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Algeria blast to hit LNG exports, importers calm

LONDON, Jan 20 (Reuters) - A huge explosion at the Skikda liquefied natural gas (LNG) plant in Algeria will hit the country's gas exports to southern Europe but importers played down the impact on Tuesday saying they had plenty of alternative suppliers.

The blast ripped through the Skikda LNG plant, one of two in Algeria, late on Monday killing at least 23 people and shutting down all activity at the oil and gas refining complex.

Skikda accounts for about a quarter of the LNG from Algeria, the world's second largest LNG exporter after Indonesia and one of Europe's main gas suppliers.

A port agent said the explosion, the worst accident at an LNG site in nearly 30 years, also badly damaged a berth at the nearby port where LNG tankers are loaded.

The port at Skikda is designed to load small LNG tankers and is used for short-distance exports to southern Europe rather than for shipments across the Atlantic, Andrew Flower, an independent gas analyst and former LNG director at BP, told Reuters.

"Skikda can only take small ships. They normally ply across the Mediterranean to Italy, Spain and France," Flower said.

"The French and the Italians could really have problems as their terminals at Fos and La Spezia can only take small ships," he added.

Italian oil and gas company Eni said it imported LNG from Skikda but added this was a small proportion of its total supply.

"There is no problem for gas supplies or for Eni, given that the system is constituted by a number of supply sources, as well as stocks," an Eni spokeswoman said.

Gaz de France , the largest gas supplier in France, was not immediately available for comment.

Algerian President Abdelaziz Bouteflika was quoted on Tuesday as saying Algeria would meet its commitments to supply its foreign partners with energy products.

The Skikda plant, owned by Algerian state oil and gas producer Sonatrach, has six LNG production trains, three of which were destroyed in the blast.

It produced about 4.6 million tonnes of LNG last year, out of a total Algerian LNG production of 19.6 million tonnes.

The remaining production comes from the larger facility at Arzew, further west on the Algerian coast, which can take larger ships and is used for exports to Europe and to the United States.

According to Flower, Algeria supplied about a million tonnes of LNG to the United States last year out of total U.S. imports of 10 million tonnes.

Distrigas , Belgium's main gas provider, said it was unaffected as its supplies came from Arzew.

Spanish gas companies Gas Natural and Cepsa said they also imported gas from Arzew. Spain buys 60 percent of its gas from Algeria. (Gilles Castonguay, Alejandro Lifschitz and Clara Ferreira-Marques)

Copyright 2004, Reuters News Service

Editorial Notes: For the US to partially overcome a looming natural gas crisis, developers have to overcome community opposition to LNG terminals so that gas may be imported by sea. Incidents like this make it all the more unlikely. For more information see here: planetforlife.com/GasRoot.htm

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