Robert Brelsford
Downstream Technology Editor
Algeria’s state-owned Sonatrach has signed an agreement with ExxonMobil Corp. to buy subsidiary Esso Italiana SRL’s 198,000-b/d Augusta refinery in Sicily to process Algerian-produced crude oil to further help reduce Algeria’s high costs for and reliance on imported petroleum products.
Alongside the Augusta refinery—which is equipped to process both Algerian Sahara Blend and residual fuel from Sonatrach’s 16.5 million-tonne/year Skikda refinery—the purchase will include three oil terminals in Augusta, Naples, and Palermo, as well as associated oil pipelines, Sonatrach and ExxonMobil said.
Algeria’s Sonatrach signed an agreement with ExxonMobil to buy subsidiary Esso Italiana SRL’s 198,000-b/d Augusta refinery in Sicily to process Algerian-produced crude oil to help reduce Algeria’s high costs for and reliance on imported petroleum products. Photo from Esso Italiana.
As part of the deal, about 660 Esso Italiana employees will transfer to Sonatrach, and Esso Italiana and ExxonMobil will enter into multiyear commercial and technology agreements with the new owner for refinery products, operation, improvement, and use of the Augusta, Palermo, and Naples terminals, the operators said.
Subject to customary closing conditions, the companies plan to finalize the deal by yearend.
Confirmation of the proposed acquisition follows Sonatrach’s announcement last month that it was in negotiations to buy a refinery outside of Algeria (OGJ Online, Mar. 26, 2018).
“The geographical proximity of Italy and the privileged relations that have always linked Sonatrach to this country make it natural that our first acquisition in refining should be in Italy, said Abdelmoumen Ould Kaddour, Sonatrach’s chief executive officer. “The Augusta refinery represents an ideal asset geographically and in terms of potential synergies with the Skikda refinery,” Ould Kaddour added.
The planned purchase comes as part of Sonatrach’s new strategy of resource development, under which the company plans to process its own oil and gas production instead of selling it into the market.
Broader plans
Sonatrach also confirmed earlier in the year that it expects to complete the refurbishment and revamping of the operator’s 2.7 million-tpy refinery in Algiers before yearend in a project that previously intended to increase crude processing capacity at the site to 3.6 million tpy (OGJ Online, June 5, 2017).
A contract launching Sontrach’s previously announced construction of a grassroots 5 million-tpy refinery at Hassi Messaoud is scheduled to be signed within the next 2-3 months, while relevant provisions for an earlier announced 5 million-tpy refinery at Tiaret—which will cost between $2-5 billion—has yet to be launched (OGJ Online, Mar. 8, 2016).
Plans for a third previously announced 5 million-tpy refinery the company previously said it would build in Biskra have yet to be disclosed.
New contract
In addition to the three proposed grassroots refineries at Hassi Messaoud, Tiaret, and Biskra, Sonatrach’s program to help meet energy demand of Algeria’s domestic market by 2040 also includes construction of a 4.6-million tpy gas oil hydrocracker and a 4-million tpy catalytic reformer to enable production of Euro 5-quality diesel and gasoline at its existing refinery in Skikda, both of which most recently were scheduled for completion in 2019 (OGJ Online, Dec. 20, 2016).
In early May, Sonatrach let a contract to Honeywell UOP LLC to provide technology licensing, basic engineering design, and other associated services for an 81,000-b/d UOP Unicracking unit and a 24,100-b/d UOP-Foster Wheeler solvent deasphalting (SDA) unit to produce ultralow-sulfur diesel, UOP said on May 8.
In addition to the Unicracking and SDA units, UOP will provide its CCR Platforming and Penex isomerization units to convert 143,000 b/d of naphtha into cleaner-burning, high-octane gasoline, the service provider said.
Part of Sonatrach’s Skikda refinery expansion plans, the new technologies will enable the operator to meet growing domestic demand for high-octane gasoline and diesel fuels that meet Euro 5 standards, UOP said.
Neither Sonatrach nor UOP revealed a value of this latest contract at Skikda.