State energy giant Sonatrach is assessing bids for two construction contracts that are part of major plans to expand Algeria's oil and gas pipeline network and create a subsea pipeline link with Italy.

Firms submitted bids for the two packages of the $5bn-plus GK3 pipeline running from Hassi R'Mel on 11 May. Algeria already has two pipelines, GK1 and GK2, from Hassi R'Mel to Skikda.

The GK3 pipeline will link the Hassi R'Mel oil and gas distribution hub in central Algeria to sites in the north of the country.

The first contract covers the construction of a 272-kilometre-long, 48-inch-diameter pipeline from Hassi R'Mel to Chaiba on the country's northern coast. The second covers the continuation of this pipeline for more than 160km from Chaiba to Ain Djasser in the northeast of the country, where it will connect with the Skikda 'megastring' network, which connects oil and gas pipelines from around the country.

Prequalified bidders for the tenders include: Bechtel and Willbros, both of the US; Entrepose Contracting and Amec Spie Capag, both of France; the UK's Petrofac; Technint and Saipem, both of Italy; Russia's Stroytransgaz; India's Punj Lloyd; Dubai-based Dodsal in a consortium with Italy's Bonatti; the local Cosider in a consortium with Germany's Dorsch Gruppe; and the local Enac, again in a consortium with Dorsch.

"These contracts are part of a huge project that is vital to Algiers' plans to develop its oil and gas acreage in the southwest and to export via the Galsi pipeline to Italy," says a source at one international contractor invited to bid on the project.

However, several prequalified firms, including Dodsal, Petrofac, and Punj Lloyd, have decided not to bid. All three companies declined to comment.

"There are several elements to these contracts, and some are more attractive than others," says one source close to the project. "It makes sense for [some firms] to wait for other parts of the project."

Sonatrach has yet to tender a further three packages for the scheme. One covers the construction of a 265km pipeline from Ain Djasser to El-Kala port on the Algeria-Tunisia border.

Contractors in Algeria say this package is particularly difficult because it crosses rough terrain. The pipeline to El-Kala is also key to the planned multi-billion-dollar Galsi pipeline linking Algeria with Italy.

The Algerian and Italian governments will hold a meeting this year to decide whether to go ahead with the pipeline.

The third package covers the installation of a major gas compressor station at Chaiba, while the fourth covers a spur line between Ain Djasser and Skikda.

No details are available on the fifth package.