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Sonatrach in Preliminary Pact for Capacity at Oxy's Ingleside LNG Import Terminal

Sonatrach, the Algerian energy company, announced Sunday it has signed a letter of intent with Occidental Energy Ventures to reserve capacity at a liquefied natural gas (LNG) import terminal that Occidental is building on the Texas Gulf Coast.

The non-binding agreement would secure Sonatrach's rights to between 250 to 500 MMcf/d of send-out capacity from Occidental's Ingleside, TX Energy Center, which was certificated by the Federal Energy Regulatory Commission last July (see Daily GPI, July 22). The 1 Bcf/d terminal will be located in the La Quinta Channel near Occidental's chemical plant on Corpus Christi Bay. The company has designated some of the capacity for its own use.

In announcing the agreement, Mohamed Meziane, Sonatrach CEO, said, "This agreement is an important step to move Algerian natural gas to the U.S. market, and part of its organic growth strategy to penetrate the international gas downstream markets." The agreement also opens the door for a potential future joint agreement to market the re-vaporized LNG in the U.S. and for Sonatrach to take an equity stake in the terminal, Sonatrach said.

Algeria had proved natural gas reserves totaling 160 Tcf, as of year-end 2004, and Sonatrach lays claim to the title of the world's second largest LNG exporter with an installed capacity of 20 million tonnes per year. Future plans include the construction of two new plants with a total capacity of 8.5 million tonnes per year located in Skikda (4.5 million tonnes per year) and Arzew (4 million tonnes per year). Sonatrach's wholly owned subsidiary, HYPROC, owns and manages a fleet of eight LNG carriers, totaling 1 million LNG cubic meter capacity.

The preliminary agreement with the subsidiary of Occidental Petroleum is very similar to one envisioning a 20-year pact which Sonatrach signed last month with Sempra LNG for capacity at Sempra's Cameron LNG receipt terminal now under development near Lake Charles, LA (see Daily GPI, Oct. 26). The Cameron terminal is expected to receive its first shipments in late 2008. The Ingleside terminal is aiming for early 2009.

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