Ukraine war sparks $13bn Algeria projects boom
22 February 2023

The value of active oil, gas and chemical projects in Algeria has surged by $12.7bn over the past 12 months as the North African country has looked to expand capacity to meet demand from European nations seeking alternatives to Russian energy imports.
Since the war in Ukraine started on 24 February last year, the total value of oil, gas and chemical projects in Algeria, including both planned projects and those under execution, has increased by 35 per cent, rising from $45.1bn to $57.4bn.
The multibillion-dollar boom in projects has been mainly driven by gas projects and chemical projects, according to data compiled by the regional project-tracking service MEED Projects.
In the wake of the war, the total value of active gas projects in Algeria has increased by 38 per cent, rising from $15.4bn to $21.2bn.
Over the same period, the value of chemical projects has increased by 75 per cent, rising from $9.3bn to $16.3bn.
The value of active oil projects has remained virtually the same, declining slightly from $11bn to $10.8bn.
Since the beginning of the war in Ukraine, European leaders looking to secure gas to replace Russian imports have visited the North African country.
As well as having significant natural gas reserves, Algeria benefits from existing gas pipeline links to Europe to facilitate exports.
In August, French President Emmanuel Macron travelled to Algeria as French imports of Algerian gas surged by 168 per cent.
In September, European Council president Charles Michel visited Algeria and described it as a “reliable” partner in energy cooperation.
During a trip to Algiers by Italian Prime Minister Giorgia Meloni, it was announced on 23 January that the Italian oil and gas firm Eni and Algeria’s national oil company Sonatrach had signed new agreements designed to boost the North African company’s gas export capacity.
It seems highly likely that the growth in the value of Algeria’s active gas projects over the past 12 months is just the start and that more projects will be announced as the country continues to try to capitalise on European demand for gas.
In January, Sonatrach announced plans to invest more than $30bn in exploration and production to boost the country’s natural gas output.
The funds will also be spent on upgrading infrastructure to export gas from liquefied natural gas (LNG) terminals and by pipelines to Europe, according to the company’s chief executive Toufik Hakkar.
Hakkar said that Algeria wanted to become one of the world’s most important sources of natural gas through Sonatrach and its planned investments.
Gas projects
In the wake of the war in Ukraine, Algeria has revived phase two of the Touat natural gas field development project.
The project is estimated to be worth $1bn and is being developed by Groupement TouatGaz, a partnership between Sonatrach and London-based Neptune Energy.
The project scope includes the development of 19 wells, the construction of a gas treatment plant, and the installation of pipelines.
In November last year, Sonatrach signed a series of contracts with the Italian contractors Tecnimont and Arkad, as well as local contractors, in a push to develop its hydrocarbons sector.
Together, the contracts, which were all signed at a single ceremony, were worth more than $660m.
The contracts included one worth AD56bn ($400m) with Tecnimont for a liquefied petroleum gas (LPG) facility at its Rhourde el-Baguel oil field.
The plant is expected to process 10 million cubic metres a day of associated gas, allowing the production of 1,000 tonnes a day (t/d) of LPG, 300 t/d of condensate and 8.7 million cubic metres a day of gas.
Chemical projects
The dramatic expansion in the total value of chemical projects in Algeria is also related to global macroeconomic conditions.
One of the largest chemical projects to be announced in Algeria since the start of the war in Ukraine is an integrated fertiliser complex.
As much of the world’s fertilisers are produced from hydrocarbons, such as natural gas and coal, the prices of fertilisers are closely linked to energy markets and have soared in value over recent years.
In March last year, a partnership between Asmidal, a subsidiary of Sonatrach, and the Chinese firms Wuhuan Engineering and Tianan Chemical announced plans to develop an integrated phosphates project in Algeria’s Tebessa Province.
The client on the project will be an Algerian-Chinese joint venture created by the companies, which is named Algerian Chinese Fertilisers Company (ACFC). The project is estimated to have a value of around $7bn.
Opportunities
The rapid growth in the value of active gas and chemical projects in Algeria has meant that many contractors have started to look at the Algerian market for opportunities. Paying attention to the North African country could likely lead to significant contract wins for some.
Since the war in Ukraine started, the total value of oil, gas and chemical projects in the study phase has nearly doubled, rising by 93 per cent from $16.6bn to $32.0bn.
This surge in project announcements in the country makes it likely that Algeria will see a large volume of gas and chemical project contract awards over the coming years, even if some projects are cancelled or delayed.
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Saudi Aramco has awarded US-headquartered KBR a contract to provide engineering services to support facility upgrades across the Marjan offshore field in Gulf waters.
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> DATABANK: Saudi data indicates project spending shiftTo see previous issues of MEED Business Review, please click herehttps://image.digitalinsightresearch.in/uploads/NewsArticle/20621733/main.jpg
