Cepsa and Sonatrach sign gas supply letter of intent

03 December 2002

Spain's Cepsahas signed a letter of intent with Algeria's state-owned Sonatrachto buy 1 billion cubic metres a year (bcm/y) of natural gas, which will be transported through the planned Medgaz trans-Mediterranean pipeline, as soon as it comes on stream. The two are joint heads of the Medgaz venture, each having 20 per cent stakes, while the rest is held equally by the UK's BP, Spain's Endesa, Italy's Eni, France's TotalFinaElfand Gaz de France. The pipeline will run from Beni Saf in Algeria to Almeria on the Spanish coast, and have a capacity of between 10 bcm/y and 15 bcm/y. A statement from Cepsa said that the latest agreement would allow it to reinforce its presence in the deregulated gas market, and would be a step towards developing infrastructure to meet growing gas demand.

The two companies signed three agreements in September 2002, in which Sonatrach took a 30 per cent stake in both Cepsa's gas marketing and co-generation businesses, and contracted to supply 600 million cubic metres a year (cm/y) of liquefied natural gas (LNG) to Cepsa's four combined cycle power plants (MEED 13:9:02).

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