Sonatrach Expands its Petrochemical Ventures

Sonatrach Expands its Petrochemical Ventures

Algerian state-run energy company Sonatrach is making acquisitions to increase its petrochemicals business with the view of reducing the north African country’s fuel imports and boosting revenue, Reuters reported.

On May 11, Sonatrach signed an agreement with French oil major Total to build a petrochemical plant in Arzew, western Algeria. Both companies will invest a total $1.4 billion with a split of 51% to 49% for Sonatrach and Total respectively, Platts reported.

The project will house a propane dehydrogenation (PDH) unit and a polypropylene production unit with an output capacity of 550,000 million tons per year.

Esso, Exxon Mobil’s Italian subsidiary, announced on May 9 an agreement to sell a number of the company’s assets to Sonatrach, Bloomberg reported. The deal will see the Algerian company acquire a 175,000 barrel per day (b/d) refinery in Augusta, and three fuel terminals in Augusta, Palermo and Naples with the related pipelines.

“Definitely petrochemicals are a top priority as we need to do more with less, to get more revenue with less oil and gas. The best way is petrochemicals,” Sonatrach chief executive Abdelmoumen Ould Kaddour stated on May 12.

Algeria spent roughly $2 billion on importing refined products in 2017.

Algeria’s oil and gas revenue stood at $33 billion in 2017, compared to $60 billion in 2014, prior to the fall in oil prices. The OPEC member has struggled to grapple with a budget deficit that has spiraled to more than 15% of gross domestic product since the oil crash.

However, the recent recovery in oil prices has given the government more room to make investments.

“The surplus in revenue due to a recent rise in the oil price should be used to buy more assets overseas. We need to be business oriented,” Kaddour said.

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