UPDATE 1-Algerian ex oil executives on trial on corruption charges

* Sonatrach 1 case is one of several graft probes

* Investigation involves contracts with suppliers

* Italy also pushing for court case on Eni’s Saipem (Adds details from the case)

ALGIERS, March 15 (Reuters) - A group of top former Algerian state oil company officials including an ex-chief executive went on trial on Sunday for corruption in a scandal involving foreign suppliers.

The so-called “Sonatrach 1” case is just one graft probe involving the state company and opens at a sensitive time for Sonatrach, with oil prices slumping and foreign interest weak in Algeria’s recent offers to develop new fields.

The state news agency APS said charges against the 19 defendants included granting privileges to third parties, hiking prices of contracts with a state company, embezzlement, money laundering and corruption.

After a day of stop-start hearings, the case was adjourned when defence lawyers withdrew because they said there was no guarantee of a fair trial for the defendants, said attorney Chaib Sadek.

“We have decided to postpone the case until a later session,” Judge Mohamed Reggad told the court in Algiers, without setting a date for the next hearing.

Former Sonatrach CEO Mohamed Meziane appeared in court accompanied by his two sons who are also defendants. More than 40 lawyers and 108 witnesses were due to take part, including another former Sonatrach CEO and the current acting company chief.

Meziane told El Watan newspaper last week he was innocent and the charges were part of a plot against him. None of the defendants has yet entered a formal plea to the court.

The state news agency said the trial centred on five contracts between Sonatrach and a local unit of a German company involving monitoring equipment and electronic protection services.

Citing a source in the case, APS said an Algerian representative of the German firm was accused of receiving privileges during the bidding process for contracts. In exchange, others were given shares in the company, it said.

In a separate investigation, Italian prosecutors last month asked for oil major Eni and its subsidiary Saipem to be put on trial on charges Saipem paid bribes to win contracts in Algeria.

Investigations into allegations that the oil service company paid intermediaries 197 million euros ($207 million) to bag contracts worth 8 billion euros with Algerian state-owned energy group Sonatrach were completed in January.

Eni and Saipem have previously denied any wrongdoing. Audits previously carried out by Eni and its 43 percent owned subsidiary Saipem both found no evidence of illegal conduct.

“With three Sonatrach CEOs in the courtroom, it shows how much the company needs to reform,” said one Algerian energy expert at the Algiers proceedings.

The scandals have shaken Sonatrach, which is a major cash source for the Algerian government that relies on energy production for more than 90 percent of its export revenues.

OPEC member Algeria, a top gas supplier to Europe, is trying to draw in more foreign oil operators to help it offset stagnant energy production. But a bidding round last year attracted only four offers on 31 fields up for auction. ($1 = 0.9531 euros) (Writing by Patrick Markey; Editing by Rosalind Russell)