Brussels, 03/12/2012 (Agence Europe) - The decision on whether to press ahead with plans for the Galsi gas pipeline, which would link Algeria to Europe, via Sardinia, has been postponed to 30 May 2013 for “technical reasons”, Sonatrach, the Algerian national oil and gas company, has announced in a press release which local media have found far from convincing. Sonatrach holds 41.6% of the shares in the company carrying out the project, in association with Italian groups Edison and Enel. The partners are projecting carrying 8 billion cubic metres of gas per year via the pipeline.
In its press release, Sonatrach states that the project is on track with the schedule agreed by shareholders, who, meeting on 14 November, continued to express the same level of enthusiasm for it. The Algerian press notes, however, that in July, Sonatrach Chief Executive Abdelhamid Zerguine had said that his group would decide in November whether it would continue its interest in the development or abandon the project. He suggested that the decision to commit to the development of the trans-continental gas pipeline was in doubt because of difficulty in determining the price of the gas delivered.
“We can only commit to it if we have firm contracts, the quantities of gas (to be piped to Europe) and there is an end to the current pressure on long-term prices”, he said at the time, according to the Algerian renewable energy portal. “We are of the view that we shouldn't invest unless our investment is guaranteed and protected. Those taking the gas must invest with us and ensure a reasonable return for our facilities over the long term.” According to the same source, the minister for energy and mines said in June that Algeria would stick with long-term gas price contracts with its European customers after contracts came to an end, thereby ruling out spot market pricing for its contracts for gas delivered via pipelines. He noted that consumer countries were demanding the overhaul of long-term contracts, where prices are indexed to oil prices.
The daily El Watan goes further and says that the growing discord is linked to Italian involvement in rival projects. “Algeria says it will not deem the investment conditions to be appropriate if Italy backs South Stream and TAP”, the paper states, referring to official sources which say that reticence had been expressed during the visit of President of the Italian Council Mario Monti to Algiers on 14 November. “The sources quoted would seem to contradict the joint final statement after the high-level Algeria-Italy meeting in Algiers on 14 November” which was chaired by Messrs Bouteflika and Monti (our translation throughout). (FB/transl.fl)