Sonatrach pipeline upgrade forces Algiers gas export cut

11 January 2008
Sonatrach to spend $1bn over five years on inspecting and upgrading 6,000 kilometres of pipelines

Algiers is being forced to cut gas exports in 2008, as state energy company Sonatrach spends more than $1bn upgrading its 16,200-kilometre oil and gas network.

The work will reduce gas production by at least 2 billion cubic metres (bcm) in 2008 alone. Further cuts could follow in the coming years.

Officially, Algiers intends to increase gas exports to 85 bcm a year by 2010. It currently exports 65 bcm of gas.

The overhaul will focus on improving safety and environmental standards, mapping the pipelines, centralising the management and improving planning.

In the first phase, Sonatrach will spend more than $1bn over five years on inspection and mapping.

“Sonatrach will spend $1.8bn on safety and raising environmental standards for all its activities,” says Abdelkader Oulhadj, head of rehabilitation projects in Sonatrach’s pipeline division, Transport par Canalisations. “About 60-65 per cent of this will be spent by the pipeline division.”

Contracts will be awarded in the first half of 2008 for work on 12 pipelines. Pipeline Integrity International, part of the US’ General Electric, Turboscope, also of the US, and Rosen of the Netherlands have been preselected to bid in February for the first two. Commercial bids are due in May for the other 10.

The first two contracts cover inspection of the 670km OB1 line between Hassi Messaoud and the Bejaia export terminal, and the 510km LZ1 liquefied petroleum gas (LPG) pipeline between Hassi R’Mel and the Arzew export terminal. “The process will never end,” says Oulhadj. “Once we have carried out inspection, we will move on to rehabilitation and repairs, and the inspection of other lines.”

Russia’s Stroytransgaz is already working on a 228km section of the GZ1 gas line between Hassi R’Mel and Arzew, and the local Cosider has the contract for a 145km section of the GK1 gas line between Hassi R’Mel and Skikda.

While inspections can be carried out without interrupting the pipeline’s flow, the project will have an impact on exports. “We have had to reduce the pressure on the GZ1 and GZ2 gas pipelines [from Hassi R’Mel to Arzew], which means we will lose about 2 bcm of gas in 2008,” says Oulhadj.

Algiers aims to minimise the impact by using alternative routes. A new gas pipeline between Hassi R’Mel and Arzew is due to be commissioned in May. Italy’s Saipem has also signed a contract to build a second LPG pipeline, between Hassi R’Mel and Arzew (MEED 9:11:07).

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