Italy-Algeria Galsi natural gas project can go ahead despite Sardinia exit

14 May 2014 14:48 Source:ICIS

The proposed Galsi 8 billion cubic metres (bcm)/year pipeline linking Italy with Algeria via the island can go ahead despite the region of Sardinia withdrawing from the project, a spokesman from Galsi said on Wednesday.

However, another source with some knowledge of the matter told ICIS that a meeting of Galsi’s board of directors scheduled towards the end of this month will decide on the project’s progress. If market conditions remain the same the venture might postpone a final decision to proceed or not to the end of 2015, said the source.

On Tuesday, the Sardinian region announced it wants to sell its stake in Galsi, the pipeline project that would send natural gas from the giant field of Hassi R’mel in Algeria to northern Italy via Sardinia.

“The Sardinian’s share in the project will be absorbed by the other shareholders,” a spokesman for the region said on Wednesday.

He added the decision has been taken because the project is “stuck”, as low gas demand and some delays in the permitting process in the Tuscany region have slowed the project.

“Nothing changes on the project to date. Simply there is a member who leaves ,” the Galsi spokesman said. He also said that other important gas projects, such as Trans-Adriatic Pipeline or Porto Empedocle LNG terminal do not need the participation of the Italian region in which they are going to take place to go ahead with the project.

The Sardinian region, which holds 11.6% stake in the project, is a financial partner and does not own a stake in the gas that will be transported, Galsi’s spokesman added.

According to the Sardinian region’s spokesman, the region will still be interested in purchasing gas landing on the Mediterranean island, if the project goes ahead. However, the region prefers to withdraw now rather than later, in order to get back its initial investment.

Meanwhile, the region will be hiring a consultant to analyse the future of gas in Sardinia, looking at alternative sources of supply, including import of shale gas from the US and compressed or liquidized gas. Matilde Mereghetti

By Matilde Mereghetti