Repsol YPF & Gas Natural Ink Deal for Algerian Gas Project

The Algerian Minister of Energy and Mines, Chakib Khelil, and the Chairmen of Repsol YPF, Antonio Brufau, and Gas Natural SDG, Salvador Gabarró, have signed in Algiers the largest contract for a gas project ever undertaken by an international consortium in Algeria.

Repsol YPF and Gas Natural SDG will develop an integrated project for the joint exploration, production, and marketing of liquefied natural gas (LNG) in the Gassi Touil zone, in east Algeria, awarded under a tender offered last 17 November.

Winning this contract places Repsol YPF in a leading position in Algeria, and provids Gas Natural SDG its first direct access to natural gas reserves to cover growing demand from the gas market.

The Consortium, in which Repsol YPF holds a 60% stake and Gas Natural SDG 40%, will make a joint investment of EUR1,628 million ($2.1 billion). The project also contemplates the construction of a liquefied natural gas plant in Arzew, through which the gas produced from this concession will be marketed.

This liquefaction plant will have a capacity for 5.2 Bcm/year of LNG, equivalent to 20% of Spain’s domestic consumption, and could be enlarged in the future with a second train to optimise the project. The plant could go into commercial operation in 2009.

The two companies will produce gas reserves already discovered in Gassi Touil, Rhourde Nouss, and Hamra, and will undertake exploration in the area under concession to discover additional oil and gas reserves for their subsequent development and production. The Gassi Touil-Rhourde Nouss zone is adjacent to the Berkine basin, where, last July, the Repsol YPF (operator) and Gas Natural SDG consortium won the 4,831 Km2 Gassi Chergui Ouest block for oil and gas exploration.

Repsol YPF and Gas Natural SDG are one of the top marketers of liquefied natural gas in the world, with a specially significant presence in Spain and the United States, and a leading position in the Atlantic Basin. Algeria maintains an important role in providing gas to Spain, supplying over 50% of the Spanish market.

This operation also provides significant internal synergies between both companies’ other exploration assets in Algeria, such as the previously mentioned Gassi Chergui Ouest block, adjacent to Gassi Touil, and Repsol YPF’s assets in Reganne (where gas has already been discovered) and M’Sari.

The Gassi Touil project is part of the Gas Natural SDG and Repsol YPF strategy to jointly study and develop any integrated gas projects for which the combined efforts of both companies contribute added value, on a project-by-project basis.