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Algeria sees Solution to Spain Gas Contract Rift | ASHARQ AL-AWSAT English Archive 2005 -2017
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ALGIERS (Reuters) – Algeria’s Sonatrach and its Spanish partners Repsol YPF and Gas Natural may end a row without waiting the outcome of an international arbitration, the Algerian energy minister said on Saturday.

Chakib Khelil added in comments reported by the official APS news agency he expected arbitration would take up to two years.

State oil and gas firm Sonatrach terminated its agreement with its Spanish partners early this month and has said it will claim substantial damages to compensate for delays and cost overruns at the Gassi Touil gas field.

It started an international arbitration against the two companies.

“The conclusion of this case will take a lot of time, between one and two years,” Kheli said.

But APS also reported him as saying that an amicable solution is possible, even before the end of the arbitration.”

Algeria awarded the contract to the Spanish consortium giving an exploration, extraction and processing concession of 30 years, and with Repsol as project operator.

The venture, in the Berkine basin in the Sahara, was on a production sharing basis and was set to go on stream in 2009.

Wood Mackenzie estimated the cost of the project had increased from around $2.9 billion when the deal was struck in 2004 to around $6.8 billion now — a rise of 134 percent – as costs of construction materials and manpower soared.