ALGIERS, ALGERIA — Algeria’s national oil and gas company, Sonatrach, has formalized a major strategic partnership by signing a $437 million contract with China’s Sinopec Guangzhou Engineering Co., Ltd. (GPEC). The agreement centers on the construction of a new heavy naphtha hydrotreating and reforming unit at the Arzew refinery in northwestern Algeria, a move designed to significantly boost the nation’s domestic production of high-quality gasoline.
Key Details of the Contract
The contract, signed on Monday, November 17, 2025, is valued at 57 billion Algerian dinars (approximately $437 million). It is an Engineering, Procurement, Construction, and Commissioning (EPCC) turnkey commitment, placing the full responsibility for the project’s design and execution on the Chinese firm, a subsidiary of the massive Sinopec Group.
The primary objective of the new unit is to dramatically increase the output of the Arzew refinery. Upon completion, the facility’s annual gasoline production capacity is projected to more than double, rising from the current 550,000 tons per year (tpy) to an impressive 1.2 million tpy.
Strategic Importance for Algerian Energy Autonomy
This investment is a core component of Sonatrach’s broader plan to modernize and expand its refining sector, reducing Algeria’s reliance on imported refined products and enhancing energy autonomy. The heavy naphtha hydrotreating process is crucial, as it uses hydrogen to remove impurities like sulfur and nitrogen from petroleum distillates, preparing the feedstock for conversion into high-octane gasoline.
The project is strategically vital as it aims to fully cover the fuel demand in Algeria’s western and southwestern regions. Furthermore, the enhanced capacity will enable Sonatrach to pursue potential export opportunities for refined products such as naphtha, fuel oil, and base oils to regional markets.
Construction and Timeline
The new unit will be built on a five-hectare plot within the existing Arzew refinery complex. The construction phase is anticipated to take 30 months to complete, after which the facility will enter into operation, marking a major milestone in Algeria’s ongoing energy industrialization strategy.
The partnership with Sinopec, which has an established track record in large-scale hydrocarbon facility design and construction, underscores the growing economic and technical cooperation between Algeria and China in the energy sector. This deal reaffirms Sonatrach’s commitment to self-financing strategic infrastructure projects to secure the nation’s energy future.
