Gas Natural Pays Sonatrach $1.9 Bln to End Dispute

Source: Reuters 6/14/2011, Location: Africa

Algeria's state-owned Sonatrach and Spanish utility Gas Natural said they have settled a long-running dispute with a deal that involves the Spanish firm paying $1.897 billion to Sonatrach.

The Algerian energy firm will also have the opportunity to acquire a minority stake in Gas Natural as part of the agreement, which draws a line under a dispute over the prices Gas Natural pays for Algerian gas imports. "This is a very important deal as it puts an end to five years of dispute," Sonatrach Chief Executive Nourredine Cherouati said at a ceremony to sign the deal.

"Our stake in Gas Natural will not exceed three percent," he said.Sonatrach, which has a monopoly on Algerian energy exports and is Spain's biggest natural gas supplier, took Gas Natural to an international arbitration court to demand the Spanish firm pay higher prices for natural gas imports.

Gas Natural contested the claim and challenged a court ruling which ordered it to pay up to 2 billion euros ($2.89 billion) in retroactive gas price increases.Gas Natural's shares closed up 1.56 percent at 13.320 euros, broadly in line with the stock market.Speaking at the signing ceremony in the Algerian capital, Gas Natural Chairman Salvador Gabarro said: "Sonatrach is our biggest supplier and this agreement puts in place a favourable framework for the development of future relations between the two companies."

In a statement, Gas Natural said the payment of $1.897 billion was in line with a revision of prices between 2007 and May 2011 and would have no impact on earnings.It said Gas Natural could participate in various Sonatrach projects and "in developing other business opportunities."

A separate statement issued by Sonatrach on Tuesday said the deal covered the "settlement of all the disagreements existing between the two companies."The deal also gave Sonatrach "opportunities for collaboration in other areas, including the acquisition of a minority stake in Gas Natural's equity," the statement said.


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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