Medgaz Pipeline

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In October 2006 the government of Algeria awarded a 20 year concession for the construction and operation of a gas pipeline linking Algeria with Spain to special purpose consortium Medgaz. The pipeline was to run from Ain Temouche in Algeria to Almeria in southern Spain, for a total length of 210 kilometers. The Medgaz pipeline was expected to transport some eight billion cubic meters of natural gas per year. The gas was acquired from Algerian state utility Sonatrach and sold mainly on the Spanish market. Medgaz was created in February 2001 under the name of Sociedad para el Estudio y Promocion del Gasoducto Argelia-Europa, vía Espana S.A. Up to 2005 Medgaz produced a number of feasibility studies, environmental and technical reports. In 2004 Medgaz became a construction company. At the end of 2006 Medgaz was owned by five energy companies: Sonatrach (Algerian state utility, 36%), CEPSA (Spain, 20%), Iberdrola (Spain, 20%), Endesa (Spain, 12%) and Gaz de France (France, 12%). The Medgaz project reach reached financial closure in December 2006, when the project’s sponsors made the “final investment decision”. Total costs were expected to reach $1,170 million (900 million Euros). Financing was to be provided by the project’s shareholders through participative loans. Construction was scheduled to begin in early 2007. The pipeline was expected to become operational in mid 2009.