Mediterranean gas pipeline gets €500 million EIB boost

24 November 2010

l-r: Pedro Miró Roig, Chairman of the Medgaz Board of Directors and EIB Vice-President Philippe de F

l-r: Pedro Miró Roig, Chairman of the Medgaz Board of Directors and EIB Vice-President Philippe de Fontaine Vive

The European Investment Bank (EIB) has granted a € 500 million loan towards the construction of a deepwater natural gas pipeline between Algeria and Spain - half the total cost of the project.

The 210 km submarine pipeline is being constructed by a consortium of five international companies known as Medgaz. Gas specialists Sonatrach, Cepsa, Iberdrola, Endesa and GDF Suez forecast a total cost of € 1 billion.

Medgaz will construct and operate the sub-sea gas transmission pipeline linking Beni Saf in Algeria and Almeria in Spain. The project includes a gas receiving terminal on the Spanish side, a compressor station at Beni Saf of initially 99 mW and short near-shore sections for a potential future second 24 in sub-sea pipeline.

The idea of building a direct gas pipeline between Algeria and Europe first arose in the 1970s, but the project is only now transforming into a reality. The EIB - the financial arm of the European Union - signed the finance contract on 23 November.

The EIB described the energy challenge in the Mediterranean as "an operational priority" and has provided financing totalling € 3,7 billion in the region between 2002 and 2009.

The bank said the Medgaz project will help to meet growing gas demand in Spain and reinforce the security of the EU energy supply.

Other flagship projects which have received a boost from the EIB included the Tillouguit hydropower plant and the Tangiers wind farm in Morocco, the Gabal el-Zait wind farm in Egypt, the Jordanian pipeline in Jordan, the Ghannouch power plant in Tunisia, and the Deir Ali I and II projects in Syria.

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