Algeria’s state-owned oil and gas company Sonatrach has signed an engineering, procurement and construction (EPC) contract with China’s Group Sinopec Luoyang Engineering Company and Sinopec International Petroleum Services Corporation (SIPS).

The contract is valued at almost AD25bn ($180m) and has a 40-month completion period.

Under the contract terms, the Chinese contractors will execute a project to dismantle existing gas storage tanks, replacing them with new facilities.

Two existing tanks at the Skikda liquefaction complex will be dismantled and a single liquefied natural gas (LNG) storage tank will be constructed.

The new tank will have a nominal capacity of 150,000 cubic metres.

The project also includes the supply and installation of equipment to connect the future storage tank to the new LNG loading system of the New Skikda Jetty.

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The project to construct the loading system is under execution.

Sonatrach said the planned projects would allow for the rapid rotation of LNG export vessels and higher volumes of gas exports.

In its statement, it said: “Once commissioned, this project will raise Sonatrach’s LNG storage capacity and increase the associated removal volumes.”

It added: “The conclusion of this contract will strengthen Sonatrach’s LNG export capacity, which aims to reinforce its position as a regional leader in LNG’s production.”

Over recent weeks, Europe’s efforts to diversify gas supplies away from Russia amid increased geopolitical tensions have increased interest in the gas produced in Algeria.

Algeria is already the EU’s third-largest gas provider behind Russia and Norway.

Algeria, which has pipelines across the Mediterranean Sea to Spain and Italy and an LNG terminal, exported about 34 billion cubic metres of gas to the EU in 2021, 8 per cent of the bloc’s total imports.

Western governments, led by the US, have threatened to impose sanctions on Russia if it invades Ukraine, potentially choking off the source of around 40 per cent of European gas imports.

This article is published by MEED, the world’s leading source of business intelligence about the Middle East. MEED provides exclusive news, data and analysis on the Middle East every day. For access to MEED’s Middle East business intelligence, subscribe here.