The UK-based engineering company Petrofac has signed an engineering, procurement and construction (EPC) contract for an estimated $1.5bn Algerian petrochemicals project.

Petrofac has partnered with China Huanqiu Contracting & Engineering Corporation (HQC), a subsidiary of China National Petroleum Corporation (CNPC), for the project, which is due to be developed in the Arzew Industrial Zone to the west of Algiers.

The contract was signed with STEP Polymers, a wholly owned subsidiary of Sonatrach’s state-owned oil and gas company Sonatrach.

In a statement, Petrofac said: “As previously announced, Petrofac will deliver the $1.5bn project with its joint venture partner HQC, with Petrofac’s share valued at over $1bn.

“The contract was signed at an official ceremony in Algiers by representatives of Petrofac, HQC and STEP.”

Tareq Kawash, Petrofac’s chief executive, said: “I am delighted to be in Algiers alongside our partner and client to mark the official award of this pioneering project.

“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.”

The signing of the contract comes less than a month after Petrofac announced that it had been selected for the contract award.

The project’s scope includes designing and building two major integrated processing units.

It includes the delivery of a new propane dehydrogenation (PDH) unit and polypropylene production unit, as well as associated utilities and infrastructure for the site.

It is expected to produce 550,000 tonnes of polypropylene a year.

Petrofac has been active in Algeria since 1997, when it opened its first office in Algiers. The company has since developed some of the country’s most significant oil and gas assets.

Polypropylene, a thermoplastic, is used for many industrial applications, such as consumer goods, medical supplies and parts for the automotive industry.

Last year, MEED revealed that bids had been submitted for the contract before the deadline of 20 July 2022.

Four international contractors were understood to have submitted commercial bids for the project’s EPC work.

In August last year, UK-based Wood Group announced it had won the project’s front-end engineering and design (feed) contract.

In the PDH process, propane is selectively dehydrogenated to create propylene. Industrial implementation of PDH is complicated owing to side reactions such as deep dehydrogenation, hydrogenolysis, cracking, polymerisation and coke formation.

Algeria is seeing an uptick in interest in its oil, gas and petrochemicals sectors as Western countries look to North African suppliers to replace imports from Russia amid the ongoing war in Ukraine.