Continental Focus, International Reach

Sonatrach and Total Sign Comprehensive Partnership Agreements

Tuesday, October 9, 2018

Algeria’s state-run firmSonatrach, and French major Total signed agreements as part of the comprehensive agreement partnership formed in 2017. A new concession contract to jointly develop the Erg Issouane gas field on the TFT Sud permit was signed between the state-run firm, Total and Algeria’s Alnaft.

The TFT Sud permit is located south of the Tin FouyéTabankort (TFT) field, of which Total is a long-standing partner. Sonatrach (51%) and Total (49%) will develop the reserves of Erg Issouane located on the TFT Sud permit 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 km-long gas pipeline. First gas is expected late 2021. The partners have also signed a gas marketing agreement. The concession contract will become effective upon approval by the Algerian authorities.

Further, the two firms signed a shareholder agreement to create a JV known as STEP, or ‘Sonatrach Total Entreprise Polymeres’. STEP will be responsible for carrying out a joint petrochemical project in Arzew. 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 are planning to start FEED from November. This project will allow the valorization of propane, produced in large quantities locally, by transforming it into polypropylene, a plastic for which demand is growing strongly.

In June 2017, Total signed a new concession contract for a period of 25 years to extend the exploitation of the field, giving Total a 26.4% interest alongside Sonatrach (51%) and Repsol (22.6%). This contract has just received the approval of the Council of Ministers.

In March 2018, Total started up production from the Timimoun gas field in southwestern Algeria. The Group has a 37.75% interest in the field, which has a production capacity of 5 million cubic meters of gas per day (around 30,000 boe/d).