BMI's Executive Summary

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Government policy is creating uncertainty in upstream sectors, thereby threatening feedstock availability and investor confidence in petrochemicals, according to BMI's latest Algeria Petrochemicals Report.

In BMI's revised Middle Eastern Petrochemicals Business Environment Rankings matrix, Algeria remains at the bottom of the 10 countries surveyed with an overall score of 37.3 points, 19 points below the regional average. On nearly every indicator, Algeria comes last by a long margin. However, the development of the Arzew petrochemical complex will elevate Algeria's score in the years ahead. In July 2007, the Algerian government awarded contracts to Total and an international consortium, Almet, worth a combined US$4bn to build two new petrochemical plants as part of a 10-unit petrochemical complex with an estimated investment of US$12bn. Total signed a contract worth US$3bn to build a 1.1mn tpa ethane cracker at Arzew to manufacture 410,000tpa of monoethylene glycol (MEG), 350,000 metric tons of high density polyethylene (PE) and 450,000 metric tons of linear low density polyethylene. (LLDPE).

Sonatrach awarded an international consortium, Almet, backed by Kuwaiti, German, Trinidadian, Japanese and Algerian investors, with the contract to build a methanol production facility at the Arzew industrial zone. The investment totals US$1bn and annual production is expected at 1mn tpa of methanol, destined for export. These investments are an indication of continued interest in Algeria's energy sector, and indicate a focus on the government's part towards attracting foreign investment in downstream. However, Algeria lags behind its regional peers in terms of its business environment, with market orientation a major weakness. The most obvious opportunities for foreign investors are in the oil and gas sectors, but here state-owned company Sonatrach is guaranteed a controlling stake in any exploration contracts. In terms of the regulatory environment for the petrochemicals industry, Algeria scores relatively poorly, due to the amendment hydrocarbons law in 2006 which ensures that Sonatrach retains a majority role (at least 51%) in running refineries and in transporting oil and gas by pipeline and subjects IOCs to a tax of 5-50% on windfall profits.

Investors have not been completely deterred from involvement in Algeria's petrochemicals sector. The investments in the petrochemicals industry announced in July 2007 are an indication of continued interest in Algeria's energy sector, and indicate a focus on the government's part towards attracting foreign investment in downstream. With inadequate investment hindering the growth of the petrochemicals industry to date, the latest developments bode well and in time, exports of these products should boost revenues.

Contents

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Chapter 1 - Executive Summary

Market Overview

Industry Developments

Foreign Direct Investment

Industry Outlook

Table: Algeria Petrochemicals Industry SWOT

Chapter 2 - Market Overview

Market Structure

Table: Production of Petrochemicals (in tonnes)

Table: Algeria Petrochemicals Sector Cracker Capacity Data and Forecasts ('000 tpa)

Chapter 3 - Industry Trends And Developments

Foreign Direct Investment

Hydrocarbon Law Amendment

Chapter 4 - Industry Forecast Scenario

Table: Algeria Petrochemical Sector - Historical Data & Forecasts

Chapter 5 - Economic Outlook

Table: Algeria: Macroeconomic Data And Forecasts

Business Environment

Chapter 6 - Company Monitor

Sonatrach/ENIP

Chapter 7 - BMI Forecast Modelling

How we generate our industry forecasts

Chemicals & Petrochemicals Industry

Cross checks

Competitive Landscape for Middle East & Africa Petrochemicals Reports: Sample of Companies Ranked

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Comparative company analyses and rankings by US$ sales, % market share, employee size, registration date and ownership structure. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) on all leading international and national operators in each market, including competitive intelligence in the following: Overall geographic presence, competitive positioning against local companies; production capacity, sales and market share; joint ventures, foreign direct investment, projects and acquisitions strategy.