Algerian Gas Exports On A Steady Rise.

Algerian exports of natural gas by pipelines and in LNG form this year are likely to reach the 60 BCM/year target set for 2000, up from 54 BCM in 1998, 39.8 BCM in 1996, 38 BCM in 1995 and about 31.5 BCM in 1994. LNG exports in 1999 may rise to more than 30 BCM, compared to 28 BCM in 1998.

This year Algeria may regain its old position as the biggest LNG exporter in the world. Sonatrach's contractors have completed the revamping of all its 17 gas liquefaction trains. Their capacity stands at 33.75 BCM/year. A major increase in demand can easily be met as these trains actually can produce up to 42.12 BCM/year (31.2m t/y).

LNG exports in 1998 totalled 28 BCM, up from 19.7 BCM in 1996, 18.6 BCM in 1995, and 18 BCM in 1994. Pipeline gas exports in 1998 amounted to 26 BCM. The capacity of the export pipelines is more than 32 BCM/year.

Sonatrach sources tell APS that exports of pipeline gas and LNG are likely to reach 72 BCM/year by 2001/2 (about 1.24 million b/d of oil equivalent) or more. These exports may exceed 104 BCM/year by 2005/7.

Exports By Pipelines: There are now two huge pipelines exporting natural gas to Europe: the TransMed line with a capacity of more than 24 BCM/year expected to reach 30 BCM/year by 2001/2; and the Maghreb-Europe Gasline (GME), which came on stream in late 1996 with a capacity of 8 BCM/year expected to reach 20 BCM/year by 2001 and almost 30 BCM/year by 2005/7.

Algerian exports through these trunklines in 1999 are likely to reach about 32.25 BCM, compared to 21.3 BCM in 1996, 19 BCM in 1995 and 13.5 BCM in 1994.

TransMed: Algeria's first gas export pipeline to Europe, the Trans- Mediterranean Pipeline, runs from Hassi R'Mel through Tunisia to northern Italy and to Slovenia. From Tunisia TransMed runs under the Mediterranean to Sicily. It came on stream in the early 1980s. TransMed's capacity has been increased gradually from 12 BCM in the 1980s to 18 BCM in the early 1990s and then to 24 BCM/year. Commissioning of the last expansion, almost completed in early 1995, was in January 1997 due to technical problems.

By 2000/1, a planned addition of two compression stations in Algeria and two in Tunisia will enable TransMed to carry some 30 BCM/year of gas to Tunisia, Italy and Slovenia. This will be its final capacity. The Algerian section of TransMed is 550 km long. Its length from Hassi R'Mel to Italy is 2,500 km. Its marine section, from Cap Bon in Tunisia to the island of Sicily, involves deep-water pipes.

The bulk of the gas is taken by Italy's main gas utility, Snam. Under a contract first signed in the late 1970s and renewed in December 1990 to run until 2018, Snam from 1997 became committed to buy 19.25 BCM/year as a minimum. This compares with 17.5 BCM in 1995 and 11.5 BCM in 1994. Italy's main power utility, Enel, is committed to buy 4 BCM/year until 2014 under a contract signed in October 1992. Enel began receiving the gas through Snam in October 1996.

From 2004/5 Enel would take the Algerian gas from In Salah, where a group of gas fields are to be developed by a BP-Sonatrach venture (see profile in Gas Market Trends No. 6). The gas will be pumped through TransMed. A deal for Enel to take the gas from In Salah was signed in April 1997 between the BP- Sonatrach venture's marketing arm, In Salah Gas, and the Italian utility. In Salah Gas now is trying to find markets in Central Europe, including Yugoslavia, Croatia and Bosnia, to buy gas from the BP-Sonatrach venture. The gas from In Salah fields would reach these markets through TransMed and a spur line from Italy.

Tunisia takes about 720 MCM/year, with 400 MCM/year committed for the next 21 years under a deal signed in Tunis on March 4, 1997, and the rest taken in lieu of transit fees with some bought on spot basis. Slovenia's Sozd Petrol is committed to take another 600 MCM/year through an extension from Snam's system under a contact to 2007 signed in January 1990. Sozd Petrol took 400 MCM in 1996 compared to 300 MCM/year in 1995 and 1994.

Sabotage: The Italian market's heavy dependence on Algerian gas has become an issue in Rome, in view of its exposure to possible sabotage to TransMed by Islamic militants. A third of Italy's gas requirements depends on TransMed. TransMed supplies were interrupted for five days after a blast on Nov. 7, 1997 damaged valves on the pipeline near the Tunisian border. On April 8, 1998 a militant attack on TransMed caused supplies to be interrupted for more than 90 minutes. But Snam's parent ENI says it has enough gas stocks to cover four months' consumption.

The radical Islamic groups in Algeria have managed to hit at the energy sector occasionally. In August 1998, an explosion destroyed 15 metres of the GC1 gas pipeline near Bordj Menaiel, 56 km north-east of Algiers, which interrupted supply for a few days. In June 1998, police defused a bomb hidden on a train tanker wagon between Mohammadia and Arzew, 320 km west of Algiers. In February 1998 a bomb blast badly damaged a gas pipeline supplying Arzew.

The 1,430-km Maghreb-Europe Gasline (GME), 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 through a spur for gas coming from the north, which will be used in future to pump Algerian gas to French utilities. Extensions from France to Germany and other European markets have been proposed.

Now, in its first phase, GME has a capacity of 8 BCM/year. The second phase should bring its capacity to more than 10 BCM/year in 1999. The third phase, by 2001, would raise this to 20 BCM/year. By 2005/7, its capacity would have reached 30 BCM/year. Bechtel has built the 48-inch, 530 km Algerian section. By then, an important part of GME's throughput would come from BP-Sonatrach's In Salah fields.

In November and December 1996, Enagas of Spain took 700 BCM of the gas. Under a contract to 2020 signed in June 1992, Enagas is to buy 6 BCM/year and may take additional quantities occasionally. Under a contract to 2020 signed in April 1994, Transgas of Portugal is to buy 2.5 BCM/year. A new 1,000 MW power plant, which supplies 20% of Portugal's needs, began taking Algerian gas through a spur line from GME in late 1997.

The Spanish market for gas continues to expand rapidly thanks to GME. Enagas' parent Gas Natural is extending its pipeline system for Algerian supplies in southern Spain, where it will have two big gas-fired power plants built by 2001, and across the western provinces which will also take gas from LNG. Spain does not have much gas storage capacity to cope with any shortage should the GME system be sabotaged.

Morocco: The Rabat government has a purchase quota amounting to 10% of GME's actual throughput. Because its market is yet to be developed, it will take years for Morocco to use its quota. A gas distribution pipeline is to be built in the north-east for GME supplies to reach the towns of Oujda, Jerada and Nador, where the authorities hope to attract new industry for offshore development zones. A Spanish-Moroccan committee is working on the gasification of northern and north-eastern provinces, where Gas Natural and Moroccan firms have formed a gas marketing company. A big combined cycle power plant is to be built at Tahadart, near Tangiers, in which Endesa of Spain and Electricite de France hold 40%. Rabat wants the builder to hold the remaining 20%.

The gas for the big expansion in GME's capacity in 2004/5 would come from Algeria's remote In Salah fields which are to be developed by BP under a wide- ranging partnership deal with Sonatrach. The key to this would be a 48-inch pipeline to run 550 km from In Salah to Hassi R'Mel, the starting point for the GME system. It would have a capacity of 9-11 BCM/year.