The construction of the $1.1bn linear alkyl benzene (LAB) plant in Algeria Skikda region is facing significant setbacks. According to industry sources, the project is facing implementation delays. Under the terms of the original contract, it was expected to be completed over 44 months ago. Moreover, project timeline was set as construction commenced in March 2024. One source said:

“There have been some issues with the project and it is not currently progressing in line with the original schedule that was set out.” Conversely, if the project had kept to the original schedule, it would have been completedin November 2027. The client company to the facility is state-owned national gas and oil company Sonatrach. When asked to comment, a Sonatrach spokesperson noted that they do not confirm nor deny any claims.

“Please be informed that we do not confirm, deny or comment on rumours, speculation and also any non-public information regarding project schedules, progress or commercial matters,” they noted. There are also other significant petrochemicals project in the Middle East such as the Red Sea petrochemicals project near the Suez Canal. Like the LAB plant, the facility has also been ravaged with significant delays in the past such as the COVID-19 pandemic.

Scope of Implementation on the LAB Plant in Algeria

The main contract for the LAB plant in Algeria was awarded to Tecnimont, a subsidiary of Italy’s Maire in March 2024. The contract it won uses the engineering, procurement, construction and commissioning (EPCC) contract model. Moreover, it was originally tendered by Sonatrach with a technical bid submission deadline of 3 March 2023. However, this has been extended several times.

The scope of the project entails the implementation of a new LAB plant with an annual production capacity of 100,000 tonnes. It also entailed associated utilities, offsites and interconnections with existing facilities. In December, China’s Jilin Chemical Construction (JCC) also won a contract worth more than $100m to work on the project.

Nonetheless, its contract is expected to be completed over 17 months after activation in March this year. JCC has said that its project scope includes engineering work “involving all disciplines”. JCC is wholly owned by China Huanqiu Contracting & Engineering. It is also affiliated to China National Petroleum Corporation (CNPC).

Project Overview

• Project Type: Linear Alkyl Benzene (LAB) plant
• Estimated Cost: $1.1bn
• Capacity: 100,000 tonnes/year
• Purpose: Petrochemical production
• Status: Delayed

Key Stakeholders

• Client: Sonatrach
• Main Contractor: Tecnimont
• Parent Company: Maire
• Subcontractor: Jilin Chemical Construction
• Affiliation: China National Petroleum Corporation

Location

• Site: Skikda
• Country: Algeria

Scope

• LAB production facility
• Associated utilities and also offsites
• Also integration with existing infrastructure
• Full EPCC execution

Funding / Delivery Model

• State-backed project (Sonatrach)
• EPCC contract awarded to Tecnimont
• Also additional subcontract packages (e.g. JCC)

Status

• Stage: Under construction
• Issue: Behind schedule
• Start: March 2024
• Expected Completion: Delayed beyond 2027

Key Risks & Challenges

• Schedule overruns
• Execution delays
• Also contractor performance issues
• There is also the risk of limited project transparency

Strategic Significance

• Expands Algeria petrochemical capacity
• Also supports downstream value chain
• Strengthens Sonatrach portfolio
• Moreover, it faces delivery and also timeline pressure