene (PP) plant in Arzew, western Algeria. The project also includes a propane dehydrogenation (PDH) unit with a capacity of 650,000 tonnes.

This is part of the comprehensive partnership announced in 2017.

The project represents an investment of around US$1.4 billion by the two partners (Sonatrach 51%, Total 49%), who are planning to start the front-end engineering and design (FEED) this year, subject to approval by the relevant Algerian regulatory authorities.

The facility will valorise propane, produced in large quantities locally, by transforming it into PP, a plastic for which demand is growing strongly. It will supply in priority the local and Mediterranean demand and Total will be responsible for the commercialisation of the rest of the production in Europe, where it will leverage its market expertise to the benefit of both partners.

“This project in Algeria illustrates our petrochemical growth strategy which consists of expanding our activities from competitively advantaged feedstock, especially derived from gas, to take advantage of the growing global plastics demand. This polypropylene project complements our other projects announced recently in the United States, in the Middle-East and in Asia, which are primarily focused on polyethylene,” commented Patrick Pouyanné, Chairman/CEO of Total. “It is also an opportunity to strengthen our cooperation with Sonatrach, by moving beyond our long-standing exploration and production relationship to invest in the downstream together.”

Total’s exploration and production activities in Algeria date back to 1952. In 2017, Total produced 15,000 barrels of oil/day in Algeria, all of it from the Tin Fouyé Tabankort (TFT) gas and condensate field. The Group currently holds a 35% in interest in TFT.

In March 2018, Total started up production from the Timimoun gas field in southwestern Algeria. The Group has a 37.75% interest in the field, which has a production capacity of 5 million cu m/day of gas. Total also markets lubricants and bitumen in Algeria.

Through the Maersk Oil acquisition, which closed on March 8, 2018, Total now holds a 12.25% interest in the El Merk, Hassi Berkine and Ourhoud oil fields, which have a combined production capacity of 400,000 barrels of oil/day.

In November 2017, Total also announced the acquisition of Engie’s upstream liquefied natural gas (LNG) assets. Once closed, this transaction will add 4.6 million tonnes/year to the Group’s global LNG portfolio thanks to supply agreements with Sonatrach.