The European Investment Bank (EIB), the European Union's long-term financing institution, has to date provided over ECU 1.1 billion for the trans-continental pipeline bringing Algerian gas to Europe.

The 2 200 kms pipeline system, costing almost ECU 3 billion, brings gas from the Hassi R'Mel field in Algeria, across Morocco and the Straits of Gibraltar to the gas grids of Spain and Portugal. The pipeline is designed to supply up to 12% of Europe's natural gas requirements in the year 2 000, and is linked to the trans-European pipeline network through connections between Spain and France. The final link into Portugal was commissioned last month. Running through four countries, the project has been constructed by: the Algerian State company SONATRACH, the EUROPE MAGHREB PIPELINE LTD specially set up for the building and managing of the Moroccan section, the Spanish GAS NATURAL group and the Portuguese TRANSGAS.

The EIB is financing the project as it supports the EU's energy policy to increase and diversify energy supplies and facilitate the use of natural gas by industry and households, as a clean and economic substitute for oil, that also will help to protect the environment.

The pipeline is a Trans-European Network (TEN) priority project, as agreed by the European Council in Essen, in December 1994. Since 1993, the Bank has played an active role in support of the trans-European gas networks, having already approved loans totalling almost ECU 3 billion for pipelines bringing Algerian and Russian gas to Europe, as well as for the construction of the Spanish, Portuguese and Greek natural gas grids, the modernisation and extension of the grid in Eastern Germany and the Spain-Portugal and UK-Continent gas interconnectors.

The EIB was set up in 1958 under the EC Treaty to provide loan finance for capital investment furthering EU objectives, in particular to support viable projects that promote: regional development; trans-European networks in transport, telecommunications and energy; the international competitiveness and integration of European industry, specially the small and medium-sized enterprises; environmental protection and improvement; and security of energy supplies. It also provides, within certain limits, finance outside the EU within the framework of the Union's cooperation policy with third countries.With the aim to establish by the year 2010 the communications networks that Europe needs for the 21st century, the European Union is making significant efforts in large-scale investment, funding transport, energy and telecommunications infrastructures. The EIB, as the EU's long-term financing institution, is playing a key role in this financing, having committed since 1993 a total of ECU 23 billion, what accounts for some 30% of the ECU 70 billion being invested in TEN-projects or sections currently under construction.The Member States committed themselves to bring forward major investment in trans-European networks (TENs) at the Essen European Council in December 1994, adopting lists of priority TENs. The Council gave special emphasis to encouraging the private sector to help in the financing, construction and running of the TENs projects, and to strengthen links with neighbouring countries, especially with countries in Central and Eastern Europe, most of whom are candidates to join the UE.

The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 31/12/1996, when ECU 1 = 1.95 DEM , 0.74 GBP, 6.56 FRF, 1.25 USD.