Petrofac has signed a $1.5bn engineering, procurement, and construction (EPC) contract with Sonatrach’s subsidiary STEP Polymers for the design and build of a petrochemical complex in Algeria.

The contract will be executed by Petrofac in consortium with China Huanqiu Contracting & Engineering Corporation (HQC). The latter is a fully-owned construction subsidiary of China National Petroleum Corporation (CNPC).

Petrofac’s share of the contract will be more than $1bn.

Petrofac group chief executive Tareq Kawash said: “I am delighted to be in Algiers alongside our partner and client to mark the official award of this pioneering project.

“Broadening Petrofac’s portfolio within the petrochemical sector, this contract builds on our 25-year track record of safely delivering strategically significant energy infrastructure in Algeria, while developing local workforces.”

The signing of the contract follows the receipt of notification of the conditional award announced by the energy services company last month.

To be built in the Arzew Industrial Zone, located west of Algiers, the petrochemical complex is expected to produce 550,000 tons of polypropylene per annum.

The produced polypropylene will be intended to meet the needs of the domestic Algerian market while the surplus production is planned to be exported to the European, Asian, and African markets.

Under the contract, Petrofac and HQC will be responsible for the design and build of two major integrated processing units. The joint venture (JV) will be delivering a new propane dehydrogenation facility and polypropylene production unit in addition to related utilities and infrastructure for the project site.

The petrochemical EPC project is scheduled to be completed within a timeline of 42 months.

To be spread over 88ha, the petrochemical complex in Arzew will generate around 6,000 direct jobs during the construction stage. It will also open up 450 roles during the operation stage along with 2,000 indirect jobs.

Sonatrach has announced the signing of a financing agreement between STEP Polymers and the National Bank of Algeria (BNA) as leader. The agreement will facilitate the financing of the construction of the polypropylene petrochemical complex to up to 70%, while the remaining 30% will be funded by equity.