UPDATE: Algeria Medgaz Pipe Commercial Operations Started Friday
April 01 2011 - 11:35AM
Dow Jones News
Commercial operations at the Medgaz natural-gas pipeline linking
Algeria to Spain started Friday, opening up a key new
transportation route to diversify European supply away from
Russia.
A spokesman for the Medgaz consortium said Friday that
commercial operations at the EUR900 million pipeline had started,
confirming information from official media in Algeria.
Medgaz--which runs under the Mediterranean sea and is 210
kilometers long--was initially expected to start operations in late
2009.
However, it has faced a host of delays and problems. They
include technical issues, a global gas glut and a long legal
dispute over Algerian gas prices pitting state-owned Sonatrach and
Spain's leading gas importer Gas Natural SA (GAS.MC), that is still
unresolved.
The route has the capacity to transport 8 billion cubic meters a
year, with a possible increase to 16 billion cubic meters in the
medium term.
The Medgaz spokesman said he had no information on the gas
volume currently transported.
State-oil giant Sonatrach owns 36% in the pipeline. Iberdrola SA
(IBE.MC) and Cepsa (Espagne) each have 20% and Endesa SA (ELE.MC)
and GDF Suez, 12% each.
Past natural-gas disputes between Russia and Ukraine have led
European importers to increasingly rely on other sources such as
Algeria, which is already the continent's third-largest
supplier.
-By Benoit Faucon, David Roman and Geraldine Amiel, Dow Jones
Newswires; +44-20-7842-9266; benoit.faucon@dowjones.com