Algerian state-owned energy company Sonatrach and Total signed two agreements to develop their partnership in natural gas and the petrochemicals industries in Algeria, the French energy giant announced Sunday.
The first agreement concerns the joint development of the Erg Issouane gas field located on the Tin Fouyé Tabankort (TFT) Sud permit, and was signed by Sonatrach, Total and Alnaft (the National Agency for the Valorization of Hydrocarbon Resources), according to a statement from Total.
The TFT Sud permit is located south of the TFT field, in which Total is a long-standing partner.
As part of this new concession contract, Sonatrach with a 51 percent share and Total with the remaining 49 percent interest will develop Erg Issouane reserves that are estimated at more than 100 million barrels of oil equivalent (boe).
The development, which represents an investment of around $400 million, will be tied back to the existing TFT gas treatment unit by a 22-kilometer-long gas pipeline. First gas is expected in late 2021.
The partners also signed a gas marketing agreement as part of the concession contract which will become effective upon the Algerian authorities' approval.
Total and Sonatrach also signed a shareholder agreement to form a joint venture known as STEP (Sonatrach Total Entreprise Polymeres).
STEP will be responsible for carrying out a joint petrochemical project in Arzew, western Algeria. The project includes a propane dehydrogenation (PDH) unit and a polypropylene production unit with an output capacity of 550,000 tons per year.
The two partners (Sonatrach 51 percent, Total 49 percent) are planning to start the front-end engineering and design (FEED) from November.
According to the statement, this project will allow valorization of propane that is produced in large quantities locally by transforming it into polypropylene, a plastic for which demand is growing strongly.
Total Chairman and CEO Patrick Pouyanne said the agreements marked "a new milestone in the development of the strategic partnership between Sonatrach and Total to continue developing the country’s gas reserves by providing the best of our technological expertise".
Sunday's agreements are part of a comprehensive partnership announced in 2017, the statement added.
By Hale Turkes