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Total and Sonatrach strengthen cooperation in natural gas and petrochemicals in Algeria

Sonatrach and Total have signed two agreements as part of the comprehensive partnership announced in 2017.

A new concession contract to jointly develop the Erg Issouane gas field located on the TFT Sud permit is to be signed by Sonatrach, Total and Alnaft (the National Agency for the Valorization of Hydrocarbon Resources). The second agreement is for a shareholder agreement to create a joint venture known as STEP (Sonatrach Total Entreprise Polymères).

The TFT Sud permit is located south of the Tin Fouyé Tabankort (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-kilometre-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.

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%, Total 49%) are planning to start the front-end engineering and design (FEED) from November. This project will allow valorizing the propane, produced in large quantities locally, by transforming it into polypropylene, a plastic for which demand is growing strongly.

“Today’s agreements mark 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,” said Patrick Pouyanné, Chairman and CEO of Total.

Total’s exploration and production activities in Algeria date back to 1952. In 2017, Total’s production in Algeria averaged 15,000 barrels of oil equivalent per day (boe/d), all of it from the TFT gas and condensate field, in which the Group currently holds a 35% in interest.