LNG IMPORTS FROM ALGERIA UNLIKELY IN 1987
Liquefied natural gas imports from
Algeria are unlikely to happen in 1987 even though its
economically feasible, U.S. industry analysts sources said.
    Youcef Yousfi, director-general of Sonatrach, the Algerian
state petroleum agency, indicated in a television interview in
Algiers that such imports would be made this year.
    "Contract negotiations, filing with the U.S. government and
the time required to restart mothballed terminals will delay
the import until 1988/1989," Daniel Tulis, a natural gas
analyst with Shearson Lehman Bros. said.
    Sonatrach is currently negotiating with two of its former
customers, Panhandle Eastern <PEL> and Distrigas, a subsidiary
of Cabot Corp <CBT> to resume LNG export, company officials
told Reuters. A third, El Paso Gas, a subsidiary of Burlington
Northern <BNI>, has expressed no interest.
    Industry analysts said some imports of Algerian LNG were
feasible. "On a marginal cost basis, the companies that have
made capital investment to handle LNG import can operate
profitably even in the current price environment,"  Frank
Spadine, an energy economist with Bankers Trust, said.
   Analysts did not forsee a major impact from Algerian imports
on U.S. prices which are currently soft but expected to trend
higher by the end of 1987.
    A decline in gas drilling and the time lag to bring Gulf of
Mexico productions onstream will tighten gas supplies and firm
prices, Shearson's Tulis said.
   In this context, Algerian LNG import would be a source of
supplemental supply to U.S. domestic production, he added.
    Company sources currently in talks with Algeria agree,
saying that Algerian LNG would only serve to meet peak demand.
    Company sources also said that any negotiations with
Algeria would emphasize looser arrangements which would relate
volumes to market requirements and prices to U.S. spot market
values.
 Reuter
