Egypt's Orascom Secures Infrastructure Contracts for El Merk Hub in Algeria

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Researched by Industrial Info Resources (Sugar Land, Texas)--Orascom Construction Industries (CAI:OCIC) (Cairo, Egypt) has secured two contracts to build facilities for the El Merk production hub in Algeria. The El Merk facility, situated in the Berkine Basin about 300 kilometers east of the capital of Algiers, will be operated by Groupement Berkine (Hassi Messaoud, Algeria). Groupement Berkine is a joint venture between Anadarko Petroleum Corporation (NYSE:APC) (The Woodlands, Texas) and Algeria's state-controlled Sonatrach (Hydra).

Groupement Berkine awarded the first contract to Orascom to design and develop infrastructure for the facility, which will handle hydrocarbon from the El Merk oil field. The estimated $230 million contract will be executed by Orascom in a joint venture with Bentini SpA (Faenza, Italy).

Orascom secured the second contract from Petrofac (LSE:PFC) (London), the engineering, procurement and construction contractor for the El Merk project. The $170 million contract covers structural steel and civil work for the processing unit. Steel products required for construction will be sourced from the Algerian and Egyptian production units of National Steel Fabrication (Cairo), a subsidiary of Orascom. The total direct share of Orascom from both the contracts amounts to $280 million. Both the contracts are expected to be executed by the end of 2011.

The El Merk facility, which will act as a central processing and distribution unit for the region, is expected to produce 29,000 barrels per day (BBL/d) of condensate, 98,000 BBL/d of oil, 600 million cubic feet of natural gas liquids, and 31,000 BBL/d of liquefied petroleum gas. The facility will also include an 80,000-BBL/d water treatment facility and a residue and gas compression reinjection system with a capacity of 500 million cubic feet. KBR Incorporated (NYSE:KBR) (Houston, Texas) is the design consultant for the project.

The El Merk facility is located in Block 208, about 250 kilometers southeast of Hassi Messaoud in the Algerian desert. The production facility will use feed from Blocks 208 and 405a. Block 405a is jointly managed by ConocoPhillips (NYSE:COP) (Houston) and Sonatrach.

The Orascom Group is engaged in the infrastructure development and building sectors. It employs about 50,000 people and operates through three primary business entities. Orascom Construction Industries is involved in the development of infrastructure projects in the Middle East, Egypt and North Africa. Contrack International (McLean, Virginia) handles industrial and institutional projects in Central Asia and the Middle East, and the BESIX Group (Brussels, Belgium) is responsible for industrial and commercial projects in the Middle East and Europe. In March, the Orascom Group indicated that its revenue from the construction sector is expected to increase by 20%-30% this fiscal year.

The group recently secured a $340 million retail center construction contract at Cairo Festival City. The project will be executed in a joint venture with Al-Futtaim Carillion (Dubai, United Arab Emirates). It will cover a built-up area of 425,000 square meters. Orascom's share in the turnkey project amounts to $120 million. The contract is expected to be executed by 2012.

Orascom is also setting up a 1,300-megawatt (MW) steam power plant in Abu Qir near Alexandria, Egypt. The contract, awarded by state-controlled West Delta Electricity Production Company (Alexandria), entails structural and civil work for the power plant.

Orascom is also completing several power projects in Algeria and Egypt with a combined power generation capacity of 4,150 MW. The BESIX Group will execute the $740 million Doha convention center and tower construction project in a joint venture with Midmac Contracting Company WLL (Doha, Qatar). The contract, awarded by Qatari Diar Real Estate Investment Company (Doha), includes the entire plumbing, civil, mechanical, electrical and architectural work. Construction of the retail center over 40,000 square meters and the convention area over 97,500 square meters will be completed by 2011. The direct share of the contract secured by BESIX Group amounts to about $370 million.

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