BP heads for Algeria

BP has signed a £1.75bn deal with Algeria to develop a gas field deep in the Sahara desert.

It's the first time Algeria has agreed to a full partnership deal with a foreign company.

The deal was signed in Algiers by BP and the state gas corporation, Sonatrach.

The new project, known as In Salah, is unlike the main gas reserves at Hassi R'mel, which the Algerians developed themselves.

When BP and Amoco merged in 1998, the oil and gas group became the largest foreign investor in Algeria.

The In Salah development ranks as one of the company's biggest three projects anywhere in the world.

Two hundred production wells will be built, together with a £702m pipeline linking the gas reserves to the Algerian network and on to Europe.

Italy has already agreed to buy nearly half of the 6.3 billion cubic metres of gas expected to come onstream by 2004.

Algeria already supplies a quarter of Europe's gas needs.