Fertiliser production in Algeria has risen in 2014 and 2015, thanks largely to major plants expanding production and the launch of a third producer. Increasing fertiliser use plays a key role in government plans to step up domestic agricultural production. Currently, Algeria’s use of fertiliser is well below that of its neighbours, Morocco and Tunisia. To this end, existing Ministry of Agriculture, Rural Development and Fisheries fertiliser subsidies of 20%, combined with expanding production locally, will help to make fertiliser cheaper for farmers.
Between 2013 and 2014, export revenue from fertilisers almost tripled, from €121.2m to €349.7m, with ammonia and urea the biggest sellers. This accounted for one-third of Algeria’s non-hydrocarbons exports in 2014, second only to oil derivative products. In the same period, ammonia exports doubled year-on-year (y-o-y) to reach €437.8m. The highest growth rate in that period, however, came from other mineral fertiliser products, primarily urea. Mineral fertiliser exports jumped almost tenfold from €34.3m in 2013 to €262.3min 2014, thanks to the addition of production plant, Sorfert, in August 2013.
The growth in Algeria’s fertiliser exports was the main reason behind a 31.7% rise y-o-y in revenue from non-hydrocarbon exports, to €1.85bn, which represents a total of 4.11% of the country’s total exports. Ammonia and urea production both take advantage of Algeria’s extensive supplies of cheap gas feedstock, which amount to approximately 159trn cu feet of recoverable gas reserves.
The recent launch of a new third-operator – Al Djazairia Al Omania Lil Asmida (AOA) – is set to expand the sector going forwards.
Developed by state-owned energy firm Sonatrach and Oman’s Suhail Bahwan Group at a cost €2.3bn, the new AOA plant, which is based in Arzew – a major centre for the petrochemicals industry – produces ammonia converted to urea and has a capacity of 2.4m tonnes. After it began operations in 2015, national production increased by about one-third and led to an immediate boost in petrochemicals production, with output rising 82% y-o-y in the first quarter of 2015.
The project faced delays during its development over discussions regarding the price of gas feedstock. A new contract was agreed, and although the details have not been made public, local press reports indicate gas will be indexed to international market prices, allowing Sonatrach, which has a 49% stake, to carve out a larger share of revenue. The initial contract was based on subsidised gas prices.
Algeria has two other large ammonia and urea facilities.
The first, Fertial, is a joint venture between Spain’s Grupo Villar Mir and Sonatrach’s subsidiary Asmidal. Recently, the company announced it will invest €250m between 2014 and 2018 to modernise its two ammonia production sites in Arzew and Annaba and increase capacity from 1.2m tonnes to 1.8m tonnes. The US engineering firm KBR was awarded a contract in September 2014 to revamp Fertial’s plants and improve energy efficiency.
The second facility, Sorfert, has the capacity to produce 1m tonnes of ammonia and 800,000 tonnes of urea per year. The firm, a joint venture between Egypt’s Orascom Construction Industries and Sonatrach, announced in November 2014 that it had produced and exported around 739,000 tonnes of ammonia and 750,000 tonnes of urea since its launch in August 2013, generating total revenues of approximately €446m.
Due to the fact that the initial agreements were signed before the implementation, in 2009, of Algeria’s 49:51 law, which requires Algerian firms to be majority stakeholders, all three foreign partners are majority owners of the joint ventures.