Algeria’s Sonatrach signs $1bn gas plant deal with India’s Larsen & Toubro

L&T Hydrocarbon Engineering, a wholly-owned subsidiary of engineering major Larsen & Toubro, on Tuesday, February 12, 2019, said it has won a $1 billion order from Algeria’s state-owned energy company, Sonatrach for the setting up of three central processing facilities.

The engineering, procurement, construction and commissioning (EPCC) contract is to set up three central processing facilities (CPF) that would produce 11 million cubic metres of gas per day. Larsen & Toubro noted that the three facilities are located close to each other in the Adrar province of Algeria.

According to Sonatrach’s Chief Executive Officer, Abdelmoumene Ould Kaddour, “The project shows that we still have gas and we can raise output in the coming few years.”

Algeria is Africa’s largest natural gas producer and has the 10th largest reserve in the world but the country’s gas exports have been declining since a 2005 peak of 65 billion cubic metres due to rising local consumption and falling production levels. Heavily dependent on hydrocarbon exports, which make up 60 percent of its budget, the country’s economy has been hard hit by dwindling reserves and the falling prices of oil. For the whole of 2018, Algeria’s gas output was 135 billion cubic metres.

The contract was awarded through international competitive bidding on a lump sum turnkey basis.