France's Total signs $1.5 bln Sonatrach deal for Algerian project

ALGIERS,  (Reuters) - French oil and gas major Total has signed a $1.5 billion deal with Sonatrach to build a polypropylene plant in western Algeria, the companies said.

Total has signed an agreement with Sonatrach to launch the engineering studies for a petrochemical project in Arzew, western Algeria. (IMAGE SOURCE: EWA)

Engineering studies have started already and front-end engineering and design will start in the summer, Total said in a statement.

Algerian state energy company Sonatrach will own a 51 percent stake in the project, with Total holding the remaining 49 percent.

"I'm happy to say that we will have petrochemical products, not just oil and gas," Sonatrach CEO Abdelmoumene Ould Kaddour told reporters at a signing ceremony on Friday.

The plant in Arzew will have annual production capacity of 550,000 tonnes of polypropylene and 650,000 tonnes of propane gas, a Sonatrach official said.

Total said the plastic will supply the Algerian and wider Mediterranean market, while some of the plant's output will be sold in Europe.

"This project in Algeria illustrates our petrochemical growth strategy, which consists of expanding our activities from competitively advantaged feedstock, especially derived from gas, to take advantage of growing global plastics demand," Total CEO Patrick Pouyanne said in the statement. (Reporting by Lamine Chikhi Additonal reporting by Bate Felix in Paris Editing by Jason Neely and David Goodman)

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