Saipem Signs $1.8Bn MLE Contract As Algeria Forges Ahead With Upstream Developments
Algeria is pushing ahead with major upstream joint ventures, and demonstrating its commitment to sustaining oil and gas production in the face of low prices. Algeria’s state energy firm Sonatrach, in partnership with the project’s operator Eni, has awarded a $1.8bn engineering, procurement and construction (EPC) contract for the 350mn cfd Menzel Ledjmet East (MLE) gas development to Saipem. Under the lump sum turnkey contract, which was signed on 23 March, the Italian engineering firm will build a gas gathering and treatment plant for gas and condensate produced at MLE and the Central Area Field Complex, also in Block 405b, around 350km southeast of Hassi Messaoud. Just two weeks earlier, Sonatrach and Anadarko awarded the $2.2bn EPC contract for the 150,000 b/d El-Merk central processing facility, also in the Berkine Basin, to Petrofac (MEES, 16 March).
The MLE plant will have a production capacity of 350mn cfd of gas and up to 35,000 b/d of liquids, according to Saipem. In terms of liquids, it is expected to produce 10,000 b/d of condensate, 14,000 b/d of LPG and 8,350 b/d of crude oil. The work is due for completion in March 2012. Eni became operator of Block 405b with a 75% interest in September last year when it bought the Canadian firm First Calgary Petroleums (FCP) for around $865mn. The Italian firm said the acquisition would increase its proven and probable (2P) reserves in Algeria by around 190mn barrels of oil equivalent. Sonatrach owns the remaining 25% of the concession. Algeria’s upstream regulatory agency Alnaft authorized the development of FCP’s discoveries on the block in 2007, and first production was initially envisaged in early 2010 (MEES, 21 January 2008).
Under the new contract, Saipem, which is 43% owned by Eni, expands its already significant presence in the Algerian upstream. The company is involved in two large projects to improve the quality of crude and boost output at the 400,000 b/d Hassi Messaoud oil field, Algeria’s largest, where production first began in 1958. It is building a crude treatment and stabilization unit to treat and transport crude oil from six fields south of the main field and which is due to be commissioned in September next year. And it was also awarded a €1.3bn lump-sum contract in November 2008, to build three LPG trains at Hassi Messaoud that will help to improve the quality of the field’s crude output and expand capacity (MEES, 16 February). US firm Shaw Group said last week that it had been selected to provide engineering services for the 24mn cmd LPG recovery plant, as a subcontractor for Saipem, having already completed the front end engineering design (FEED) work. The plant is due to be completed in the first half of 2012
Copyright MEES 2009.
