China’s Sinopec and Sonatrach of Algeria have signed a memorandum of understanding on expanding their existing collaboration.

Guo Yueliang, chairman of Sinopec International Energy Investment Limited, and Toufik Hakkar, chairman and chief executive officer of Sonatrach, recently met along with senior executives to discuss ongoing relations and prospects for further cooperation, particularly in the field of oil and gas exploration and production.

Sinopec, which has been present in Algeria since 2002, operates the Zarzaitine field together with Sonatrach, under an association contract aimed at increasing the recovery rate of existing crude oil reserves.

In May this year, Sonatrach and Sinopec Overseas Oil & Gas Limited signed a production-sharing contract related to the contractual perimeter of Zarzaitine, under Algeria’s new law (19-13) on hydrocarbon activities.

The total investment for the programme is estimated at US$490 million, which will enable the recovery of nearly 95 million barrels of oil.

In February Sonatrach awarded Sinopec a contract for the construction of a new liquefied natural gas (LNG) storage tank for the Skikda LNG facility.

Sonatrach signed the contract with Sinopec units Sinopec Luoyang Engineering and Sinopec International Petroleum Services Corporation.

Under the deal, worth US$177.7 million, Sinopec will build the 150,000 cubic metre storage tank at Algeria’s eastern gas export terminal of Skikda, and dismantle two existing tanks in the complex. The LNG plant has a capacity of 4 million metric tonnes per year.

The project also includes the supply and installation of equipment for the connection of the storage tank to the LNG loading system of the new Skikda jetty. The project will allow for the removal and significant rotations of export LNG vessels.

Sonatrach has ambitions to consolidate its position as a regional leader in LNG production.