Identifier
Created
Classification
Origin
06ALGIERS2019
2006-11-21 14:58:00
CONFIDENTIAL
Embassy Algiers
Cable title:
SUB-MEDITERRANEAN GAS DEALS ARE UNDERCURRENT OF
how-toVZCZCXRO5195 RR RUEHDE DE RUEHAS #2019 3251458 ZNY CCCCC ZZH R 211458Z NOV 06 FM AMEMBASSY ALGIERS TO RUEHC/SECSTATE WASHDC 2393 INFO RUEHHH/OPEC COLLECTIVE RUEHLO/AMEMBASSY LONDON 1436 RUEHMD/AMEMBASSY MADRID 8497 RUEHNK/AMEMBASSY NOUAKCHOTT 5865 RUEHFR/AMEMBASSY PARIS 1999 RUEHRB/AMEMBASSY RABAT 1510 RUEHRO/AMEMBASSY ROME 0393 RUEHTU/AMEMBASSY TUNIS 6370 RUEHCL/AMCONSUL CASABLANCA 2785 RUEHMIL/AMCONSUL MILAN 0048 RUEHRON/AMCONSUL NAPLES 0001 RUEAIIA/CIA WASHDC RHEBAAA/DEPT OF ENERGY WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC
C O N F I D E N T I A L ALGIERS 002019
SIPDIS
SIPDIS
ENERGY FOR EIA
E.O. 12958: DECL: 11/19/2016
TAGS: ENRG EPET PREL EINV IT AG
SUBJECT: SUB-MEDITERRANEAN GAS DEALS ARE UNDERCURRENT OF
PRODI'S VISIT
REF: ALGIERS 01844
Classified By: DCM Thomas F. Daughton; reasons 1.4 (b) and (d).
C O N F I D E N T I A L ALGIERS 002019
SIPDIS
SIPDIS
ENERGY FOR EIA
E.O. 12958: DECL: 11/19/2016
TAGS: ENRG EPET PREL EINV IT AG
SUBJECT: SUB-MEDITERRANEAN GAS DEALS ARE UNDERCURRENT OF
PRODI'S VISIT
REF: ALGIERS 01844
Classified By: DCM Thomas F. Daughton; reasons 1.4 (b) and (d).
1. (U) Speculation about the details of future energy
cooperation between Algeria and Italy swirled in Algerian
business circles following the November 14-15 visit to
Algiers by Italian Prime Minister Romani Prodi. The
state-owned French-language daily El Moudjahid focused on
Prodi's discussions with President Bouteflika and Prime
Minister Belkhadem regarding Italy's promotion of small and
medium enterprises in Algeria; the implementation of a 2003
friendship treaty between the two countries; and the opening
of a school for Italy's thousand-odd expatriate community in
Algeria. The buzz in the business community, however,
squared on the parallel discussions between Italian energy
firms and the Algerian state oil and gas parastatal
Sonatrach.
2. (U) As a result of these meetings, Sonatrach assured the
construction of the long-planned, 8 billion cubic meter per
year (bcm) GALSI pipeline, which will link Algeria to Italy
via Sardinia. Sonatrach verified that it signed marketing
agreements with five Italian firms to supply 6 bcm for 15
years starting in 2011, while an Italian subsidiary of
Sonatrach will receive and market separately an additional 2
bcm. While Sonatrach officials suggested that the pipeline
could be finished as early as 2009, an Embassy contact
working for a major U.S. oil firm said construction was more
likely to start in 2008 and finish by 2011. The CEO of one
of the Italian companies involved in the deal announced
publicly that the "project is an important contributor to
security and flexibility for Italy's gas system."
3. (U) Separately, the Italian embassy in Algiers indicated
after Prodi's visit that the timeframe had been moved up for
an expansion to the TransMed pipeline, which currently
supplies 27 bcm to Sicily and mainland Italy by way of
Tunisia. According to the embassy, phase one of the
expansion, which was slated to increase the pipeline's export
capacity to 30.2 bcm by 2008, remained on track. A second
phase, which aims to then ramp up exports an addition 3.3
bcm, could be accomplished by 2009. Engineers previously
anticipated this expansion would be completed by 2012.
