The headquarters of the public energy company Sonatrach in Algiers, November 2019. RAMZI BOUDINA/ Portal
Algerian public hydrocarbons group Sonatrach announced on Thursday (October 6) that it has signed a deal with its main customer in Spain, Naturgy, to “revision” the prices of the gas it supplies. The nature of this “revision” has not been specified, but Sonatrach has mentioned an increase in the price of its gas sold to Spain in recent months in the context of a diplomatic crisis between Algiers and Madrid.
This decision was announced at a time when prices continue to rise due to disruptions in Russian gas supplies to Europe due to the war in Ukraine, a Russian-occupied country.
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“Sonatrach and its partner Naturgy have agreed to revise the prices of existing long-term gas supply contracts in light of market developments, thus ensuring the balance of their contracts on a win-win basis,” the Algerian company said in a press release.
The agreement was signed in Algiers by Sonatrach CEO Toufik Hakkar and his Naturgy colleague Francisco Reynes Massanet. Naturgy is the main Spanish buyer of Algerian gas. The Spanish group has an almost equal stake (49%/51%) with Sonatrach in the Medgaz pipeline, which directly connects Spain to the Algerian gas fields.
The question of Western Sahara
According to Enagas, manager of Spain’s gas network, in August Algeria was Spain’s second largest gas supplier (24%), behind the United States (26.5%) and ahead of Nigeria (15.3%). Algerian gas’s share of Spanish imports has fallen sharply in recent months, while until recently it accounted for 50% of its imports. This decline came against a background of serious tensions between Algiers and Madrid.
The Algerian government has been furious with Spain since the government of socialist Pedro Sánchez decided in March to back Morocco’s autonomy plan for Western Sahara in a bid to end a nearly year-long diplomatic crisis between Madrid and Rabat.
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In response to this reversal in Madrid’s traditionally neutral position, the Algerian authorities suspended a cooperation agreement with Spain in early June. The issue of Western Sahara, a former Spanish colony considered a “non-autonomous territory” by the United Nations, has pitted Morocco – which controls 80% of it – against the Algiers-backed Polisario Front separatists for decades.
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