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MEDGAZ

Yves Lebas Cepsa Gas Comercializadora

Juan Antonio VeraCepsa / Medgaz

WGC Amsterdam June 2006

A new off shore gas pipeline between Algeria and Spain in the new liberalized

European gas markets’ context

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Medgaz – A new gas pipeline

I. Location

II. The technical project

III. The partnership

IV. The Spanish gas market

V. Future challenges

3World Gas Congress – Amsterdam – June 2006

Medgaz – A new gas pipeline

I. Location

II. The technical project

III. The partnership

IV. The Spanish gas market

V. Future challenges

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I. Location

AlmeriaAlmeria

Beni SafBeni Saf

Hassi R’melHassi R’mel

AlmeriaAlmeria

Beni SafBeni Saf

Hassi R’melHassi R’mel

Photo from www.nasa.org

LNG regasification

Main gas pipelines

Medgaz pipelineGME

Euskadour pipeline

Lacal

Source: Sonatrach 2006

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Medgaz – A new gas pipeline

I. Location

II. The technical project

III. The partnership

IV. The Spanish gas market

V. Future challenges

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II. The technical project: studied corridors

From the corridors studies already in the 70s

To the current selected route

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II. The technical project: relevant figures

� Length: 200 km

� Max. Depth: 2.165 m

� Diameter: 24 inches ID

� Capacity: 8-10 bcm/year

� Investment: 700 M€

MEDGAZ - Transportation SystemOFFSHORE SECTION

-2200

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0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200

KP (km)

Wat

er D

epth

(m

)

ALGERIA SPAIN

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Medgaz – A new gas pipeline

I. Location

II. The technical project

III. The partnership

IV. The Spanish gas market

V. Future challenges

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III. The partnership

� Project presentation to Authorities 2002� EU support: PIC/TEN 2003-2004

� Shareholders’ Agreement 2004 (Feb)

� UE financial support 2005

� Medgaz rated as “A urgent” by Spain 2005 (Jun)� EPC Tenders launched Feb 2006

The Medgaz partners comprise:�The largest gas supplier to Spain

� The second oil company in Spain

� The two major Spanish utilities

� Two global oil & gas majors� One of the main gas company in

Europe

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SPANISH GAS MARKET SHARE 2004

Gas Natural

Iberdrola

BP

Unión Fenosa

Endesa

Cepsa

Shell

Rest

0

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450

1997

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GW

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Non-AlgeriaLNG AlgeriaNG Algeria

� Algeria is the closest gas supply to Spain

� Algerian NG: most competitive gas source

� Strong Spanish dependence on Algeria, reduced after 2001

� The main player in the Spanish market had so far unrivalled access to Algerian NG� Medgaz will provide generalized access to the most competitive gas to 4 out of the 7 main gas players in Spain

III. The partnership: Algerian gas supply

Source: CNE

Source: CNE

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Medgaz – A new gas pipeline

I. Location

II. The technical project

III. The partnership

IV. The Spanish gas market

V. Future challenges

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IV. The Spanish gas market: demand growth

� 10+%/year growth� 1990-2003 Ind. & Commercial� 2004-2011 power generation

� No indigenous gas

� Very limited storage

� LNG biased� Spain as a “gas island”

Source: CNE

Source: CNE

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The new Spanish energy plan 2006-2012 tries to address the new market challenge:

� Expected consumption growth

� Change in market structure:�Electricity driven market

�Volatile renewable (wind)

IV. The Spanish gas market: 2011 horizon

Source: Ministerio de Industria 2006

Medgaz role in the 2011 horizon:

� Direct access to gas producing fields (3 -4 hours Hassi-R’Mel to Madrid)

� Pipeline operational flexibility

Source: Ministerio de Industria 2006

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Medgaz – A new gas pipeline

I. Location

II. The technical project

III. The partnership

IV. The Spanish gas market

V. Future challenges

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V. Future challenges

Medgaz facilitates the integration of the European gas markets

� Consolidates Algeria as the Southern Europe gas strategic partner

� Opens the Spanish market to level ground competition

� Provides incentives to Spanish interconnections with France:

� Spain less of a “gas island”� Spanish access to French storage� French access to Algerian NG

� Widens the opportunities of future African gas pipeline projects (TSGP Nigeria-Algeria)

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Thank you for your attention

Merci de votre attention

Gracias por su atención

Thank you for your attention

Merci de votre attention

Gracias por su atención

www.medgaz.com