Naturgy and Sonatrach establish that the Medgaz expansion will start operations in the fourth quarter of 2021
  • Francisco Reynés, Naturgy chairman, and Toufik Hakkar, Sonatrach chairman, reached the agreement during a work meeting held during a visit to Medgaz in Orán (Algeria) and it confirms the excellent progress of the expansion project.
  • When the Medgaz expansion, which has seen investment of 90 million dollars (€73 million), starts operations it will transport 25% of the natural gas consumed in Spain and strengthen the strategic relationship between the two companies.
  • In 2021, Medgaz celebrates a decade of continuous operations, confirming the strategic value of this infrastructure for a secure supply to Spain.


Today Francisco Reynés, Naturgy chairman, and Toufik Hakkar, Sonatrach chairman, agreed that the Medgaz expansion would start operations in the autumn. The companies held a work meeting in Orán (Algeria) as part of a visit to Medgaz. The agreement will see the gas pipeline expand its capacity by 2 bcm/year, representing an increase of 25%, reaching 10 bcm/year from the fourth quarter onwards.

The expansion has seen investment of approximately 90 million dollars (€73 million) and the installation of a fourth turbo compressor to increase capacity to 10 bcm/year. Once the expansion is operating, 25% of Spanish natural gas consumption will pass through Medgaz.

After a continuous decade of operations and initial investment of over 1 billion dollars, when the Medgaz expansion starts operations it will boost the security of the supply to Spain because it is a key infrastructure for natural gas transport.

Launching the expanded capacity of the gas pipeline also strengthens the strategic alliance between Naturgy and Sonatrach. The Algerian company is one of the leading gas providers to Spain and is the fourth largest shareholder in Naturgy with a share of 4%.

Francisco Reynés stated that this infrastructure 'strengthens the security of the natural gas supply to Spain, and is key to providing guarantees and stability to the ecological transition and decarbonisation process. After a decade of continuous operations, Medgaz is a success in terms of operations and our collaboration with a strategic partner like Sonatrach.'

About Medgaz

Medgaz is responsible for designing, constructing and operating the deep-sea gas pipeline from Algeria to Europe through Spain. This is a direct and profitable way to supply natural gas to the south of Europe.

Sonatrach is the owner and operator of the gas pipeline from the Hassi R'Mel gas fields to Beni Saf on the Algerian Coast, where it connects with Medgaz. The Medgaz gas pipeline connects to the Spanish transport network in Almeria.

The project was awarded by the Algerian government for a period of 35 years (until 2041) in 2006, and it may be extended by an additional 15 years.

At the end of 2019, Naturgy converted its 14.95% share in Medgaz into a strategic 49% share after purchasing 34.05% from Mubadala via a special purpose vehicle (SPV). In March of last year, Naturgy reached an agreement with BlackRock that saw the investment manager enter the SPV.

At present, Medgaz is owned by Sonatrach (51% share) and Naturgy (the remaining 49% via the SPV in which BlackRock has a share) and there is a shareholder agreement that grants the two companies joint control of the gas pipeline.

The infrastructure is consistent with Naturgy's action plan to find investments that contributes to the energy transition and generates shareholder value, with stable, predictable and low risk cash flows.

Madrid, 13 July 2021

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Naturgy Energy Group SA published this content on 13 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 July 2021 13:34:04 UTC.