The fossil fuel sector in Algeria is the subject of many development projects sponsored mainly by the Sonatrach group. The oil company has broadened its field of activity by collaborating with large companies, such as Total Energies, to boost its exports and win new markets.
After the Italian company ENI and the Slovenian company GEOPLAN, here is Sonatrach joining forces with the French group Total Energy. This time, the project aims to create a plastic production company (polypropylene) in Oran. The factory should supply the domestic market and then export its products to Africa and elsewhere in the near future.
Sonatrach-Total polypropylene plant in Oran: imminent start of works
The specialist London media HERE reveals that it is in Oran that the STEP (Sonatrach-Total Entreprise Polymères), of which work will start in July 2023 with a completion time of 36 months. The Arzew industrial zone will supply the plant with gas and raw materials, supplied directly from the Erg Issouane gas field.
Arzew oil complex, in Oran
The nominal production capacity of 550,000 tons/year of homopolymer will be used on the one hand to supply Europe, as agreed in the agreements, but also to cover the polypropylene needs of Algeria and, to a lesser extent, those of its Moroccan and Tunisian neighbors.
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Polypropylene, used in many industries (automotive, technology, pharmaceuticals, etc.) is currently largely imported by Algeria. The Sonatrach-Total project aims to guarantee a local and international plastic production unit, and at the same time allow Algeria to take a step forward towards self-sufficiency.
The 49/51 regime is applied to this partnership, which takes the form of a joint venture, with Sonatrach as majority shareholder. The construction and commissioning of the plant will also create thousands of jobs.
Algerian plastic from STEP exported to Africa, Asia and Europe
The CEO of Sonatrach Total Entreprise Polymères, Abbes Laghrour, expressed his enthusiasm for the fledgling company’s customer portfolio: “I’m quite optimistic that demand will be quite strong – and I think the market needs 80 million tons/year“.
Propylene is a multipurpose and easily recyclable form of plastic.
Eventually, this plastic factory should be able to target countries like South Africa, but also Asia. If the Asian continent has its share of complexes of the same kind, it is not the same for Africa where competition is weak. Thus, if all goes well, STEP could well monopolize the entire African polypropylene market within a few years.
On the other hand, the joint venture has a major advantage over its competitors: faster progress and competitive prices. The gas supply being provided by Sonatrach at lower costs, the STEP will be able to offer more advantageous prices than those of companies in the Middle East, for example.
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Finally, let us recall that Sonatrach has entered into a partnership with the American group Chevron. The agreement, signed in 2020, covers exploration projects for new hydrocarbon basins in the Ahnet, Gourara and Berkine regions.