4. (C) COMMENT: That Prodi chose Algeria as the place to
make what was reportedly only his second visit abroad since
coming to power fueled speculation here that energy security
was the driving force of the visit. Italy is the
second-largest hydrocarbons client of Algeria after the U.S.,
importing nearly USD 7 billion worth of hydrocarbon products
in 2005 and accounting for some 40 percent of Italy's gas
consumption. With the international press touting as yet
unconfirmed rumors that Algeria and Russia are teaming up to
create an international gas cartel, the Algerians are
exploiting European nervousness to encourage Italy to
diversify its energy imports. This boosts Algeria's efforts
to ramp up its hydrocarbons export capacity (reftel) -- by
securing the construction of GALSI and speeding up the
expansion of TransMed -- while winning it long-term access to
European markets in the process. In addition, carving out a
quarter of GALSI's output for Sonatrach to market by itself
fits with Energy Minister Khelil's long-term strategy to
expand Sonatrach's reach downstream into marketing and
trading operations.
FORD
SIPDIS
SIPDIS
ENERGY FOR EIA
E.O. 12958: DECL: 11/19/2016
TAGS: ENRG EPET PREL EINV IT AG
SUBJECT: SUB-MEDITERRANEAN GAS DEALS ARE UNDERCURRENT OF
PRODI'S VISIT
REF: ALGIERS 01844
Classified By: DCM Thomas F. Daughton; reasons 1.4 (b) and (d).
1. (U) Speculation about the details of future energy
cooperation between Algeria and Italy swirled in Algerian
business circles following the November 14-15 visit to
Algiers by Italian Prime Minister Romani Prodi. The
state-owned French-language daily El Moudjahid focused on
Prodi's discussions with President Bouteflika and Prime
Minister Belkhadem regarding Italy's promotion of small and
medium enterprises in Algeria; the implementation of a 2003
friendship treaty between the two countries; and the opening
of a school for Italy's thousand-odd expatriate community in
Algeria. The buzz in the business community, however,
squared on the parallel discussions between Italian energy
firms and the Algerian state oil and gas parastatal
Sonatrach.
2. (U) As a result of these meetings, Sonatrach assured the
construction of the long-planned, 8 billion cubic meter per
year (bcm) GALSI pipeline, which will link Algeria to Italy
via Sardinia. Sonatrach verified that it signed marketing
agreements with five Italian firms to supply 6 bcm for 15
years starting in 2011, while an Italian subsidiary of
Sonatrach will receive and market separately an additional 2
bcm. While Sonatrach officials suggested that the pipeline
could be finished as early as 2009, an Embassy contact
working for a major U.S. oil firm said construction was more
likely to start in 2008 and finish by 2011. The CEO of one
of the Italian companies involved in the deal announced
publicly that the "project is an important contributor to
security and flexibility for Italy's gas system."
3. (U) Separately, the Italian embassy in Algiers indicated
after Prodi's visit that the timeframe had been moved up for
an expansion to the TransMed pipeline, which currently
supplies 27 bcm to Sicily and mainland Italy by way of
Tunisia. According to the embassy, phase one of the
expansion, which was slated to increase the pipeline's export
capacity to 30.2 bcm by 2008, remained on track. A second
phase, which aims to then ramp up exports an addition 3.3
bcm, could be accomplished by 2009. Engineers previously
anticipated this expansion would be completed by 2012.
4. (C) COMMENT: That Prodi chose Algeria as the place to
make what was reportedly only his second visit abroad since
coming to power fueled speculation here that energy security
was the driving force of the visit. Italy is the
second-largest hydrocarbons client of Algeria after the U.S.,
importing nearly USD 7 billion worth of hydrocarbon products
in 2005 and accounting for some 40 percent of Italy's gas
consumption. With the international press touting as yet
unconfirmed rumors that Algeria and Russia are teaming up to
create an international gas cartel, the Algerians are
exploiting European nervousness to encourage Italy to
diversify its energy imports. This boosts Algeria's efforts
to ramp up its hydrocarbons export capacity (reftel) -- by
securing the construction of GALSI and speeding up the
expansion of TransMed -- while winning it long-term access to
European markets in the process. In addition, carving out a
quarter of GALSI's output for Sonatrach to market by itself
fits with Energy Minister Khelil's long-term strategy to
expand Sonatrach's reach downstream into marketing and
trading operations.
FORD