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. Last Updated: 07/27/2016

Gazprom and LUKoil Seeking Closer Relations With Algeria

Gazprom and LUKoil signed memorandums of understanding Friday with Algerian state company Sonatrach as they seek more joint oil and gas projects.

The Industry and Energy Ministry said Gazprom and Sonatrach agreed to cooperate in upstream asset swaps, joint bidding for assets in third countries and in the liquefied natural gas business, in which Sonatrach is a leading player.

Gazprom supplies Europe with one-quarter of its gas needs, and Sonatrach is also a major gas exporter to the continent.

LUKoil said it had also agreed with Sonatrach to cooperate in asset swaps in the upstream sector.

Russia and Algeria are both seeking to increase state control over their energy sectors and have often called for closer cooperation in the gas sector.

In the 1990s, Gazprom's management outraged European officials by calling for an OPEC-like gas cartel, which would involve Russia, Algeria and Norway, supplying the bulk of pipeline gas to Europe.

The idea never materialized and Gazprom said it was focusing on learning more about gas liquefaction, a completely new business for the company, which allows for long-haul exports by tanker.

Last year, Gazprom agreed with France's Gaz de France to swap Russian pipeline gas in Europe against one of GdF's LNG cargoes for delivery to the United States. Gazprom supplied additional volumes of gas for GdF to Europe and swapped it against an LNG cargo from a joint venture between GdF and Sonatrach.

Gazprom supplies Europe with 150 billion cubic meters of gas per year. Algeria has exports of about 60 bcm a year.