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4 April 2007 - Energias de Portugal (EDP) and Algerian state energy firm Sonatrach are to sign a memorandum of understanding that may see the companies create a business partnership to operate in gas and power generation segments.

As part of the agreement, Sonatrach has acquired 2 per cent of the Portuguese utility's share capital. Sonatrach will provide up to 2bn cubic metres of natural gas per year over a long-term period. Part of this capacity will go to EDP while the remainder will be used to operate new combined cycle gas turbine (CCGT) projects that will be established by the partnership.

In addition, the companies are to set up a joint venture to market natural gas, while Sonatrach will participate as a minority stakeholder, with at least 25 per cent interest, in power generation companies that will develop new CCGT projects. These turbines will be run on gas supplied by Sonatrach.

EDP said that the companies could also agree to additional partnership components, including mid-stream gas business ventures. EDP commented that the partnership would build on the company's aims to develop an integrated natural gas strategy, as well as the construction of the new CCGT power generation projects in Iberia, Spain.

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