Sonatrach Replaces Samsung Engineering in $4 Billion Hassi Messaoud Refinery Project
On Thursday, November 28, Samsung Engineering confirmed that its $1.3 billion contract with Algeria’s state-owned energy giant Sonatrach has been canceled. The contract, signed in 2020, involved the construction of a massive crude oil refinery at Haoud El Hamra in Hassi Messaoud, Algeria’s largest oilfield.
The cancellation was reported by South Korea’s Yonhap News Agency, citing no official explanation from Sonatrach for the decision. However, the Spanish newspaper CincoDias revealed that China’s Sinopec has replaced Samsung Engineering in the revamped project, valued at $4 billion.
A Strategic Change in Partners
Initially awarded in 2020 to a consortium led by Samsung Engineering and Spain’s Técnicas Reunidas, the refinery project is a cornerstone of Algeria’s strategy to bolster its energy production. Following Samsung’s removal, Sinopec will now lead the consortium alongside Técnicas Reunidas.
The updated agreement outlines a completion timeline of 65 months, compared to the original 52-month schedule. This means the refinery is now expected to be operational by 2028.
Refinery Specifications and National Goals
The refinery is designed to process 5 million tons of crude oil annually, equivalent to 110,000 barrels per day. Its purpose is to strengthen Algeria’s domestic fuel and lubricant production while creating surplus for export.
Sonatrach initially launched the tender for this project in 2017, emphasizing its importance for meeting Algeria’s growing energy demands. However, significant delays have plagued the initiative, with no construction having started seven years later.
Sinopec’s Strategic Alliance with Sonatrach
Sinopec’s entry into the project reflects its growing collaboration with Sonatrach. In 2023, the two companies formed a strategic alliance aimed at deepening cooperation in Algeria’s hydrocarbons sector. Sinopec’s involvement is expected to accelerate progress and ensure the completion of this long-delayed project.
Implications for Algeria’s Energy Sector
The Hassi Messaoud refinery underscores Algeria’s commitment to modernizing its energy infrastructure to meet both domestic and international demands. While the delays highlight ongoing challenges, the project’s relaunch with Sinopec signals Algeria’s willingness to forge new partnerships to overcome obstacles and deliver results.
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