Orascom Construction Industries (OCI) announced that it had signed an initial agreement with the Algerian state-owned oil & gas company Sonatrach for the establishment of a one million ton per year greenfield ammonia/urea plant in Algeria for a total investment cost of US$ 746 million. OCI initiated the project with a detailed proposal and feasibility study that was presented to Sonatrach and will act as lead project developer.
Societe Generale has been appointed as the financial advisor and White & Case (London) has been appointed as the appointed legal advisor for the new venture. OCI will have a 51% stake in the new venture while Sonatrach will own the remaining 49%. The plant is expected to be built in the industrial zone at Arzew near the Mediterranean Sea shoreline. OCI intends to obtain the required long-term project finance debt in a limited recourse structure from a combination of local Algerian and international banks. The project will be shortly submitted for approval to the Algerian National Council for Investments.
Based on the agreement and following necessary approvals, Sonatrach will also enter into a 20-year gas supply agreement with the new venture.
OCI Chief Executive Officer, Nassef Sawiris commented “Algeria is a core market for OCI. We continue to be extremely bullish on the economy and the investment climate in Algeria. We are further motivated by our successful experience in the Algerian construction and cement markets. OCI employs more than 2,000 Algerians across a variety of group activities and will continue to tap Algeria’s pool of talented human resources for future projects. OCI has already received several expressions of interest from international fertilizer traders to enter into long-term off-take agreements for the plant’s output. This new venture is in keeping with our strategy to expand into natural gas-derivative industries that capitalize on the region’s competitive advantages. This new venture will help us maintain our growth momentum in 2009 and beyond.”
In October 05, OCI announced an investment in the fertilizer industry through a 50% stake in the Middle East Petrochemical Company (MEPCO) that in turn owns 60% of Egyptian Basic Industries Corporation (EBIC) which is currently constructing a 2,000 ton per day greenfield ammonia plant in Ain Sokhna – Egypt for a total investment cost of US$ 540 million. The EBIC plant is scheduled for start-up during early 2009.