A UK specialist engineering company based in Lincoln is supplying 15 gas turbine units to Algeria’s oil pipeline sector in a contract worth around £25mn with support from the Export Credits Guarantee Department (ECGD).

Demag Delaval Industrial Turbomachinery Ltd (DDIT) is supplying the equipment for Phase 2 of the OZ2 Oil Pipeline which will transport oil from Haoud El Hamra to the refinery and port town of Arzew, following the route of the existing OZ1 Oil Pipeline which was built 30 years ago.

Mike O’Brien, minister for trade, says: “The OZ2 Oil Pipeline will help boost Algeria’s oil exports and increase the country’s hard-currency revenues. This ECGD-supported deal will also help support jobs at the DDIT’s gas turbines factory based in Lincoln – welcome news for the UK’s manufacturing sector.”

ECGD, the UK’s official export credit agency, is reinsuring the equipment built by DDIT in conjunction with the European export credit agencies Sace (Italy) and Coface (France).

The same parties were involved in supplying equipment under phase one of the OZ2 Oil Pipeline project including reinsurance from ECGD.

This contract to supply 15 gas turbine units – which DDIT won in 2003 – is part of the overall contract to build six pumping stations on the pipeline awarded by Sonatrach, the Algerian national oil and gas company, to the French/Italian consortium Spie-Capag-Saipem GEIE, which has sub-contracted DDIT.

Under the reinsurance deal backed by ECGD, loans provided by a pool of banks, of which Societe Generale is the arranger and agent, will be used by the Algerian national oil and gas company to pay for the six pumping stations which will transmit oil through the pipeline which is due for operation in 2005.

Steve Wildman, commercial director, oil and gas, for Demag Delaval Industrial Turbomachinery, says: “The company greatly values the opportunity to further develop the oil and gas infrastructure with Sonatrach with the support provided by the ECGD. The first DDIT gas turbines were supplied to Algeria in 1962 and now total 124 sets.”

Oil reserves in Algeria are currently estimated to be 11.3bn barrels although continuing oil exploration is expected to see this figure increase.

Since May 2003 Demag Delaval Industrial Turbomachinery Ltd (formerly Alstom Power UK Ltd) has been fully owned by Siemens AG.