BP and Sonatrach Launch In Salah Gas In Salah Gas Announces Italian Power Deal

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29 April 1997

'In Salah Gas' has been launched today by BP and Sonatrach as a joint marketing venture to bring the next tranche of Algerian gas to Europe.

This follows the contract signed in December 1995 which established the Sonatrach-BP association to explore, develop and market gas jointly from the In Salah region in southern Algeria which is known to contain a number of sizeable gas fields. The association plans to link the unexploited In Salah gas reserves into Sonatrach's comprehensive existing gas export systems and to market jointly the gas in the fast growing markets of southern Europe.

In Salah Gas also announced today a major gas supply deal with Italian power generating giant ENEL. The deal consists of the assignment to In Salah Gas of the existing supply contract between Sonatrach and ENEL. Under this assignment, In Salah Gas will take over responsibility for the contract to supply ENEL with four billion cubic metres a year of gas. Deliveries under this contract started towards the end of 1996 and will continue to be met by Sonatrach up to the date of first gas production from In Salah. This is the first sales announcement to be made by the BP-Sonatrach joint venture.

Mr. Nazim Charif Eddine Zouioueche, Chief Executive of Sonatrach, said today, "With this announcement from In Salah Gas, it is clear that the Sonatrach-BP association is working well in all areas of its activity downstream and upstream. I am sure that the combination of Sonatrach's and BP's expertise and experience will make In Salah Gas a powerful new force in the European gas market."

"We are very proud of the quality of the relationships that we have with our partners. In this respect I would like to mention particularly our relationship with ENEL. The mutual trust and respect between our two organisations have been fully confirmed with the assignment to In Salah Gas of the gas sales and purchase contract between Sonatrach and ENEL."
Mr Rodney Chase, Chief Executive of BP Exploration said today, "We are very pleased with the progress made by the joint venture team. I can confirm today that our joint operations are under way at In Salah and that the commercial team is established in the Hague. Now comes the vital appraisal phase as we seek to confirm the extent of the gas reserves in the region and finalise the development plan. The launch of In Salah Gas signals a significant new supply choice for customers in the European gas market. The In Salah project is well on track to meet the demands of the market in the near future."

Mr Ahmed Messili, General Manager of In Salah Gas said that the arrangements with ENEL were a great start for the venture noting that "power generation is the fastest growing sector in European gas demand. The contract with ENEL underlines the aim of In Salah Gas to be customer responsive in meeting the demands of the market." Mr Messili added that the project "has every expectation that the reserve base will be sufficient to fulfil gas sales commitments of 9-11 billion cubic metres a year for decades to come. In Salah Gas will focus its gas sales activities on Europe and North Africa. As a new player, In Salah Gas is well positioned to serve customers needs in a changing market."

Notes to Editors:
The In Salah Project was first announced when Sonatrach and BP signed their contract of association on 23 December 1995 to explore, appraise, develop and market gas from the region of In Salah, a remote area of the Sahara, which is within Mining District 3 in Algeria. Located some 1200km south of Algiers, the licence area covers 23,000 square km and is about 20% of the total District 3 area of 120,000 square km which is equivalent to the size of England.

There are seven known gas fields in the licence area which are currently undergoing an appraisal program consisting of 750 square kilometres of 3-D seismic and five appraisal wells. A separate exploration area within the licence has a work programme of 2,000km of 2-D seismic and four exploration wells.

Seismic began in February, 1997 and the first well will be spudded in summer 1997.

Full development will cost about $3,500 million including a 520-kilometres pipeline northwards to Hassi R'Mel, where there are existing Sonatrach gas pipelines connecting to Europe and the natural gas liquefaction plants on the Algerian coast. First production from the In Salah Project is expected to be the early part of the next decade with a plateau estimated at around 9-11 billion cubic metres a year.

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