meed-logo

line1 line2 line3
SIGN IN / REGISTER

Algeria cancels $1.3bn refinery contract and makes new award

6 December 2024

Register for MEED's 14-day trial access 

Algerian state energy producer Sonatrach has cancelled its $1.3bn contract with South Korea’s Samsung Engineering for the planned $3.7bn Hassi Messaoud refinery project in Algeria, and replaced it with China’s Sinopec.

Samsung Engineering confirmed the contract’s cancellation on 28 November without specifying the reason.

Sonatrach officially signed the main contract award for the Hassi Messaoud refinery with the consortium of Samsung Engineering and Tecnicas Reunidas in January 2020.

Since then, little progress has been made on the project due to various factors, including the Covid-19 pandemic, which caused significant disruption to the project.

Spanish newspaper CincoDias reported that China’s Sinopec has replaced Samsung Engineering on the project.

Spain’s Tecnicas Reunidas is still participating in the project, according to industry sources.

In August this year, MEED revealed that only some preliminary engineering work had been finished and the project was about 5% complete.

In 2023, Sonatrach restarted talks with the consortium that won the contract to execute the Hassi Messaoud refinery project to get it moving, but they were unsuccessful.

Talks were reinstated in 2024, but these were also unsuccessful.

In August, MEED revealed that Samsung Engineering and Tecnicas Reunidas had asked for amendments to the original deal due to the significant increase in building material prices since the original contracts were signed, which implies the project cannot be completed with the same budget.

At the time, a source said that the consortium wanted more money to account for inflation since 2020, when the contracts were signed.

In July this year, the vice-president of refining and petrochemicals at Sonatrach, Slimane Slimani, said that his company aimed to bring the facility online before the end of 2027.

Industry sources say this target will be difficult to achieve given the extensive delays and disruption that the project has suffered.

Speaking on Radio Algerienne Chaine 3 in July, Slimani said that Sonatrach had officially revived the project, and its execution was aligned with the company’s broader strategy for the country’s downstream sector.

He said the refinery project is estimated to produce an extra 2.7 million tonnes of diesel fuel and 1.2 million tonnes of gasoline a year.

When Sonatrach first announced the project, it was part of Algeria’s $14bn strategic downstream capacity expansion programme, which included the construction of five new refineries.

Under the terms of the original contracts signed in 2020, contractors were required to execute the works on a lump-sum turn-key basis.

Prior to the delays, the work was expected to be completed in about 52 months and conclude in the first quarter of 2025.

The scope of work includes building process and utility units; a crude distillation unit/vacuum distillation unit; a continuous catalytic reforming unit; an isomerisation, naphtha hydro-treating unit; a hydro desulphurisation unit; and a hydrocracker unit, as well as utility systems.

In recent years, Algeria’s $14bn strategic downstream capacity expansion programme has been scaled down and delayed.

Initially, Sonatrach awarded the front-end engineering and design contract for three refineries to London-based Amec Foster Wheeler in 2016.

These three refineries were located in Hassi Messaoud, Biskra and Tiaret.

Under the original $14bn plan, a further two refineries were to be added later.

Budget issues in 2017 put the Biskra refinery on hold so that Sonatrach could focus on moving forward with the Hassi Messaoud and Tiaret refineries.

Then, in 2018, Sonatrach cancelled the tendering process for the Tiaret refinery following a major downstream review.

https://image.digitalinsightresearch.in/uploads/NewsArticle/13072344/main.jpg
Wil Crisp

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Saudi Arabia to localise desalination equipment production

    31 July 2026

    Saudi Water Authority (SWA) has announced plans to establish a factory in Saudi Arabia to manufacture energy recovery devices used to reduce power consumption at reverse-osmosis desalination plants.

    US-based Energy Recovery will operate the facility with a capacity to produce 2,000 devices a year. Production is scheduled to begin in the first quarter of 2027.

    SWA said the facility will be the first factory outside the US to manufacture the specialised equipment.

    Domestic demand in Saudi Arabia is estimated at 1,200 devices a year. About 40% of the factory’s production is expected to be supplied to markets in the GCC, Africa and Asia.

