Algeria halts production at gas complex hit by blasts and fire

The accident at Skikda cost Algeria $300 million in lost export revenue in addition to about $1 billion that will be needed to rebuild the facility.
Thursday 04/07/2019
The logo of Algerian state energy company Sonatrach is pictured on a gate outside the headquarters in Algiers, Algeria, June 26, 2016. (Reuters)
The logo of Algerian state energy company Sonatrach is pictured on a gate outside the headquarters in Algiers, Algeria, June 26, 2016. (Reuters)

TUNIS - Algeria's state energy group Sonatrach has stopped production at one of the country's key gas complexes, which had been hit by two explosions and a fire.

Technical teams and investigators worked to determine the effects and cause of the incident, which was the worst in 15 years in Algeria’s crucial gas export industry. Emergency personnel fought the fire for two days and nights before it was said to be under control July 3.

The fire broke out at 10pm, July 1 at Algeria's main liquefied natural gas (LNG) complex in Arzew's petrochemical hub in the western region of Oran, turning the sky bright orange and yellow interspersed with black smoke.

The blaze was preceded by two explosions that shook buildings and prompted residents 40km away to flee their homes. Some people initially took the blasts for an earthquake. The GL1Z's fire spewed towers of clouds, heavy smoke and bursts of flames to residential areas in Arzew and Betio.

Sonatrach said there were four injuries from the fire that spread through pipelines carrying natural gas into the complex known as GLZ from Hassi R'mel gas field in the south.

The cause of the incident was unclear although Algerian media reported that "sabotage" was unlikely at a high-security zone because the Arzew complex accounts for most of the country's liquefied natural gas exports.

Local media said the incident could have resulted in a national disaster if the fire had spread to other gas plants because of the economic role of Arzew, which represent 95% of Algeria's total gas and oil export sales.

GL1Z is one of three LNG complexes in Arzew, where natural gas is chilled from vapour until it condenses into liquid to be transported by ships to markets in Asia and the United States.

Arzew petrochemical hub stretches over 120 hectares. It is one of the biggest LNG export outlets in the world. GL1Z has a production capacity of 7.9 million tonnes per year. Arzew’s complexes GL2Z and GL3Z have a total output capacity of 13 million tonnes annually.

Algerian energy experts said the explosions and fire at GL1Z, was the worst incident since the 2004 accident in Skikda's LNG complex, where an explosion flattened a large part of the gas plant, killing 30 people and injuring 70 others. Sonatrach attributed the explosion to an accident at a steam boiler.

The incident at Skikda cost Algeria $300 million in lost export revenue because of the idled plant in addition to about $1 billion needed to rebuild the facility, which had been constructed in the early 1970s by Technip, a French construction company, and renovated in the 1990s by the Halliburton Company, a US energy services firm.

Sonatrach told its clients the Arzew "incident" would  have no effect on the production capacity of the GL1Z complex.

Experts said Sonatrach does not want to lose market share to competing LNG producers in Africa, such as Egypt and Nigeria. Egypt is close to traditionally large European markets for Algerian gas, such as Spain.

"Sonatrach has decided to halt completely the production at GL1Z complex after it was confirmed that the resumption of production currently could cause ‘safety problems’ after close investigation of the equipment and pipelines that were affected by the force of the explosions," Algeria's newspaper El Khabar reported.