Algeria' Sonatrach awarded China Petroleum Engineering and Construction Corporation (CPECC) a $420 million contract to renovate the Sidi R'cine Refinery in Bakari near its capital Algiers, the state energy firm announced on Sunday.

Under the deal, the Chinese company will repair the refinery after Sonatrach severed its initial deal with French engineering company Technip, according to Channel News Asia.

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Sonatrach initially awarded the then-worth $975 million deal to Technip in 2010. However, the two parties decided to part ways last year because of alleged procedural differences. Reports from Algerian media said that Technip purportedly realized that more works were needed to be done than merely modernizing the refinery, according to The Malay Online.

Meanwhile, the project aims to modernize and bring to European standards the more than 50-year-old Sidi R'cine refinery. It also plans to increase its current annual output of 2.7 million tons of refined petrol by 35 percent.

The agreement was signed by Tahar Cherif Zerrar, head of the Sonatrach refinery, and Liu Chun Lin, CPECC's general manager. It was witnessed by Noureddine Boutarfa, the energy minister; Amine Mazouzi, Sonatrach's chief executive officer; and Yang Guangyu, China's ambassador to Algiers, the All Africa news website noted.

Algeria has announced rehabilitation works on its refineries and plans to construct five more as it aims to increase its output by 50 percent in five years, Reuters reported. Currently, the country produces 30 million tons of oil products annually.  

The rehabilitation works for the Sonatrach's Sidi R'cine Refinery will be carried out for 21 months.

TagsAlgeria Sonatrach, Sidi R'cine Algeria, Sidi R'cine Bakari, Oil Refinery, China Petroleum Engineering and Construction Corporation, CPECC