    Energy recovery devices improve the efficiency of desalination plants by recovering energy from the reverse-osmosis process, reducing power consumption and operating costs.

    SWA said local manufacturing will reduce dependence on imports, shorten supply times and improve the reliability of supply chains serving desalination plants.

    The authority estimates the market opportunity for the industry at more than SR547m ($146m). This includes about SR247m ($69.5m) in Saudi Arabia and SR300m ($80m) across the Middle East and North Africa.

    The project is expected to contribute about SR137m ($36.5m) to Saudi Arabia’s GDP by 2033. SWA expects localisation within the product’s value chain to exceed 80%.

    The project is also intended to support knowledge transfer and develop local capabilities in the manufacture of desalination technologies.

    SWA led efforts to establish the project in cooperation with Saudi Arabia’s Ministry of Investment, Ministry of Industry & Mineral Resources and Local Content & Government Procurement Authority.

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17853316/main.jpg
    Mark Dowdall
  • EtihadWE seeks bids for retendered substations

    31 July 2026

    Etihad Water & Electricity (Etihad WE) has retendered a contract for the construction of two 33/11kV substations and associated underground cabling works in the Northern Emirates.

    The bid submission deadline is 24 August.

    Estimated to cost $100m, the project had originally been tendered earlier this year, with bids due on 20 May.

    The scope covers a new 33/11kV substation at Umm Dera (UMDR) in Umm Al-Quwain and another at Rams-3 (RMS3) in Ras Al-Khaimah. The contract also includes associated 33kV underground cabling works at both locations.

    The works are divided into four packages:

    • A1: New Umm Derra 33/11kV Substation (UMDR)
    • A2: New Rams-3 33/11kV Substation (RMS3)
    • A3: Umm Derra 33kV Underground Cabling Works
    • A4 : Rams-3 33kV Underground Cabling Works

    Etihad WE has invited prequalified engineering, procurement and construction (EPC) contractors to bid for the project on a lump-sum turnkey basis.

    According to the utility, contractors prequalified for both substation and cabling works can bid for the full scope. Contractors qualified only for substation works can bid for the complete substation scope, while those qualified only for cabling works can bid for the complete cabling scope.

    The project includes design, engineering, supply, construction, installation, testing and commissioning.

    The substation scope includes switchgear, transformers, protection and control systems and Scada systems. The project also covers civil works and supporting infrastructure.

    Etihad WE is responsible for electricity and water services in Ajman, Umm Al-Quwain, Ras Al-Khaimah, Fujairah and parts of Sharjah. The utility has been investing in new substations and transmission infrastructure as electricity demand continues to increase across the Northern Emirates.

    Earlier in July, the utility tendered a contract to build three new substations in Ajman.

    Estimated to cost $150m, the project involves the construction of three new 132/11kV substations in the Bahya, Rumaila and Liwara districts. It also includes associated 132kV underground cabling works to connect the substations to the existing transmission network.

    The bid submission deadline is 10 August.

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17857843/main.jpg
    Mark Dowdall
  • Taqa raises $750m to finance water projects

    30 July 2026

    Abu Dhabi National Energy Company (Taqa) has issued a $750m five-year blue bond to finance sustainable water and wastewater management projects.

    The company said the transaction is the largest blue bond issuance in the Europe, Middle East and Africa region. It is also the largest blue bond issued by an integrated power and water utility globally.

    Issuing the bond allows Taqa to raise money from investors specifically to support water-related environmental projects. These can include desalination, wastewater treatment, water recycling and reuse, and infrastructure that improves water efficiency.

    It is the first blue bond issued under Taqa’s Green and Blue Finance Framework, and follows another blue financing transaction in the UAE earlier this year.

    On 8 January, Dubai-based Emirates NBD bank announced the completion of a $1bn dual-tranche sustainable bond issuance, comprising a $300m blue tranche with a three-year tenor and a $700m green tranche with a five-year tenor.

    Emirates NBD said at the time that the $300m tranche was the largest blue bond issued in the UAE and GCC. The proceeds are intended to support marine conservation and sustainable water projects, while proceeds from the green tranche will finance green initiatives.

    Taqa launched its original Green Finance Framework in 2023 and updated it in 2026 to include blue financing instruments. The latest issuance takes its total green and blue labelled bond issuances to $2.6bn since 2023.

