21-01-09 A sharp increase in Algerian gas exports to Spain when the Medgaz pipeline opens later this year could boost supplies to Europe as a whole, Industry Minister Miguel Sebastian said.
"Medgaz will not just be for consumption in Spain, but for all of Europe," Sebastian told, referring to the new link that will carry up to 8 bn cm of North African gas. "In that sense, Medgaz will play a very important role in supplies to Europe," he added.

Russian gas supplies to Europe via Ukraine resumed for the first time after Moscow and Kiev ended a contract row that cut flows to about 20 European countries.
Spain itself was unaffected by the dispute as its only significant European supplier is Norway and it is effectively isolated from the rest of Europe by a lack of grid connections with France. Spain imports virtually all of the 44 bn cm of gas it consumes each year and is the world's third biggest importer of liquefied natural gas (LNG), via six import terminals.

Although Spain may have an exportable surplus when Medgaz comes onstream, it only has the capacity to pump a minimal 0.1 bn cm per year to France via the Euskadour pipeline. Plans exist to expand Euskadour to 2.5 bn cm per year, but not until 2011.
The only other cross-border link, the Larrau pipeline, has a capacity of 2.5 bn cmpy but can only import gas to Spain.

A spokeswoman for gas transport company Enagas said talks were under way to expand Larrau to 5 bn cmpy and to allow it to pump gas northwards by 2011.
"The issue is being worked on but doesn't just depend on us, rather it is a broader European issue," she said. Plans are also afoot to build an additional 7.5 bn cmpy pipeline across the Pyrenees dubbed "Midcat", but no target date has been fixed.

LNG shipments seen steady
Sebastian said that additional supplies from Algeria did not mean Spain would buy less LNG, which currently accounts for 78 % of its imports and allows the country to choose between a wide range of suppliers.
"It is a very valid model as it guarantees us security of supply and furthermore minimises strategic risks," he said.

Ian Cronshaw, head of energy diversity at the International Energy Agency (IEA), said the Spanish market alone could not easily absorb additional supplies from Medgaz without being able to export any on to France.
"If you build that pipeline you are going to depress prices. Whereas 8 out of a 500 bn cm market for the whole of Europe is trivial," he said.

Medgaz finished laying the undersea stretch of the planned 210 km pipeline in December. The consortium plans to conduct tests until March and start transporting gas to Spain in the second half of 2009 from the Beni Saf field in Algeria.
Algeria's state-run Sonatrach has a 36- % stake in Medgaz, Spanish energy company Cepsa 20 %, Spanish utilities Iberdrola and Endesa 20 % and 12 %, and Gaz de France 12 %.