Sonatrach, Total Sign TFT-Sud, Petchem Deals
Algerian state producer Sonatrach and Total signed two agreements October 7 as part of their comprehensive partnership announced in 2017.
The first is a new concession contract to jointly develop the Erg Issouane gas field on the 'TFT Sud' permit. The second is to create a new venture called Step (Sonatrach Total Entreprise Polymeres).
The TFT Sud permit – to the south of Total’s existing Tin Fouye Tabankort field – will enable Sonatrach (51%) and Total (49%) to develop the estimated more than 100mn barrels of oil equivalent reserves of the Erg Issouane gas field at a cost of $400mn. The TFT Sud concession contract was one of three upstream decrees adopted by the Algerian cabinet late last month.
Erg Issouane, from which first gas is expected late 2021, will be tied back to the existing TFT gas treatment unit by a 22-km gas pipeline. The partners have also signed a gas marketing agreement. The concession contract will become effective upon approval by the Algerian authorities.
Total’s 2017 net production in Algeria averaged 15,000 boe/d, all from the TFT gas and condensate field. It signed a new 25 year TFT concession contract in June 2017, giving it a 26.4% interest alongside Sonatrach (51%) and Repsol (22.6%) which was recently ratified by the Algerian cabinet.
In March 2018, Total started up the 1.82bn m3/yr (30,000 boe/d) Timimoun gas field, southwest Algeria, in which it has a 37.75% stake.
Two recent acquisitions by Total have also deepened its exposure to Algeria. These are its March 2018 acquisition of Denmark’s Maersk Oil, with a 12.25% interest in the El Merk, Hassi Berkine and Ourhoud oil fields that together have production capacity of 400,000 boe/d gross; and its mid-2018 completion of its acquisition of Engie’s upstream LNG assets, including term contracts of 4.6mn mt/yr with Sonatrach.
Petrochemicals
Regarding the STEP petrochemical venture, Total said it will undertake in a joint petrochemical project in Arzew, western Algeria, capable of producing 550,000 tons/yr polypropylene – subject to a front-end engineering and design study that is planned to start shortly. The project will monetise propane.
Sonatrach CEO Abdelmoumen Ould Kaddour added that his company is advanced in two overseas downstream ventures with other partners: Algerian state news agency APS quoted him saying that Sonatrach was well advanced in negotiations with a Turkish partner to develop a propylene unit in Turkey; and in May 2018 Sonatrach agreed to buy the Augusta oil refinery in Sicily, Italy, from ExxonMobil. The CEO also said that Sonatrach continues to discuss offshore and petchem projects with Eni.
Map credit: Total
Update 10.30am GMT: Total and Saudi Aramco announced October 8 their signature in Dhahran of an agreement for the front-end engineering and design (Feed) of a petrochemical complex in Jubail, on Saudi Arabia’s eastern coast - first announced in April 2018 - that would be sited next to the SATORP refinery, operated by Saudi Aramco 62.5% and Total 37.5%. The petchem complex would comprise a mixed-feed cracker (50% ethane and refinery off-gases) – the first in the Gulf region to be integrated with a refinery – with a capacity of 1.5mn mt/yr ethylene and related high-added-value petrochemical units. Subject to Feed and final investment, the project represents an investment of around $5bn and is scheduled to start-up in 2024.