Sonatrach-Total JV to begin construction of Algeria PP plant in July

LONDON (ICIS)–A joint-venture (JV) between Total and Sonatrach is expected to begin construction of its Algerian polypropylene (PP) plant in July 2023, and Abbes Laghrour, director general of Sonatrach Total Entreprise Polymeres (STEP), is extremely upbeat about its potential.

“We can satisfy all demand in Algeria and we are able to supply customers in North Africa,” Laghrour said.

There is very little domestic PP production in North Africa compared to demand, and the region mostly relies on exports from Europe and the Middle East.

The STEP PP plant will have a nameplate capacity of 550,000 tonnes/year of homopolymer.

Well-documented and commonplace shipping problems connected with Algeria are not expected to impact the plant as upstream material will be provided by the Erg Issouane gas field.

The JV will initially concentrate on Algeria and its neighbouring countries, such as Morocco and Tunisia. A 50% share will also be reserved for export, with Europe the main focus.

The hope is that other areas of Africa will eventually be targeted, with South Africa in particular, and Asia mentioned as potential future destinations.

It is a difficult time to launch new PP capacity as expansions and new plant openings are scheduled all over Asia. They will come in addition to recent start-ups – although a plant in Africa with a focus on providing product to the continent will be a rarity.

Algerian gas and energy will provide STEP with a competitive price advantage for exports into Europe and will be able to supply it more quickly than other material which largely comes from the Middle East and Asia.

Laghrour was also upbeat about the demand outlook despite the generally weak sentiment that pervades the continent.

“I’m rather optimistic about demand which would be rather strong – and that market needs would exceed 80m tonnes/year,” noted Laghrour.

Competition with Asian exports could be fierce by the time the STEP plant opens, but there is little competition across North Africa which will provide it with a unique opportunity.

This will be the case if African economies are able to recover from a current sharp economic downturn, the fallout from COVID-19 lockdowns, rising inflation and domestic currency devaluations – all of which have seriously dampened the medium-term outlook.

Thumbnail image shows Sonatrach Raffinerie d’Aler in Sidi R’cine, Algeria, operated by Sonatrach (image credit: APP/NurPhoto/Shutterstock)