Petrofac Ltd. has secured the construction contract for Sonatrach SPA’s petrochemical project worth $1.5 billion in Algeria

On Monday, Petrofac, the UK-based energy engineering company, confirmed in a press release that its wholly-owned subsidiary, STEP Polymers SPA, signed a definitive design and build agreement with Sonatrach, Algeria’s national oil and gas company. The project, located in the Arzew Industrial Zone, aims to produce 550,000 tons of polypropylene annually. Sonatrach plans to distribute the polypropylene domestically and export it to Africa, Europe, and Asia. Polypropylene is a widely used polymer in the production of plastic machinery parts, packaging, and fibers. Sonatrach has set a target completion time of 42 months for the project. Petrofac will carry out the project through its joint venture with China Huanqiu Contracting & Engineering Corp. The value of Petrofac’s share in the contract exceeds $1.5 billion. Tareq Kawash, CEO of Petrofac, expressed his satisfaction with the contract, stating, “This contract not only expands Petrofac’s portfolio in the petrochemical sector but also builds upon our 25-year history of safely delivering crucial energy infrastructure projects in Algeria while fostering local workforces.” Petrofac initially announced the conditional award of the contract on May 18. Kawash emphasized Algeria’s significance as a core market for Petrofac, stating their commitment to supporting the country’s long-term development of critical infrastructure, especially in major energy and petrochemical projects. Sonatrach revealed on Sunday that the project would generate 6,000 direct jobs and involve reforestation efforts to mitigate environmental impact. The project is part of Petrofac’s $1.5 billion worth of opportunities in the preferred bidder stage, as stated in their annual earnings report. This announcement bolsters their outlook following a challenging year in 2022. In March, Petrofac, alongside Hitachi Energy Ltd., was selected by TenneT, an electricity fuel provider in the Netherlands and Germany, to supply offshore platforms and onshore converter stations for Dutch and German grid projects. In April, Petrofac announced a contract from ORLEN Lietuva for the expansion of a refinery complex in Lithuania, valued at approximately $216 million (EUR 200 million). Petrofac’s 2022 results report, published on April 27, indicated a positive market outlook for the remainder of 2023 and beyond. The company highlighted a healthy pipeline of engineering and construction opportunities, with potential awards amounting to $40 billion scheduled for the period until June 2024. This includes bids currently in the proposal process worth approximately $12 billion, as well as an additional $1.5 billion where Petrofac remains the preferred bidder. Petrofac experienced a 33 percent decline in revenue, amounting to $1.3 billion for the previous year. The company attributed this decline to the completion of legacy projects affected by the COVID-19 pandemic and delays in industry awards. For 2022, Petrofac reported a net loss of $310 million.