April 28, 2011 / 9:53 AM / 8 years ago

UPDATE 1-Enel to buy stake in Algeria JV for up to $183 mln

* Enel to pay up to $183 million for 18.375 pct of Isarene

* Partner Petroceltic says deal values asset at up to $1 bln

* Says up to 50 pct of 6 trln cubic feet gas recoverable

(Adds estimate of reserves, quotes)

DUBLIN, April 28 (Reuters) - Italian utility Enel (ENEI.MI) is to buy a stake in an Algerian gas field from Irish energy company Petroceltic PCI.I for a maximum $183 million, the Irish firm said on Tuesday.

Enel will buy a 18.375 stake in the Isarene field in south-east Algeria which has been developed in a joint venture between Petroceltic and Algerian state energy company Sonatrach since 2005, once regulatory approval has been secured, it said.

Petroceltic, with 56.625 percent, will remain the operator of the project, while Sonatrach will retain its 25 percent. Enel will not be represented on the project’s board.

The Isarene field contains roughly 6 trillion cubic feet (170 billion cubic meters) of gas, of which 30-50 percent is likely recoverable, Petroceltic CEO Brian O’Cathain told Reuters. The deal implies the field is worth $800 million-$1 billion, he said.

“This transaction is a strong endorsement of the quality of the Isarene asset,” O’Cathain said. “Enel have a very detailed knowledge of the market both in Europe and Algeria. Their knowledge of the market will help us to market the gas.”

Italy is heavily dependent on gas from Algeria, securing 70 billion cubic meters (bcm) of gas from Algeria in 2009 from total imports of 70 bcm.

The Algerian authorities have given their informal approval to the deal, but it will likely take around three months for the government and Sonatrach to sign off on it, O’Cathain said.

Under the deal, Enel has agreed to pay up to $36.75 million towards costs already incurred in the project, and up to $75 million depending on the volume of recoverable reserves.

It will also pay 49 percent of a maximum of $149 million towards the cost of six appraisal wells and a seventh contingent well, the Petroceltic statement said.

Enel’s stock price was up 1 percent in early trade on Thursday, while Petroceltic was flat. (Writing by Conor Humphries; Editing by David Cowell and Jane Merriman)

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