Sonatrach, TechnipFMC resolve dispute over cancelled refinery revamp contract

Algeria’s state-owned Sonatrach SPA and TechnipFMC PLC have settled all disputes related to a previously terminated contract under which Technip France was to provide services related to the refurbishment and revamping of the operator’s 2.7 million-tonne/year Algiers refinery.

Algeria’s state-owned Sonatrach SPA and TechnipFMC PLC have settled all disputes related to a previously terminated contract under which Technip France was to provide services related to the refurbishment and revamping of the operator’s 2.7 million-tonne/year Algiers refinery (OGJ Online, Sept. 24, 2010).

Sonatrach and TechnipFMC have amicably reached a definitive settlement agreement satisfactory to both parties and effective immediately both companies have agreed to end arbitration proceedings on the matter, the service company said.

Awarded to Technip in 2010, the 38-month, $908-million lump-sum turnkey contract covered execution of the complete scope of works for the refinery’s refurbishment including design, supply of equipment and bulk material, construction, and start-up services for revamps of existing units to enable the plant to increase its crude processing capacity to 3.6 million tpy (OGJ Online, Dec. 22, 2010).

In its quarterly earnings report to investors for second-quarter 2015, Technip confirmed it no longer was involved in the Algiers project at Sonatrach’s request.

Following severance of the contract, both companies had exercised their right to initiate arbitration proceedings on unidentified contractual claims, with proceedings at that time still in the earliest stages, according to a July 28, 2015, release from Technip.

In November 2016, Sonatrach let a contract for a cooperative reconstruction and extension project at the Algiers refinery to China National Petroleum Corp. subsidiary China Petroleum Engineering & Construction Corp. (CPECC), CPECC said in releases dated Nov. 10 and Dec. 15, 2016.

The 21-month contract covers rehabilitation works at the refinery that will allow it to increase processing capacity by 35%, Algeria’s Ministry of Energy said in Nov. 6, 2016, release.

The parties have yet to confirm further details of the revised revamp plan, including either a definitive timeline for completion or revised estimates of its overall cost.

Contact Robert Brelsford at rbrelsford@ogjonline.com.

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