Algeria, October 31, 2018

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Algeria to sustain robust gas exports to Europe – Sonatrach

(Montel) Algeria will sustain robust gas exports to Europe – currently at multi-year highs – thanks to new production and interconnection capacity, said the head of state-run company Sonatrach.

“We have new supply coming online and we will sustain exports to Europe for years,” CEO Abdelmoumen Ould Kaddour told Montel late on Monday, shrugging off market concerns about rising domestic demand and delays in bringing Algeria's vast gas deposits to market.

Algeria is Europe’s third biggest gas supplier, after Russia and Norway, with Spain depending on the country for around half of its demand.

The North African country’s pipeline exports to Europe surged nearly 14% year on year to almost 25bcm in the first nine months of 2018, while its supplies to Spain alone reached a historical high of 12.9bcm over the period.

The Sonatrach chief said that incremental gas exports to Europe going forward will increasingly head to Spain and Portugal through the GME and Medgaz pipelines. The third international connection is the Trans-Mediterranean Pipeline to Italy through Tunisia.

Capacity boost
He cited work that began last month on the construction of a 600km pipeline “loop” that will be able to divert supplies from GME to Medgaz, which will also be complimented by new compressor stations that will raise Medgaz capacity to 10bcm from the current 8bcm by 2020.

Medgaz capacity could be further boosted to 16bcm with more turbo compressors, Sonatrach has said.

Algeria is shifting its exports market to focus more on Spain, particularly as Italy expects increasing supplies from Azerbaijan from 2020.

Algeria’s pipeline exports to Spain are on track for an annual record this year and could exceed those to Italy, which reached 11.9bcm in the first nine months.

Meanwhile, exports through the GME pipeline to Spain via Morocco rose 47% over the nine-month period to 7.7bcm, while flows through the Medgaz pipeline increased 6.4% to almost 5.2bcm, according to data compiled by Montel.

Furthermore, Kaddour said Sonatrach’s gas production projects will be able to both meet local consumption and export requirements.

Over the summer Sonatrach extended a supply contract with Naturgy, Spain’s biggest buyer of Algerian gas. The deal, valued at EUR 2.5bn a year, will see Sonatrach supply 40% of the Spanish company’s needs to 2030.

Algeria’s gas could prove critical for security of supply to Europe but would require building more interconnection capacity between France and Spain, according to one industry source.

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