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Algeria LNG supply secure despite strike

Action at water plant shuts Skikda; Arzew ramps up to pick up slack

30 March 2011 - Algeria's liquefied natural gas (LNG) supply to Europe is not expected to be disrupted after a strike shut the Skikda plant, as scheduled tankers were still able to load at  Arzew, a source close to the situation told Petroleum Economist.

Sonatrach's  4.7m  tonnes a year  (t/y) Skikda LNG train closed over the weekend after a strike at a neighbouring water plant reduced water supplies.  But Sonatrach's other LNG production facilities have enough capacity to meet the state-run firm's loading obligations, the source told Petroleum Economist late on Tuesday.

"Offtakes are unaffected as the ships initially dedicated to Skikda are rerouted to the Arzew plants where the load factor of the trains can easily rise," the source added.

The Skikda train can only load small sized LNG tankers and is smaller than Arzew which has total production capacity of 17.25m  t/y  from three trains.  Algeria supplies around 1.68bn cubic metres a year (cm/y) of LNG to the UK and 5.19bn  cm/y to Spain.

The global LNG market has tightened over the last few weeks after a massive earthquake in Japan knocked out 11 of its nuclear reactors.  Japan is expected to import extra LNG to meet fuel demand needs, with some cargoes from Europe possibly being diverted as traders cash in on the premium Japan is prepared to pay for the cuper-cooled gas.

European and UK gas prices also rose after Germany closed seven of its reactors for safety check, with some unlikely to ever return to service.  The civil war in Libya has cut gas supplies to Italy, adding to the nervousness in Europe's energy markets.  Kwok W Wan, London.

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