Sonatrach, Iberdrola ink $12bn deal

13 January 2006
State energy company Sonatrachsigned in late December an estimated Eur 10,000 million ($12,000 million) strategic agreement with Spain's Iberdrolafor the development and marketing of gas and for co-operation in the power and alternative energy sector over the next 20 years.

The agreement covers:

A 60 per cent increase in the volume of gas to be received by Iberdrola through the Medgaz pipeline to 1,600 million cubic metres a year (cm/y);

A possible increase in the 730,000 tonnes a year of liquefied natural gas (LNG) currently supplied to Iberdrola under an agreement reached in March 2002 (MEED 15:3:02);

The acquisition by Sonatrach of a stake in Iberdrola's cogeneration plants in Spain, which have capacity of almost 600 MW;

The possibility of joint investments to build thermal generation plants and wind and solar facilities in Algeria and elsewhere;

The study of potential joint investments in the exploration, production, liquefaction and transportation of natural gas.

Iberdrola signed in July 2004 a contract with Sonatrach for the receipt of 1,000 million cm/y of gas through the Medgaz pipeline between Beni Saf and Almeria, which is due to come on stream at the end of 2008. The Spanish firm has a 12 per cent stake in the Medgaz project company (MEED 23:12:05; 16:7:04).

Iberdrola's increased offtake from the pipeline and the proposals to increase its LNG purchases will ensure a stable supply of gas for its combined cycle facilities in Spain, where it has an aggregate installed capacity of 4,000 MW.

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