Petrofac Ltd. has won the construction contract for Sonatrach SPA’s $1.5-billion petrochemical project in Algeria.
STEP Polymers SPA, a wholly-owned subsidiary of Algeria’s national oil and gas company, signed a definitive design and build deal with Petrofac, the United Kingdom-based energy engineering company confirmed in a press release Monday.
The project in Arzew Industrial Zone targets to produce 550,000 tons of polypropylene a year not only for domestic distribution but also for export to Africa, Europe and Asia, Sonatrach has said. Polypropylene is a polymer commonly used in the making of plastic machinery parts and packaging, as well as fibers.
Sonatrach eyes completion within 42 months.
Petrofac will execute the project through its joint venture with China Huanqiu Contracting & Engineering Corp. Petrofac’s share of the contract value is over $1.5 billion.
“Broadening Petrofac’s portfolio within the petrochemical sector, this contract builds on our 25-year track record of safely delivering strategically significant energy infrastructure in Algeria, while developing local workforces”, Petrofac chief executive Tareq Kawash said in Monday’s announcement.
Petrofac announced the conditional award May 18, with Kawash saying, “Algeria is a core market for Petrofac and we are committed to supporting the long-term delivery of critical infrastructure as the country plays an increasingly important role as a major energy producer and moves into major petrochemical projects”.
Announcing the award of the contract Sunday, Sonatrach said the project will create 6,000 direct jobs, and will involve tree planting to offset environmental costs.
Positive Outlook for Energy Construction Sector
The project is part of $1.5 billion worth of opportunities Petrofac announced in its annual earnings report to be at the preferred bidder stage, boosting its outlook after a non-profitable 2022.
In March, it announced it has been chosen along with Hitachi Energy Ltd. by Netherlands and Germany electricity fuel provider TenneT for the supply of offshore platforms and onshore converter stations for Dutch and German grid projects.
In April Petrofac announced a contract from ORLEN Lietuva for the expansion of a refinery complex in Lithuania. The engineering, procurement and construction deal is valued about $216 million (EUR 200 million).
“The market outlook for the remainder of 2023 and beyond remains positive”, Petrofac said in its 2022 results report published April 27. “Following a decade of underinvestment, a renewed focus in the sector on secure, affordable, sustainable energy provides a backdrop for awards in the short and medium-term.”
“E&C’s [engineering and construction] addressable pipeline remains healthy, with a potential US$40 billion in customer opportunities scheduled for award in the period to June 2024”, it added. “This includes bids in the proposal process of approximately US$12 billion and a further US$1.5 billion where we remain at preferred bidder stage.”
Petrofac saw a 33 percent fall in revenue to $1.3 billion for last year. “2022 was another challenging year for E&C as we progressed with the completion of many of the legacy Covid-19 affected projects in the portfolio and new industry awards were further delayed”, it said.
“Industry awards were lower than expected again in 2022, and, as a result, E&C’s new order intake for the year was lower than prior years at US$0.5 billion (2021: US$1.2 billion), comprising an EPC contract in Algeria and net variation orders”, Petrofac added.
It reported a net loss of $310 million for 2022.
Source: Rig Zone
