The French utility has purchased approximately one billion cubic meters of Algerian natural gas per year, intended to be transported via Medgaz, the underwater gas pipeline project that will directly connect Algeria with Spain when operational.

This agreement, covering a 20-year term, will enable Gaz de France to continue diversifying its supply channels and strengthen its position on the European natural gas market, particularly in Spain, the Gallic company said in a statement.

With natural gas consumption on the rise by 17.6% in 2005, Spain is a significant market, experiencing sharp growth, thanks in particular to electricity production from natural gas. Gaz de France aims to develop its presence on the Spanish market, where it sold 5.2TWh in 2005.

Gaz de France is a partner in the Medgaz project, with a 12% stake. The gas pipeline, which will have eight billion cubic meters in capacity, is expected to begin operating in 2009.