In Salah Gas to market gas in Southern European markets.

Apr 30, 1997 02:00 AM

Algerian national oil company Sonatrach and BP have announced the launch of a new JV, In Salah Gas, to bring the next phase of Algerian natural gas to Europe. It follows the contract signed in December 1995 establishing the Sonatrach-BP association to explore, develop and market gas from the In Salah region in southern Algeria, known to contain a number of substantial gas fields.
The association plans to link the unexploited In Salah gas reserves into Sonatrach's comprehensive export systems and to market the gas in the fast-growing markets of Southern Europe.
In Salah Gas also announced a major gas supply deal with Italian power company Enel, a deal that consists of the assignment to In Salah Gas of the existing supply contract between Sonatrach and Enel. Under this assignment, In Salah will be responsible for a deal to supply Enel with 4 bn cubic meters of gas a year. Deliveries began towards the end of 1996 and will continue to be met by Sonatrach up until the first production is madefrom the In Salah fields.
Nazim Charif Eddine Souioueche, Sonatrach chief executive, said today: "With this announcement from In Salah Gas, it is clear that the BP-Sonatrach association is working well in all areas of activity downstream and upstream."
Ahmed Messili, general manager of In Salah Gas, said the arrangements with Enel were a great start for the venture because power generation is the fastest-growing sector in European gas demand.
The expectation was that the reserve base would be sufficient to fulfil gas sale commitments of 9 bn to 11 bn cubic meters a year for decades to come from In Salah's fields.
There are seven known gas fields in the license area, which are currently undergoing an appraisal program. Full development will cost $ 3.5 bn, including the construction of a 520 km pipeline from In Salah to Hassi R'mel in the North, where there are existing Sonatrach gas pipelines connecting to Europe.First production from the project is expected to be in the early part of the nextdecade.
In Salah is in a remote area of the Sahara desert some 1,200 km south of Algiers. The license area covers 23,000 sq km.

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