Tunisia to Construct Refinery in Skhira

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Researched by Industrial Info Resources (Sugar Land, Texas)--Researched by Industrial Info Resources (Sugar Land, Texas)--Tunisia produces about 91,000 barrels per day (BBL/d) of oil and 2.97 billion cubic meters of gas each year, which does not meet the country's domestic demand.

The country's electricity sector is 72% gas-fired and consumes the whole of the gas produced domestically. To meet demand, additional gas is imported from neighboring Algeria, which transports gas to Tunisia through the Trans-Mediterranean Pipeline. Libya also exports 20,000 BBL/d of crude oil to Tunisia, which is refined at Tunisia's sole refinery, located in Benzerte.

In 2007, Tunisia made plans to build a refinery with a capacity of between 120,000 and 150,000 BBL/d in Skhira, a Mediterranean port about 350 kilometers southeast of Tunis. Qatar Petroleum (Doha, Qatar) announced that it had been awarded a contract from the Tunisian government to build the $2 billion oil refinery in partnership with Petrofac Limited (LSE:PFC) (Jersey, United Kingdom), but the project was suspended because of fluctuating changes in project costs since 2008 and remains on hold.

Tunisia, challenged with the 10-12% annual growth rate in domestic demand for oil and other refined products, commenced talks with Libya last October about the financing of the Skhira refinery project.

In November, Libya joined the project to commence the building of the Skhira oil refinery, but no details were given as to what role Libya would play in the project, or the size of its investment.

Algeria and Tunisia are deepening their cooperation regarding oil and gas. An agreement has been made between the countries regarding offshore oil exploration planned to start this year off the Tunisian coasts. Another agreement was signed in 2009 in which Algeria pledged to supply gas and electricity to the bordering areas of Tunisia and to complete grid interconnection between both countries.

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