Econostrum | Economic News in the Mediterranean

Gas further cools relations between Algeria and Spain

Written by Frédéric Dubessy on Thursday, April 28th 2022 à 18:05 | Read 304 times

ALGERIA / SPAIN / MOROCCO. The relations between Algeria and Spain, disturbed since March 2022, know a new episode of tension while Madrid wants to send back to Morocco a part of the Algerian gas which it receives.

Spain's desire to reverse the flow of GME to Morocco does not please Algeria (photo: DR)
Spain's desire to reverse the flow of GME to Morocco does not please Algeria (photo: DR)
ALGERIA / SPAIN / MOROCCO. Relations between Algeria and Spain are getting colder and colder against the background of gas deliveries. Since 18 March 2022 and Spain's support of the Moroccan autonomy plan for Western Sahara (equivalent to the recognition of Morocco's sovereignty over this territory), Algiers has been reconsidering its friendship with Madrid.

This sudden reversal of a constant strategy of neutrality on this issue since Moroccan independence has disturbed the good understanding between the two countries. Algeria, the main supporter of the Polisario Front, even recalled its ambassador to Madrid on 19 March 2022. On Saturday 23 April 2022, the Algerian president, Abdelmadjid Tebboune, described this change of position as "morally and historically unacceptable". Especially since it means, without ambiguity, a rapprochement with Morocco, its enemy.

On 8 April 2022, a meeting in Rabat between Pedro Sanchez, President of the Spanish government, and the King of Morocco, Mohammed VI, officially put an end to the crisis between the two kingdoms. It had been going on for almost a year. A "peace" symbolised by a sixteen-point roadmap, not much appreciated by Algiers which, in August 2021, decided unilaterally to break off all diplomatic relations with its neighbour.

Madrid wants to ensure Rabat's energy security

It is therefore now gas that has entered the game. In 2021, Spain imported 40% of its gas from Algeria and Algiers is now threatening to turn off the tap, as part of these deliveries are about to be re-exported to Morocco. Algeria decided on 31 October 2021 to close the Maghreb Europe Gas Pipeline (GME), which served Spain via Morocco, and thus not to renew the twenty-five year contract that was coming to an end. In compensation for this transit through its territory, the Cherifian kingdom had the possibility of using the pipeline at preferential prices and drew 97% of its gas needs from it.

Algerian gas continues to arrive in Spain thanks to another gas pipeline, this one underwater, Medgaz. With a capacity of 10 billion cubic metres per year, it is based on a partnership between Sonatrach and Medina Partnership (50% owned by the Spanish company Naturgy and 50% by the American company BlackRock).

From February 2022, Madrid offered Rabat to ensure its energy security and part of its annual needs of about 1 billion cubic metres. "Morocco will be able to acquire liquefied natural gas (LNG) on the international markets, have it delivered to a regasification plant in peninsular Spain and use the GME to transport it to its territory," the Spanish Ministry of Ecological Transition stated at the time. At the time, the operator of the Spanish gas network, Enagás, was already announcing its intention to reverse the flow of GME and to define an exit tariff, as is currently the case for Portugal and France.

Algiers also threatens to close the Medgaz pipeline

On Wednesday 27 April 2022, Teresa Ribera, Spanish Minister for Ecological Transition and Demographic Challenge, officially informed her Algerian counterpart, Mohamed Arkab, Minister of Energy, that she was considering reversing the flow of GME. Without specifying whether it was to serve Morocco. The Algerian Ministry of Energy reacted immediately: 'Any Algerian natural gas delivered to Spain, whose destination is not the one stipulated in the contracts, will be considered as a breach of the contractual commitments'. He added that this 'could lead to the termination of the contract between Sonatrach and its Spanish customers'. On Saturday 23 April 2022, Abdelmadjid Tebboune had however announced that his country "would never renounce its commitments to supply gas to Spain, whatever the circumstances.

However, Madrid assures that Algerian gas will not flow through the GME. Madrid specifies that the gas transported through the reversal of the flow will come from gas purchased on the international markets by Morocco. Delivered to Spain, it will be regasified there, as indicated in February 2022 by the Spanish Minister for Energy Transition, before being sent to Morocco under an agreement signed between Enagás and the Moroccan National Office of Hydrocarbons and Mines (ONHYM).

The Algerian threat to close Medgaz also comes at a time when Naturgy has been negotiating with Sonatrach for the renewal of this contract for a year. However, the contract will not end soon, as Francisco Reynès, president of Naturgy, explains: "The contract that binds us to Sonatrach is very complex because of the clauses and prices that it contains (...) Although the tariffs must be revised periodically, the contract is in force until 2032 with a value of around €12 billion.

State-owned Sonatrach says it wants to raise the price of its gas exports to Spain as a first step. It is also working to strengthen its links with Italy to increase its deliveries to that country, at the expense of Spain.

The crisis was reflected internally with the decision of the Spanish Congress to question the government. The majority Popular Party (PP - liberal-conservative) wants to hear Pedro Sanchez on the new relations with Morocco and its consequences on those with Algeria.

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