GALSI Pipeline

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GALSI Pipeline, also known as the Gasdotto Algeria–Sardegna Italia (GALSI), is a shelved pipeline which would link gas from Algeria to Italy. Sections of the pipeline have also been called the Cagliari-Olbia Pipeline and the Olbia-Pescaia Gas Pipeline.

Location

The pipeline would begin at Koudiet Draouche near the Annaba Gulf in Algeria and connect to the Algeria-Sardinia undersea section. In Sardinia, the pipeline would reach Porto Botte, from where it then stretches south to north to reach Olbia. At Olbia, the pipeline would connect with the Sardinia-Tuscany undersea section. The pipeline would terminate at Piombino in Italy, where the gas would be delivered to the national gas distribution network.

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Project Details

• Operator: Sonatrach (41.6%), Edison (20.8%), Enel (15.6%), Hera Group (10.4%), Region of Sardinia (10.4%)
• Current capacity:
• Proposed capacity: 8 bcm per year / 16,000 Gwh/day
• Diameter: 26, 48 inches
• Length: 861 km / 535 miles
  • GALSI International Section: 288 km / 165 miles
  • GALSI Italian Section 1 onshore pipeline crossing Sardinia: 285 km / 177 miles
  • GALSI Italian Section 2 sealine Sardinia - Tuscany: 288 km / 179 miles
• Cost: US$3 billion
• Status: Shelved
• Proposed Start Year: 2022

Ownership

A consortium of energy and gas companies established a new company called GALSI in 2003 to develop the pipeline. Sonatrach owns the largest share of 41.6% interest in GALSI, while Edison has 20.8% interest, Enel has 15.6% interest and Hera has 10.4%. The region of Sardinia owns the remaining 10.4% stake.

Background

In 2003, a consortium of Sonatrach, Edison, Enel and Hera Group launched a joint-venture to develop the GALSI (Gasdotto Algeria–Sardegna Italia) pipeline which would further link Algeria's gas production to Italian markets. As Algeria already supplies Italy with 35% of its gas needs with the Transmed pipeline, the Galsi project would further Italy's dependence upon Algeria's gas production.

The pipeline would measure approximately 837km – 565km of which would be offshore across the Mediterranean Sea, while 272km would be onshore. The pipeline would have a capacity of 8 billion cubic meters per year and it would cost around US$2.5 billion to implement the project.

In 2008, the GALSI consortium and SNAM came to an agreement where GALSI "will develop the engineering and obtain the main permits and authorisations required, and Snam Rete Gas will build the pipeline and subsequently manage the gas transport activities."

In 2005, a feasibility study was conducted while the project was geared to be completed by 2012. However, delays have prevented any construction of the pipeline as the project continues to be in limbo.

Delays and Possible Cancellation

While construction was originally planned to begin in 2012, the project has been continuously delayed due to a number of technical and economic challenges. The delays have been caused by both sides. First, various concerns from Italian officials delayed the project shortly after feasibility studies, which were subsequently followed by concerns from Algerian state-backed company, Sonatrach. Some of the concerns rested upon pricing, the instability of European gas markets, and alternative pipeline projects which may make the GALSI pipeline non-viable.

In 2014, Enel CEO Francesco Starace stated that progress on the GALSI pipeline's construction did "not looking encouraging."

In 2015, a new partnership was agreed by the Algerian Minister of Foreign affairs Ramatane Lamamra and Italy’s Paolo Gentiloni to continue with the development of the GALSI pipeline.

As of 2018, Edison SPA reported that the GALSI pipeline was expected to go on stream in 2018 even though there has not been any reported construction or further development on the pipeline project.

As there have been no construction or other developments, the pipeline was presumed to be cancelled.

In December of 2019, the European Commission "Data on the budgetary and technical implementation of the European Energy Programme for Recovery" stated ", the Commission has decided to terminate the EEPR Financial aid. The termination procedure has been formally adopted by the Commission."

However, in the November 25, 2020 release of its Ten Year Network Development Plan (TYNDP), the European Network of Transmission System Operators for Gas (ENTSOG) states construction was expected to begin in 2020 and be completed by 2022 for commissioning by 2022.

Italian transmission operator SNAM explicitly did not include the GALSI project in its 2020-2029 TYNDP, but it did list it as a project from a third party with the status of awaiting final investment decision. There is no mention of the project in the SNAM 2021-2030 TYNDP, nor is it in ENTSOG's 2022 release of their TYNDP.

In response to shareholder question in April 2021, SNAM expressed that it had no intention in participating in GALSI as Italy forbids them from building underwater pipelines.

Due to SNAM's stated lack of interest in the project, and other apparent inaction on the project, as of August 2021, it is considered to be shelved.

Financing

In 2003, Petroleum Economist reported that the Asian Development Bank had opened a US$100,000 line of credit for the project. It also described the project promoters' then hopes of attracting finance from other multi-lateral development banks (MDBs) such as the European Investment Bank. No other MDB finance commitments are known to have been made as of December 2020. At the time, Sonatrach was also reported to be seeking to use export credits and self-financing to raise the funds for the Algerian portion of the project.

In April 2009, IJGlobal reported that U.S. bank Citi had been appointed the project's financial advisor. Although not confirmed, it is assumed that Citi has maintained this advisory role. According to IJGlobal, the project is to be funded through each sponsor contributing funds on a pro-rata basis, either from funding on balance sheets or through corporate borrowing.

ENTSOG's 'Ten Year Network Development Plan 2020' Project Details describes how in 2010 the project received a 120 million euros grant from the European Commission's European Energy Programme for Recovery, though this grant was subsequently cancelled in 2014. It is also stated that "Future availability of new European Commission funds would be a key issue for the success of the project."

Articles and resources

External resources

Wikipedia also has an article on GALSI Pipeline. This article may use content from the Wikipedia article under the terms of the GFDL.