SNC lands $1.1-billion Algerian contract

Engineering giant SNC-Lavalin Group Inc. (SNC-T42.26-1.28-2.94%) has been awarded a $1.1-billion (U.S.) contract to build a natural gas processing facility for Algeria’s national oil company.

The contract awarded by Sonatrach spans 39 months. The Montreal-based company confirmed the deal but said it will unveil details on Tuesday.

Algeria’s energy minister said Monday SNC-Lavalin will build gas collection infrastructure at four southern fields, a natural gas processing facility at Qartzites de Hamra and a processing facility to re-inject carbon dioxide into gas fields.

The natural gas will flow to the Arzew liquefied natural gas processing facility being built near Oran, allowing Sonatrach to increase exports, Energy Minister Chakib Khelil Khelil said, according to a report in Algeria’s APS news agency.

Canaccord Adams analyst Yuri Lynk described the contract as positive for SNC and said it could add about 15 cents of earnings per share in 2010 and 15 per cent to the company’s backlog.

“Furthermore, at 39 months in length, the Sonatrach contract helps to provide visibility beyond 2010,” he wrote on Monday.

However, he cautioned that SNC’s packages division contracts are partially subcontracted for the supply of material and equipment that can be adversely affected by subcontractors or suppliers failing to meet standards.

SNC-Lavalin has been working in the north African country for more than 40 years, and built the famed Martyr’s Tower in Algiers.

For the first time in its history, the company was the target of a terrorist attack as 12 of its employees were killed last August in a bus bomb blast in Algeria.