Officials from the two companies also signed a letter of intent paving the way for Iberdrola to buy a further 1 bcm/y a year once the Medgaz trans-Mediterranean pipeline is built. Feasibility studies are being carried out on the new gas pipeline, which will run directly from Algeria to Spain (MEED 8:3:02, Cover Story).

Algeria is Spain's primary gas supplier, providing around 10 bcm in 2001, 61 per cent of the country's total gas demand. Spanish gas consumption is expected to rise significantly over the coming decade. Iberdrola, which is embarking on a programme of new combined-cycle power plants, including the installation of a further 4,000 MW of capacity in Spain, estimates that it will have to boost its total gas supply to 14 bcm/y by 2006 from 9 bcm/y at present.