    The Taqa financing also comes as the company expands and modernises its water infrastructure. Taqa is targeting reverse-osmosis technology for 66% of its desalination capacity by 2030, up from about 40% in 2025.

    In June, Taqa awarded a contract for the construction of a 1-million-cubic-metre emergency lagoon in Abu Dhabi. The project will be developed in two phases.

    Phase one has a capacity of 500,000 cubic metres and is planned to be completed within 18 months of the contract award.

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17845953/main.jpg
    Mark Dowdall
  • UAE renewables firm secures $375m in financing

    30 July 2026

    Positive Zero, the UAE-based renewable energy firm, has announced the successful closing of a financing facility of up to $375m.

    The long-term financing was arranged by Paris-headquartered Natixis Corporate & Investment Banking (Natixis CIB) and Saudi Arabia-based The Arab Energy Fund.

    Natixis CIB also acted as financial adviser, facility agent, security agent and green loan coordinator for the transaction.

    “The non-recourse financing is the first transaction of its kind in the region for a diversified portfolio of decentralised infrastructure assets, including distributed solar power generation, energy efficiency and clean mobility solutions,” Positive Zero said in a statement.

    “The financing will provide substantial long-term capital to support Positive Zero’s continued expansion in the United Arab Emirates, Saudi Arabia, Bahrain, Oman and Qatar, funding the growth of its distributed infrastructure portfolio, capital expenditure programme and strategic development initiatives,” the Dubai-based firm said.

    The new debt facility secured by Positive Zero builds on US-based BlackRock’s investment of up to $400m in the company in 2023, “further strengthening the company’s capital structure and supporting the next phase of its growth”.

    Positive Zero has the largest distributed solar capacity in the region with more than 500MW in operations and under construction, avoiding more than 450,000 metric tonnes a year of carbon emissions.

    The company has also saved over 100 million kilowatt-hours (kWh) in energy consumption across its client portfolio through its energy-efficiency solutions.

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17845491/main3835.jpg
    Indrajit Sen
  • US-Saudi consortium to build $5bn refinery outside Strait of Hormuz

    30 July 2026

    Register for MEED’s 14-day trial access 

    A consortium of privately owned US and Saudi companies has announced an investment commitment of $5bn to build an integrated oil refining, storage and export facility outside the volatile Strait of Hormuz shipping lane.

    After three years of evaluating sites across the Gulf, the consortium has shortlisted three GCC locations beyond the Strait of Hormuz. Discussions have advanced over the past two years, with a preferred site expected to be selected by the end of 2026.

    The consortium, Mera Oil, comprises Fort Worth, Texas-based MWG Enterprises; the US-based Patel Family Office; and PWS, an associate company of Saudi Arabia’s AHQ Group.

    Mera Oil said it remains open to alternative proposals that meet its infrastructure, resilience and development requirements.

    The proposed project will feature a 200,000-barrel-a-day refinery, deepwater port connectivity, large-scale crude and refined-product storage, and marine export facilities.

    A pre-feasibility study covering refinery design, logistics, capital requirements and execution planning is at an advanced stage.

    Once a host jurisdiction is confirmed, the project will proceed to detailed site assessments and engineering design, with mechanical completion targeted for end-2029, followed by commissioning and the start of commercial operations.

    The consortium plans to focus on producing high-specification middle distillates, including ultra-low sulphur diesel and jet fuel, for selected international markets.

    The project is expected to occupy about 1,200-1,500 acres of port-connected industrial land and could create up to 3,000 direct jobs, and around 15,000 indirect and induced jobs, during construction and operations.

    Mera Oil is also progressing discussions with feedstock suppliers and expects financing to include sponsor equity, sovereign and institutional investment, project finance, export-credit support and sharia-compliant funding structures.

    “Designed as a route-resilient energy hub, the development aims to strengthen regional manufacturing, logistics, technical expertise and energy security,” Mera Oil said.

    The first phase of the planned investment will “incorporate energy-efficient refining technologies, emissions-control systems, and potential future capabilities including sustainable aviation fuel co-processing and carbon management.”

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17843946/main.jpg
    Indrajit Sen