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Algeria May Halt Gas Supply To Spain If It Doesn’t Stop Re-Exporting Gas

Africa’s top natural gas exporter, Algeria, has warned Spain that it would consider Madrid sending Algerian deliveries to third countries a breach of contract, as Spain plans to send gas to Morocco.

Algeria and Morocco are in a diplomatic rift over Western Sahara. Because of the spat, Algeria halted late last year gas supply to Morocco via the Maghreb–Europe Gas Pipeline that runs from Algeria through Morocco onto Andalusia, Spain.  

Spain, for its part, has said it would supply gas to Morocco in a reverse flow of the Maghreb–Europe, which has apparently angered Algeria.

In a statement carried by Algeria’s state news agency APS, the Algerian Ministry of Energy and Mines said late on Wednesday:

“Any conveyance of the Algerian natural gas delivered to Spain, whose destination is other than that specified in the contracts, will be considered as a breach of the contractual commitments, and consequently may lead to the termination of the agreement between Sonatrach and its Spanish customers.”

Algeria’s state energy firm Sonatrach delivered more than 40 percent of Spain’s gas imports last year, according to AFP.

It was not immediately clear whether Algeria would terminate supply agreements if Spain sends non-Algerian natural gas to Morocco.

The threat of yet another supply disruption in Europe and the Mediterranean region comes amid growing tensions between Russia and the EU over gas supplies and Vladimir Putin’s rubles-for-gas payment scheme. On Wednesday, Russia’s state gas major Gazprom suspended gas deliveries to Poland and Bulgaria, citing their unwillingness to pay in rubles.

At the same time, EU countries in southern Europe have been looking at African gas suppliers, including Algeria, to reduce their exposure to Russian gas.

Italy, for example, which depends for 40 percent of its gas demand on Russia, signed a deal with Algeria earlier this month to receive 40 percent more gas from the African gas exporter via the existing pipeline in the Mediterranean. Italy’s Eni will increase the quantities of gas imported through the TransMed / Enrico Mattei pipeline under the long-term gas supply contract in place with Sonatrach starting from the autumn.

By Tsvetana Paraskova for Oilprice.com

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