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Algeria retenders Skikda refinery contract

11 December 2024

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Algeria’s national oil and gas company, Sonatrach, has retendered a contract for a fuel oil conversion unit and associated installations to be developed at the Skikda refinery site.

The retender of the hydrocracker package comes after MEED reported that the package’s provisional $3.2bn contract award to India’s Larsen & Toubro Energy Hydrocarbon (LTEH) was cancelled amid increased tensions between Algiers and New Delhi.

The cancellation came less than a year after Sonatrach announced it had provisionally awarded the contract to LTEH.

Although all the approvals had come through and everything was ready for the contract to be signed, the contract award was cancelled before it was signed, and LTEH never started executing the project contract.

The decision to cancel the contract award was made in the fourth quarter of 2023.

The retender uses a two-stage process, and the contract uses the engineering, procurement and construction (EPC) model.

The scope of the services to be provided includes:

  • All detailed engineering studies
  • Supply and delivery
  • Construction and assembly
  • Connection to existing installations
  • All tests and commissioning
  • The specialisation of the personnel of the contracting authority
  • Operational assistance for a period of eighteen months
  • Supply of spare parts for two years of operation

The project scope will include the development of:

  • Hydrocracking block (HCU block)
  • A fuel oil hydrocracking (HCU) train with a capacity of 2.3 million tonnes a year
  • Vacuum distillation unit
  • Hydrocracking unit (UOP licence)
  • Solvent deasphalting unit (UOP licence)
  • Hydrogen production unit (licence to be acquired by the EPC)
  • Sulfur recovery unit (licence to be acquired by the EPC)
  • Amine regeneration unit (public domain)
  • Acidic water softening unit (public domain)
  • Hot water/steam production unit
  • Raw water, demineralised water, drinking water, cooling water and utility water supply system
  • Vapour and condensate management system
  • Water treatment unit and fire protection system
  • Instrument air unit
  • Natural gas/fuel gas unit
  • Nitrogen production unit
  • Torch system
  • Interconnections
  • Storage
  • Product dispatching system
  • Buildings

All bidders must show that they have had an annual turnover of more than $800m over the past five years.

They also need to show that they have completed at least two EPC projects in the hydrocarbons sector, including one project in the field of refining.

The annual capacity of the Skikda hydrocracker unit is expected to be 4.5 million tonnes.

In March last year, Sonatrach relaunched its planned project to construct a hydrocracker facility in the country’s Skikda province with an expanded budget.

At the time, it was thought that the scheme could ultimately replace the stalling project to build the Hassi Messaoud refinery in the Ouargla province.

Sonatrach first announced plans to develop an expansion to the Skikda refinery in 2016, but the project’s progress has suffered numerous setbacks.

In 2016, Sonatrach said that the project’s scope would include:

  • A hydrocracking unit
  • A naphtha reforming unit
  • Deasphalting units
  • A continuous catalytic reforming unit

It signed a contract with Spain’s Tecnicas Reunidas for engineering and consultancy studies late in 2016 and issued tenders for the main contractor in 2017.

In 2018, Honeywell was appointed as the technology provider and given a contract to provide basic engineering design and other associated services.

The project started to see significant delays in 2019, and none of the main contracts have been awarded.

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Wil Crisp

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