Orascom takes advantage from Algeria gas for 25 years

Algeria’s energy group Sonatrach signed suspicious deals with its various subsidies such as GCB, GTP, ENTP along with tens of contacts with protection company, investigations show.

• A large number of 25-year-contracts were signed amicably. Deals have been sealed this way since the dismissal of former CEO Abdelhak Bouhafs. He rejected pressures from the Algerian energy minister Chakib Khelil who was fighting to make changes to the hydrocarbons law.
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• Of the significant deals, there is a contract signed to provide Orascom Construction Industries with natural gas at local market price. It has been almost for free for 25 years. The company needed the gas for its fertilizers factories in the province of OranAlgiers). On the other hand, it does not have any necessary technology to work in fertilizers and petrochemicals sector. (west of
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• Orascom Construction Industries granted its deal with Sonatrach to a German fertilizers factories manufacturer. That raised doubts among investigators on whether the Algerian government and Sonatrach really could not deal with the German company to build new petrochemical factories.
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• Algeria is a leading country in petrochemical industries. So, does the government need Sawaris family’s services to mediate between it and the German company, investigators wonder.
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• Algeria’s National Agency of Investment Promotion has granted Sawaris family tax privileges all the time it was setting up its projects in the country. That led to the dismissal of the agency’s manager for refusing to sign.
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• Sawaris is working on making the factory known abroad and making investors believe that works reached 80 percent in order to make profits in stock exchange. Yet, works achievement is estimated at 15 percent only.
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• Orascom Construction Industries contract stipulates that the Egyptian company gets one billion cube metre of gas at domestic market price annually for 25 years. Word Trade Organisation has been asking Algeria to make changes to gas price for years.
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• This gas is used to provide an ammonia producing factory with 1.3 million ton energy. Orascom Construction Industries has 51 percent of the company’s capital and Sonatrach’s contribution 49 percent.
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• Orascom prepared all necessary studies to the project and presented it to Sonatrach with the help of Societe General and White Index. Exterior Bank of Algeria accepted to fund the project after putting pressures on its officials.
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• A contract was signed with German UHDE to make a design for the factory in the industrial zone Arzew. That means Orascom has nothing to do with petrochemicals industry and it is no more than a speculative company. That also means there were suspicious conditions when fertilizers deals were signed in Algeria. Orascom entered this sensitive and complicated sector after it had bought Egyptian Fertilizers Company owned by Abraaj Capital at $59.1 billion.
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• The project is valued at $746 million. A part of it will be funded through long-term loans by Algerian banks. The new factory will be established in Arzew industrial zone. An agreement was signed with Sonatrach to provide the project with Algerian natural gas at 4 dollars per unit. In the world market, one million units costs about 14 dollars. That means energy ministry grants Egypt’s Orascom a present of one billion dollars every year.
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• In an attempt to convince the Algerian government in stopping gas waste, Russian Gazprom suggested to build, fund petrochemicals factories and buy the gas at international market price. Yet, Sonatrach did not reply it and preferred to deal with Sawaris family. The Egyptian group has nothing to do with petrochemicals industry compared to Sonatrach and Gazprom.