Pipeline plans take shape

06 January 2006
Gas sale and purchase agreements (SPAs) on the proposed Galsi gas pipeline to Italy and the Medgaz pipe to Spain are at an advanced stage of negotiations. The two pipelines, with total capacity of 16,000 million cubic metres a year (cm/y), are due to come on stream by the beginning of 2009 (MEED 29:7:05; 25:3:05).

Spain's Cepsa on 16 December signed an SPA for 1,600 million cm/y of gas to be delivered through Medgaz, which will have throughput capacity of 8,000 million cm/y. The five other Medgaz consortium members - state energy company Sonatrach, the UK's BP, France's Total, Gaz de France and Spanish companies Endesa and Iberdrola - are expected to sign similar agreements by the beginning of January. Iberdrola in mid-2004 signed a memorandum of understanding for the sale and purchase of 1,000 million cm/y of gas.

Initial throughput at Medgaz is expected to be 6,000 million-7,000 million cm/y. Depending on market conditions, there are plans to double capacity to 16,000 million cm/y by 2012-14. 'On day one we don't intend to move 8,000 million cm/y,' says Medgaz project director Jay Chaudhuri. 'But we intend to move up to full capacity soon after. And if demand is still growing and prices are stable then we will build a second pipeline in the same corridor.'

Tenders for the construction of the 220-kilometre subsea pipeline will be issued to prequalified bidders following the beginning of a 20-day public consultation process expected to be launched by the Spanish government in the first half of January. Construction of the pipeline is expected to take 24 months, with the pipeline terminals set to take 30 months. All commercial contracts are due to be signed in mid-2006. 'We need to ensure that contractors can meet our time line,' says Chaudhuri. 'We are not only looking at quality and price, but also schedule.'

Negotiations on the sale of natural gas through the 8,000 million-cm/y Galsi pipeline to Italy are expected to be completed soon, Energy Minister Chakib Khelil told MEED in early December. 'Negotiations on the sale of gas are well advanced,' said Khelil. 'We expect them to be signed in the first quarter of 2006.' Twelve letters of intent were signed for the sale of the gas through the Galsi pipeline in March.

A tender for the pipeline, which will run 1,470 kilometres from Hassi R'Mel to Castiglionne della Pescaia, is expected to follow soon after the completion of SPA agreements. 'We are awaiting formal authorisation from the Italian government, but we hope to launch a tender in the first quarter,' Mohamed Meziane, head of Sonatrach, told MEED in early December.

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