Algeria’s Sonatrach, China’s CPECC Sign $210 Million Contract for Alrar Gas Field Expansion

✏️ BY: Dr. Hana Saada

Algiers, Algeria | August 16th, 2024 — On August 15, 2024, Sonatrach, Algeria’s leading state-owned oil and gas firm, sealed a pivotal $210 million contract with China Petroleum Engineering Corporation (CPECC). The agreement, worth approximately 7 billion Algerian dinars, is set to significantly enhance operations at the Alrar gas field in the Illizi Basin. The signing ceremony, attended by Sonatrach CEO Rachid Hachichi and Zheng Xiang, Executive President of CPECC Algeria, marks a critical step in advancing Algeria’s gas production capabilities.

The contract’s primary objective is to address the decreasing pressure in the Alrar gas field and maintain its production capacity at a steady rate of 10 million standard cubic meters per day (Sm³/d). This comprehensive project includes several essential elements:

Engineering, Procurement, and Construction (EPC) Scope: The agreement covers the engineering, procurement, and construction of three new compression trains. It also involves modifications to the admission and separation collectors at the slug catchers, installation of booster pumps, and integration with existing infrastructure and utilities.

Infrastructure Enhancements: The project will feature extensive infrastructure upgrades, including an expansion of the fire protection network, improvements to anti-intrusion and surveillance systems, construction of an electrical substation, and upgrades to the Integrated Control and Safety System (ICSS).

Timeline and Execution: The infrastructure enhancements are projected to be completed by the end of the second quarter of 2027, with the overall project scheduled for completion within 32 months.

In his remarks, CEO Rachid Hachichi underscored Sonatrach’s commitment to advancing its upstream gas investments to meet the increasing demands of the national market. He stressed that the project is vital for managing the natural decline of the Alrar field, which has been operational since 1984, and for sustaining ongoing gas production.

Hachichi also highlighted that the expansion would reinforce Sonatrach’s ability to meet its international commercial obligations, thus bolstering Algeria’s stature as a significant player in the global energy arena. He expressed confidence in CPECC’s capability to execute the project efficiently, adhering to established deadlines, budget constraints, and stringent safety and environmental standards.

This collaboration underscores Sonatrach’s dedication to upgrading its infrastructure and preserving production levels at one of Algeria’s critical gas fields, ensuring the company’s ability to satisfy both domestic and international energy demands.

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