MOSCOW (MRC) -- Algerian NOC Sonatrach took two major steps forward in early May on the fresh development path promised by the reformist new CEO on his accession last year, said Yourpetrochemicalnews.
The traditionally conservative company acquired its first overseas refining asset and signed a firm deal with an IOC major to proceed with a long-mooted multi-billion dollar petrochemicals project at home.
Meanwhile, the slow-moving drive to improve domestic refining provision also saw progress in the form of a technology supply contract on the planned upgrade of the country’s largest existing plant.
On May 9, Sonatrach signed a deal of undisclosed value to acquire the 175,000 bpd Augusta refinery in Sicily from Esso Italiana, the Italian subsidiary of US super-major ExxonMobil.
Also covered are fuel terminals at Augusta, Palermo and Naples, with associated pipelines. The acquisition is the Algerian firm’s first international downstream investment, cohering with a new overseas expansion policy instigated by incoming CEO Abdelmoumen Ould Kaddour when he was appointed to the role in March 2017. The deal is anticipated to close by year-end pending local regulatory approvals.
However, while other major Middle Eastern oil producers have purchased refining assets abroad primarily to secure market share for their crude in regions of fast-growing oil products demand, Sonatrach’s maiden foreign venture remains driven by domestic supply imperatives and the refinery’s closeness to the home market. The facility is envisaged processing Algeria’s Sahara Blend crude and residual products from the Skikda refinery – Algeria’s largest – on the northeast coast into higher-grade fuels for re-export to fill gaps in local provision and thereby reduce the burgeoning bill for product imports.
As Ould Kaddour explained in an interview shortly before the deal, the timing for such acquisitions is opportune for Algiers – as Western majors look to reduce their exposure to the oversupplied European refining sector.
MRC