Algeria says Stream should pay for Gassi Touil delays
Hispanic gas shippers Gas Natural and Repsol YPF may have to compensate Algeria’s state Sonatrach with make-up LNG cargoes in return for delays to the Gassi Touil project, Algerian energy minister Chakib Khelil told Spanish daily El País this week.
Carlos Berenguer, who leads the project for Repsol, has already admitted there will be penalties to pay if the 4 million tonnes per annum (mtpa) project is not finished on time in 2009, a deadline that is impossible given engineering problems and cost increases and the recent decision to re-tender the contract to build the liquefaction terminal (see HLM 2nd March). But what the penalties for late start up would amount to is under negotiation and creating further friction between the partners.
“Sonatrach has already signed LNG supply contracts with companies in the US. Repsol and Gas Natural will have to provide Sonatrach with the necessary LNG, so Sonatrach can fulfil its commitments,” Khelil said in the interview. He said the ongoing negotiations with Gas Natural and Repsol were “disappointing”.
It has not been confirmed, however, that the compensation will definitely be asked for in the form of LNG cargoes. If it is, then Stream, the LNG joint venture between Gas Natural and Repsol, will have to source them on the spot market, or it could buy the LNG straight from Sonatrach.
A Gas Natural spokeswoman declined to comment, while a Repsol source said it appeared it would be LNG from the market. However, he said “the fight” was “between Gas Natural and Sonatrach” and claimed Repsol did not want to be drawn into it.
Gas Natural and Repsol won a tender to partner Sonatrach in the development of the new Gassi Touil fields in 2004. Since then, the project has been dogged by delays, which the Hispanic companies have attributed to shortages in the international engineering market. A working group was set up in February to speed up exploration and meet the 2010 target for first gas.
A spokeswoman for Gas Natural confirmed to Heren Energy this week it had re-opened a tender for the LNG terminal linked to Gassi Touil, but did not want to give any more details. The offer from the contractors originally chosen, Japanese JGC and US KBR, is said to be too expensive.
Tension has grown lately between Algeria and Spain, both on the back of the Gassi Touil project and a newly proposed price hike in Gas Natural’s long-term contract for gas through the Maghreb pipeline. Some sources were slightly sceptic towards the demands made by Khelil in the press, suggesting it could all be part of the negotiation process.
Confusion over the new Algerian energy legislation provides a further source of uncertainty as it remains unclear whether a tax on “extraordinary revenues”, linked to crude oil prices – in short, a windfall profits tax – will be imposed on already existing projects, including Gassi Touil.
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