Plans for $1.5bn ammonia plant in Algeria back on track, gas deal
Richard Ewing
12-May-2014
LONDON
(ICIS)–Ambitious plans for a $1.5bn export-oriented ammonia
plant in Algeria that were first revealed in
2007 are back on track following the signing of a
crucial gas deal and investment agreement, a
local market source confirmed on Monday.
Proposals for the El Bahia fertilizer project were derailed
several years ago because of a dispute between the
two joint venture partners: a subsidiary of
state-owned energy giant Sonatrach and Spanish
fertilizer group Fertiberia, owned by Grupo Villar Mir
(GVM).
However, the pair recently shook hands on a new gas and
investment deal that has given fresh impetus to the huge
nitrogen manufacturing project that will be constructed
at Arzew and comprise a facilty producing 1.1m tonnes/year of
ammonia for sale overseas.
The 3,300 tonne/day El Bahia plant is still at the
design stage and an exact location for the facility near the
coastal city has yet to be disclosed, the source added.
“The facility will produce around 1.1m tonnes/year of ammonia
for export,” the source confirmed. “Building such a
plant normally takes 3-4 years but this is Algeria so
who knows when it may actually start production.”
The agreement, which was reached on 30 April after a
lengthy impasse, also included a new gas deal for leading
ammonia producer Fertial that will see the company
invest $300m in additional fertilizer capacity over the
next few years.
Fertial is owned by Asmidal – whose parent is
Sonatrach – and Fertiberia and the
new investment will allow the firm to increase its
ammonia capacity by 40% to 1.1m tonnes/year from the existing
850,000 tonnes/year.
The majority of the extra capacity from expansion work
at Fertial’s existing plants at Arzew and Annaba will be
shipped abroad, although a portion will be consumed by
a new 250,000 tonne/year nitrogen phosphorous
potassium (NPK) line at Annaba.
The company, which currently
operates a 200,000 tonne/year NPK unit at the facility,
expects the extra NPK product to be sold abroad rather than
domestically.
However, none of the extra capacity
is likely to come online before 2018 as Fertial’s
expansion plans are still at an early stage and Algeria’s
planning process turns slowly.
The source, who also revealed Fertial’s
gas supply rates have returned to normal after several months
of curtailments, declined to disclose any details of the new
gas deal, apart from saying it had increased.
He added that while some internal changes
to top management had taken place, the shareholdings remains
the same with Madrid-based GVM maintaining its 66% stake and
Asmidal its 34% share.
In a short statement late last month,
Sonatrach said the signing of the agreement in the capital,
Algiers, will “give new impetus to the country’s fertilizer
industry”.
It added part of the deal involved a
“review of certain provisions of the partnership agreement
between Fertial and Asmidal” and included a “rebalancing of
the economic and operational interests of the parties”.
Algeria has recently become a leading
exporter of nitrogen fertilizers following the late 2013
start-up of the $2bn Sorfert plant in Arzew.
Sorfert has the capacity
to produce 800,000 tonnes/year of merchant ammonia and
1.3m tonnes/year of granular urea for export.
Both Fertial and Sorfert have been loading ammonia cargoes on
a more frequent basis in recent weeks following the
introduction of a controversial export licensing process by
the government in late 2013 that impacted and delayed
shipments for several months.
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Contact us
Partnering with ICIS unlocks a vision of a future you can trust and achieve. We leverage our unrivalled network of industry experts to deliver a comprehensive market view based on independent and reliable data, insight and analytics.
Contact us to learn how we can support you as you transact today and plan for tomorrow.