Tunisia Tendering for $1.4 Billion Refinery Project to Keep Up with Domestic Demand

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). Work on a 120,000 barrel per day (BPD) oil refinery at La Skhira in Tunisia will begin in late 2007 or early 2008. Currently, the government will close the prequalification tender process on March 31, 2006, for the $1.4 billion project and will name the pre-qualified, interested investors no later than June 2006. The tender contract winner will be chosen in June 2007 and will build, own, and operate (BOO) for an initial period of 30 years. The contract will cover the supply of crude oil to feed the refinery.

Crude and oil treatment and refining units with a minimum capacity of 120,000 bpd, storage installations for the refined products, all the necessary auxiliary installations, administrative buildings, warehouses and workshops and all the infrastructure necessary for the good operation of the refinery, such as roads parking areas, lighting and security fencing will be covered by the scope of the contract.

The project contract will benefit from a special fiscal regime ratified by law and suggestions made by bidders will be studied and may be taken on board when the final package is launched.

It is thought that a significant portion of investment in the refinery project could come from the UAE following talks with Tunisia in late 2005. Dubai already holds about 86% of the current UAE trade with the country. In addition to Skhira a number of infrastructure and development projects in Tunisia were under discussion.

The site at La Skhira already has a complete petroleum infrastructure and a protected and easily accessible port. There is existing storage capacity of 1.9 million barrels of crude oil combined with the additional equivalent capacity of petroleum products. The port terminal also offered various options of supply via different pipelines. The key pipelines offer a secure supply of crude oil from the fields in the south of Tunisia and from In Amenas in Algeria. Over 20% of Algeria’s oil exports are handled through Skhira.

La Skhira is positioned strategically close to the EU market which is chronically thirsty for petroleum products. In 2004 Europe imported 2.4 million barrels of petroleum products per day. Tunisia was the first southern Mediterranean company to sign an association and free trade agreement with the EU in 1995.Foreign investors benefit from a range of multilateral and bilateral guarantees.

The government has finally moved on the refinery project in order to meet domestic demand for petroleum products in an economy that has been growing at an average annual rate of 5% over the past decade. In 2004 national consumption pf petroleum products was 79,000 bpd and this figure has been increasing at a rate of 4% a year. 61,000 bpd of the 2004 total was imported. For the past two years the capacity of the country’s existing refinery at Bizerte has been 30,000 bpd.

A GDP growth rate of 5.6% has been predicted for Tunisia in 2006.

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