Repsol Launches Gassi Touil LNG Project in Algeria

Repsol YPF, Gas Natural and Sonatrach signed the constitution of a joint venture that sets in motion the integrated Gassi Touil gas project in Algeria. The signing took place in Algiers, in the presence of the Energy and Mining Minister Mr. Chakib Khelil, and the Presidents of Repsol YPF, Antonio Brufau, and Gas Natural, Salvador Gabarro, and Sonatrach, Mohamid Meziane.

The agreement was signed by Sonatrach Downstream Vice-president Doctor Abdelhafid Feghouli, Repsol YPF Upstream General Director, Nemesio Fernández-Cuesta, and Gas Natural Chief Executive Officer, Rafael Villaseca.

The new company, called Sociedad de Licuefaccion (SDL), will construct and operate the natural gas liquefaction terminal that is part of this project, and which also contemplates the exploration, production, liquefaction and the commercialization of a hydrocarbon reserves block in the eastern Algerian regions of Gassi Touil, Rhourde Nouss and Hamra.

The participation of the new society is as follows: Repsol Exploration Algeria S.A. (48%); Gas Natural Exploration S.L. (32%, 100% Gas Natural affiliate) and Holding Sonatrach Raffinage et Chimie (20%, 100% Sonatrach affiliate).

The Gassi Touil project was awarded in 2004 by the Algerian state to the Repsol YPF (60%) and Gas Natural (40%) consortium, being the first contract for the development of such a project awarded to a foreign company in that country. It is a project with important synergies given the presence that both companies have in Algeria, and their relevant position in the gas markets. The Gassi Touil area is near the Berkine Basin, where the consortium has been awarded the Gassi Chergui Ouest exploration block, and near to the Repsol YPF block of Reggane, where gas has already been discovered, and M' Sari Akabli.

First direct access to reserves for Gas Natural

With an initial 30-year duration, this project grants Repsol YPF a leading position in Algeria, and if added to that what it already holds in Libya, places the company in a privileged position in Magreb. For Gas Natural, this project represents for the first time their having direct access to natural gas reserves to cover demand in this growing market.

The liquefaction terminal, which will be located in the industrial area of Arzew in the vicinities of the Djedid gas port, will have a nominal capacity of 4 million tons/year of liquefied natural gas (LNG), that can be amplified in the future with the construction of a second train. The gas to be used in this plant, will originate from gas reserves that have already been discovered in the Gassi Touil, Rhourde Nouss and Hamra areas, and the LNG produced will be commercialized by a joint venture in which Sonatrach, Repsol YPF and Natural Gas SDG will also participate.

The period for executing this project and constructing the terminal is 54 months. Throughout last year the conceptual engineering tasks for the terminal and the marine facilities were concluded. It is foreseen that at the end of March, the basic engineering that is being developed in Houston for specialized engineering under the supervision of the Repsol YPF and Gas Natural teams will conclude. The geotechnical, seismic, and environmental impact investigation studies in the construction area have been carried out as well as the awarding of major processing equipment.

Seismic testing and drilling

To develop the Gassi Touil, Rhourde Nouss and Hamra areas data is being acquired via the most ambitious campaign of seismic testing that has to date been done in Algeria. An intensive drilling campaign will begin at the end of the first half of 2006. At the same time, work is being done on the design and construction of upstream production facilities.

Exploration work is also being done in the mentioned areas to discover additional hydrocarbon reservations and, to carry out at a later date, their development and production to supplying a second liquefaction train.