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French, Algerian Governments Discussing GDF/Sonatrach Deal: Report

The French government is pursuing talks with Algeria over a possible tie-up between Gaz de France and Algerian state-owned peer Sonatrach, according to the Financial Times.

French President Nicolas Sarkozy has said before that a tie-up with Sonatrach is an alternative to the stalled Suez scheme, the FT's online edition said, citing unnamed sources as saying France and Algeria are still in talks over partnerships and equity stakes.

It said government bankers have told it that that options being discussed included the possibility of Sonatrach taking a stake in GDF, or commercial and industrial partnerships.

But the FT cited one banker as saying a firm deal was unlikely in the short term. Sarkozy is scheduled to meet Algerian President Abdelaziz Bouteflika during a tour of Algeria, Tunisia and Morocco scheduled for July 10 and 11.

The FT reported yesterday that Sarkozy had summoned Prime Minister Francois Fillon and Finance Minister Christine Lagarde to decide the fate of the merger between GDF and Suez, but later in the day Lagarde said all options for the deal remain open.

Unions yesterday said the government has ruled out the idea of a merger between GDF and EDF.