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Algeria launches $2.3bn upstream gas project

4 December 2024

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Algeria’s national oil company Sonatrach has held a ceremony to mark the start of the $2.3bn gas development project to upgrade Algeria’s Hassi Rmel gas field.

In a statement, Sonatrach’s chairman and chief executive, Rachid Hachichi, said the project would help to maintain a production rate from the field of 188 million standard cubic metres a day (cm/d).

In May, a partnership of Italy’s Maire and US-based Baker Hughes was awarded the engineering, procurement and construction (EPC) contract.

The project aims to stabilise the pressure of the natural gas being transported through the Hassi Rmel transmission system.

Hassi Rmel is Algeria’s largest gas field, extending 70 kilometres (km) from north to south and 50km from east to west.

Maire has said that its subsidiary Tecnimont Integrated E&C Solutions will carry out its portion of the work.

It said that $1.7bn of the contract related to work that Tecnimont would carry out.

The project is focused on developing three gas booster stations and upgrading the gas gathering system at the Hassi Rmel gas field, which is located 550km south of Algiers.

The three gas booster stations will be developed in the field’s northern, central and southern zones.

The project includes installing 20 turbocompressors, which will compress about 188 million standard cm/d of natural gas.

It also includes:

  • Rehabilitation of the existing gas-collecting network
  • Construction of three condensate demercurisation units
  • Tie-ins for the utilities

The existing gas gathering system, which will be upgraded during the project, includes more than 300km of flowlines connecting the wells.

The central booster station is expected to be completed within 33 months.

The northern booster station is anticipated to be completed in 36 months, and the southern booster station in 39 months.

The respective commissioning dates for the booster stations are October 2026, January 2027 and April 2027.

In its latest statement about the project, Sonatrach said: “The completion of this project will maintain the level of gas production in order to satisfy the domestic market, and enable Sonatrach to meet its commercial international commitments.”

The project aims to help maintain the pressure of the gas as it travels through the pipelines, allowing it to continue flowing more efficiently and ensuring a reliable and uninterrupted supply of natural gas to Italy and, subsequently, to Europe.

This project is the third major field development project to be awarded for the Hassi Rmel gas field.

Tokyo-headquartered JGC was awarded the second major field development contract for the Hassi Rmel gas field in 2016. The contract, worth $1.1bn, was completed in February 2021.

JGC participated in early talks with Sonatrach about potentially taking on the third development project for the Hassi Rmel field.

However, talks between JGC and Sonatrach regarding the project ended without an agreement between the two companies.

Chemical plant

In March, Tecnimont was awarded a $1.1bn contract for the planned linear alkyl benzene (LAB) plant at Skikda in Algeria.

The project entails implementing a new LAB plant with an annual production capacity of 100,000 tonnes and the associated utilities, offsites and interconnections with the existing facilities.

The completion of the project is scheduled within 44 months from the contract’s effective date.

Italy has increasingly sought a deeper partnership with Algeria since the start of the Russia-Ukraine war.

Claudio Descalzi, CEO of the Italian oil and gas company Eni, has said that Algeria is expected to supply 38% of Italy’s gas needs in 2024, as much as Russia did before it cut flows to Europe in retaliation against war sanctions.

Growing demand

Algeria has seen an uptick in its upstream energy projects amid increased demand as European nations look for alternatives to Russian energy imports due to the ongoing war in Ukraine.

In February, Algeria announced a contract to supply Germany with pipeline gas for the first time.

It said that a contract had been signed between a subsidiary of the Leipzig-headquartered company VNG and Sonatrach.

In July last year, the French oil and gas firm TotalEnergies signed a series of agreements with Sonatrach to increase Algerian gas production and the number of gas deliveries to France.

The agreements were signed by Patrick Pouyanne, the chairman and chief executive of TotalEnergies, and Toufik Hakkar, the chief executive of Sonatrach.

Under the terms of one of the agreements, both parties agreed to convert the production contracts for the Tin Fouye Tabankort 2 (TFT2) and Tin Fouye Tabankort Sud (TFT Sud) fields in southern Algeria to the framework established by the Algerian Petroleum Law enacted on 11 December 2019.

Sonatrach has a 51% stake in the fields and TotalEnergies has a 49% stake.

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Wil Crisp

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