Monday, Dec 03, 2012
By Summer Said
DUBAI--Algerian state-run oil company Sonatrach said Monday it has delayed until May 30 a decision on whether it will proceed with a planned natural gas pipeline that would link the north African country to Italy.
The 8 billion-cubic-meter Galsi pipeline, which will pump gas directly from Algeria to Sardinia, was initially expected to start up in 2012, but that date has slipped to 2014.
"The final decision was postponed due to technical reasons...but Sonatrach and its Italian partners are giving equal importance to the project," the Algerian firm said in a statement, according to the official Algerie Presse Service, or APS.
Sonatrach didn't elaborate further on the reasons for the delay.
The decision on starting construction of the pipeline has been delayed a number of times due to the pricing formulas that partners wanted to impose on Sonatrach, the Algerian firm's chief executive, Abdelhamid Zerguine said in July.
Sonatrach, Galsi's largest partner, wouldn't commit until it has firm contracts and the gas pricing issue for the long term is resolved. as "we believe we should not invest without our investments being guaranteed and protected," he said.
Algerian Energy Minister Youcef Yousfi told the local press earlier this year that economic and technical problems are blocking the construction of the pipeline, but didn't give details.
Italy, which imports 90% of its gas needs, said in May it would approve the pipeline, which will cost more than 2 billion euros ($2.6 billion), by the end of the summer.
Recent governments have pushed for new gas-import infrastructure to boost the country's energy security. However, the drop in natural gas prices during the economic slowdown in Europe has altered the economics of the project.
Enel SpA (ENEL.MI), Edison SpA and Sonatrach are among Galsi's investors.
Write to Summer Said at summer.said@dowjones.com
(END) Dow Jones Newswires
03-12-12 1947GMT
