ALGERIA - The PDF Line & Iberian Markets.

The 1,430-km Maghreb-Europe PDF gasline, on stream since November 1996, runs from Hassi R'Mel through Morocco, across the Strait of Gibraltar to Cordoba in Spain. There it ties into the Spanish transmission network. One section to Portugal came on stream in early March 1997. The system links up with France. Extensions from France to Germany and other European markets have been proposed. The pipeline's capacity in October 2004 reached 12.85 BCM/y in October 2004 to take an increased volume of gas from the new In Salah system which went on stream in July. Gas Natural (GN), the main gas utility in Spain, owns 72.36% of PDF's non-Algerian segment, with the rest held by Transgas of Portugal.

Under a contract to 2021 signed in June 1992 and extended by one year in 2001, GN's division Enagas is committed to buy 6 BCM/y and may take more occasionally. In 2002 it took more than 6.5 BCM, up from 5.5 BCM in 2001 and 6.3 BCM in 2000. Under a contract to 2020 signed in April 1994, Transgas is committed to buy 2.5 BCM/y, the volume it took in 2002 (from 2.3 BCM in 2001 and 2 BCM in 2000).

The Spanish market continues to expand rapidly thanks to PDF. GN has extended its pipeline system for Algerian supplies in southern Spain, where it has two big gas-fired power plants which started up in 2001, and across the western provinces which will also take gas from LNG. Spain now is the second biggest gas market for Algeria.

The MedGaz Pipeline Via Almeria: Sonatrach and Cespa are main partners in a 200-km, 8 BCM/y marine pipeline called MedGaz to be built from Algeria's north-western port of Beni Saf to Almeria in southern Spain. Construction work will begin in July and the $780m pipeline will be on stream in early 2008. A power line will also run along the MedGaz route (see background in Vol. 56, Gas Market Trends No. 7). The pipe will be laid at waters of up to 2,150 metres. Eventually MedGaz's capacity will be doubled to 16 BCM/y.

Iberdrola, a power utility expanding into gas, has signed two sales and purchase agreements (SPA) with Sonatrach for 2 BCM/y, of which 1 BCM/y will be pumped by MedGas. The other buyers through MedGaz will be Gaz de France (GdF - 2 BCM/y), Tractebel unit Distrigaz (1 BCM/y), Total (1 BCM/y), Cepsa (1 BCM/y), ENI (1 BCM/y) and Endesa (1 BCM/y). Medgaz is owned by Sonatrach (20%), Cepsa (20%) and Total, BP, GdF, Endesa and Iberdrola (each holding 12%).

MedGaz, created in August 2000, will add another 8 BCM/y capacity at a later date as pipeline is to be extended to reach other European markets. MedGaz is owned 20% by Sonatrach, 20% by Cepsa, and 12% by each of TFE, BP, GdF, ENI and Endesa. These partners have assisted in the project's feasibility study.

PDF and MedGaz will allow for other African gas exporters to reach EU markets through Algeria. This is being discussed by Sonatrach and Nigeria's NNPC, which will be supplying gas by pipeline to Niger and Mali, after an initiative to that effect was made in 2000 by Algerian Energy and Mines Minister Chakib Khelil.