Algeria guarantees gas supply to Spain

Algeria guarantees gas supply to Spain

According to APS, the official Algerian news agency, published this Sunday, November 7, the gas supply pipeline to Spain is guaranteed to continue. In fact, it stated that the Medgaz pipeline that carries natural gas directly from Algeria to Almeria will increase its capacity. This will apparently enable it to supply 10,700m³ per year by the end of the year.

The entry into service of a fourth turbocharger on the pipeline would make this increase possible said the Algerian government statement. With the closure of the Maghreb Europe Gas Pipeline (GME) at the end of October, due to tensions between Morocco and Algeria, it left Medgaz as the only alternative gas supply for Spain.

As APS pointed out, “The final investment decision in this structure can only be made in the event that long-term natural gas contracts are concluded between Sonatrach – the Algerian company – and European clients by volumes for a period sufficient to recovering the investments”.

Sonatrach and Naturgy strengthened their position in Medgaz in 2020 with the acquisition of Cepsa shares, which means that Sonatrach controls 51 per cent of Medgaz, while 49 per cent is in the hands of the Spanish company, Naturgy.

It was also highlighted by APS that the expired GME contracts with Morocco, Spain, and Portugal totalled 6.7 billion cubic metres of natural gas annually, which was approximately half of the maximum capacity that GME could supply.

Mahma Buzian, an energy expert, is quoted by APS as saying that due to the non-renewal of the GME contracts, Sonatrach has agreed to “transfer part of the volume planned for the GME to Medgaz”.

Algeria has always been Spain’s main supplier of natural gas, and even though the supply is available via Medgaz, the government is looking into the possibility of importing liquefied natural gas through LNG tankers, which would, unfortunately, result in its price increasing, as reported by laopiniondemalaga.es.

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