June 30, 2009 / 2:04 PM / in 9 years

No deal yet on firms for Sahara gas pipeline-Khelil

DOHA, June 30 (Reuters) - Nigeria, Niger and Algeria have yet to agree on which foreign companies will build the Trans-Sahara pipeline, Algerian Energy and Mines Minister Chakib Khelil said on Tuesday.

Nigeria’s state oil company NNPC, Algeria’s state oil company Sonatrach and Niger will sign a deal next week in Abuja to facilitate the pipeline, he said.

The European Union views the project to bring gas from Nigeria across the desert to Europe via Algeria as one that could help it diversify energy supplies.

“We haven’t accepted anybody yet,” Khelil told reporters after attending a gas meeting in Doha. “Only partners that can bring something to the project, not just money, should be there.”

Russia’s Gazprom (GAZP.MM), France’s Total (TOTF.PA) and Italy’s Eni (ENI.MI) were among many companies that had expressed interest in participating in the $10 billion project, Khelil said.

Each country could sell stakes in its share of the pipeline, as long as the new partners were accepted by the other two countries, he added.

Algeria could pump the Nigerian gas onto Europe through existing pipelines that it may expand, or it could build another line for the gas, he said.

“Initially there will be space in the pipeline system,” he said. The pipeline would start operating in 2015-2016, he added.

Some of Algeria’s long-term supply contracts with Italy were due to expire in 2019-2020, so the Nigerian gas could replace Algerian gas in those contracts, he said.

The partners would raise the money for the project against long-term sales deals, Khelil said.

The project had been stuck on the drawing board for years. Issues that took time to resolve were how to develop gas fields in Nigeria for both domestic and international supply and what would happen if the pipeline were cut off, he said. Algeria would supply gas if supplies from Nigeria halted for any reason, he added.

Around a third of Nigeria’s oil output is out of action due to militant attacks on oil installations.

Initially NNPC and Sonatrach would hold a total around 90 percent stakes in the project, while Niger would hold 10 percent, Khelil said. (Reporting by Simon Webb; editing by William Hardy)

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