OCI & Sonatrach to Co-invest in Fertilizer Project in Algeria

Orascom Construction Industries (OCI) has signed an initial agreement with the Algerian state-owned oil & gas company Sonatrach for the establishment of a one million ton per year greenfield ammonia/urea plant in Algeria for a total investment cost of US$ 746 million. OCI initiated the project with a detailed proposal and feasibility study that was presented to Sonatrach and will act as lead project developer.

Societe Generale has been appointed as the financial advisor and White & Case (London) has been appointed as the appointed legal advisor for the new venture. OCI will have a 51% stake in the new venture while Sonatrach will own the remaining 49%. The plant is expected to be built in the industrial zone at Arzew near the Mediterranean Sea shoreline. OCI intends to obtain the required long-term project finance debt in a limited recourse structure from a combination of local Algerian and international banks. The project will be shortly submitted for approval to the Algerian National Council for Investments. Based on the agreement and following necessary approvals, Sonatrach will also enter into a 20-year gas supply agreement with the new venture.

In October 05, OCI announced an investment in the fertilizer industry through a 50% stake in the Middle East Petrochemical Company (MEPCO) that in turn owns 60% of Egyptian Basic Industries Corporation (EBIC) which is currently constructing a 2,000 ton per day greenfield ammonia plant in Ain Sokhna – Egypt for a total investment cost of US$ 540 million. The EBIC plant is scheduled for start-up during early 2009.