Sunday, February 25

Algeria threatens to terminate the gas supply contract with Spain


Algeria raises the tone of its threats to Spain in full diplomatic clash after the turn of the Government of Pedro Sánchez on Western Sahara. The Algerian Government warns that break supply contracts gas signed with Spanish companies if it detects that part of that gas ends up being resold to Morocco, with which it has broken off diplomatic relations also on account of the Sahara.

The vice president and minister for the Ecological Transition, Teresa Ribera, announced this Wednesday the imminent reopening of the Maghreb-Europe gas pipeline, which Algeria decided to close last October. But the reopening will not be so that gas reaches Spain, but rather the direction of the flow of the tube is reversed to send gas from Spain to Morocco. Algiers’ reaction has been to warn that it will terminate the contracts with Spanish companies if part of that gas is resold to Morocco.

“Morocco has asked for support to guarantee its energy security based on trade relations and Spain has responded positively to its request, as it should do with any other partner or neighbor,” explain Spanish government sources. The Government completely denies that Algerian gas can be redirected to Morocco, and underlines that the role of Spain will be limited to receiving in Spanish plants the ships with the gas that Rabat buys from any supplier country and sending it through the gas pipeline.

“With total transparency, Morocco will be able to acquire liquefied natural gas [el que se transporta por barco] in the international markets, disembark it in a peninsular regasification plant and use the Maghreb gas pipeline to reach its territory. In no case will the gas acquired by Morocco have Algerian origin”, they explain from the Ministry for Ecological Transition. “The activation of this mechanism has been discussed with Algeria in recent months and today it has been communicated to the Algerian minister.”

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After receiving confirmation from Ribera that it authorizes the use of the gas pipeline to supply Morocco, the Algerian Ministry of Energy and Mines has warned in a statement that any transport of gas delivered to Spain whose destination is not that stipulated in the contracts will be considered a breach of the commitments and will allow the energy group sonatrach to break those agreements with Spanish clients.

Climbing Spain-Algeria

In the midst of the energy crisis and in the midst of the spiral of price hikes, Algeria decided to close the largest of the gas pipelines with which it supplied gas to Spain, which has caused a change in the structure of the country’s imports. The closure of the submarine tube of the Strait, at the end of October, has forced Spain to skyrocket the weight of gas purchases that arrive by ship and has ended up causing a historic turnaround in the ranking of supplier countries. After five decades of permanent leadership by Algeria, since last January the United States has become the largest seller of gas to Spain and last month purchases from the American giant accounted for 43% of total imports.

Algeria closed the Maghreb-Europe gas pipeline on October 31, which connects with Spain through Morocco, as a result of the diplomatic clash between Algiers and Rabat on behalf of Western Sahara. After 25 years in operation, the tube was closed and there is no real prospect that it will be reactivated in the short or medium term. Algeria guaranteed the Spanish Government the supply contemplated in all contracts with Spanish energy companies (especially Naturgy, the largest buyer), by expanding the capacity of the other gas pipeline between the two countries and even supplementing shipments using ships.

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But in recent weeks, bilateral relations have become even more cloudy after the turn of the Pedro Sánchez government around Western Sahara, supporting Morocco’s autonomy plan for the former Spanish colony to the detriment of the self-determination supported by the Saharawi movement and also Algeria. Algeria has offered to maintain prices to all gas buying countries. Everyone except Spain, for which the Algerian Government plans to “recalculate” the cost of supply. A warning that comes precisely from the Algerian giant Sonatrach and the Spanish Naturgy have been negotiating for months a review of the prices of their gas supply contracts for the next three years.

The gas sector insists that it is a “ordinary review” of the many contracts that are made approximately every three years, but the negotiations have been rarefied and stressed by the turn of the Spanish Government. With the international gas markets out of control and setting record prices, the price increase in the renegotiation is almost taken for granted.


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