28-07-08 Algeria's state-owned oil and gas company Sonatrach has signed a contract with a consortium of Italy's Snamprogetti and Japan's Chiyoda to build a 4.7 mm tpy LNG train at Arzew at a cost of $ 4.55 bn, the Algerian company said.
The consortium is committed to a guaranteed price of Dinars 55,071/ton ($ 890.10/ton) with the work due for completion in 2012, when Algeria's LNG production will rise to 30 mm tpy, said Abdelhafid Feghouli, Sonatrach's downstream vice president.

The contract to build a third LNG train at Arzew had been awarded provisionally to UK oil services company Petrofac and IKPT of Indonesia earlier this month after a public bidding process, but Sonatrach said the group had failed to provide sufficient guarantees about its plans for the project. The joint bid by Snamprogetti, part of Italy's Saipem, and Chiyoda, was a close second.
The Petrofac-IKPT bid was rejected as the companies failed to give Sonatrach sufficient guarantees about the capacity and the overall cost of the project within a time frame specified by Sonatrach.

France's Technip also submitted a bid for the project, proposing a 4.88 mm tpy plant at a total cost of $ 5.92 bn.
Initially, the project was to have been developed by Spain's Repsol-YPF and Gas Natural along with an Algerian company, El Andalus, set up for the purpose. But the project was withdrawn because of a delay in implementation and Sonatrach decided to fund the new train itself. Gas feedstock will come from the Gassi Touil and Rhourde Enouss gas fields.

Algeria, an OPEC oil producer, is the fourth-biggest exporter of LNG in the world, with two LNG plants at Skikda and Arzew. It also supplies gas to European markets through pipelines running to Spain and Italy.
The country, the world's first LNG exporter, is looking to increase its production capacity. Last year Sonatrach awarded US company Kellogg Brown and Root a $ 2.85 bn contract to build a 4.5 mm tpy train at Skikda, due to be completed in 2011.