The fall in natural gas prices has caused the Spanish company Naturgy, the main importer of gas through the pipelines, to demand from the Algerian state-owned company Sonatrach, the most important state-owned company in the African country, a down negotiation of the prices agreed several years ago.
The COVID-19 crisis has had a full impact on the Algerian economy, a country with nearly 50 million inhabitants, with a health system considered the worst in the area and with hardly any industrial fabric, non-existent agriculture. It is the ninth gas producer in the world, surviving depending on “Sonatrach” which accounts for more than 95 percent of its export. The country’s difficulties over popular revolts, the drop in gas prices, are added to international corruption cases affecting the largest public company. The first for an acquisition of an Italian refinery “augusta” through bribes and the second case for a sale of adulterated gas to Lebanon.
“We are in a situation that is really difficult because the oil market has collapsed since 2014, but also by the Covid-19. In the hydrocarbons sector, this year we expected to make $23 billion from about $33 billion last year, a remarkable difference,” said Energy Minister Abdelmadjid Attar this week. Spain has lowered its import from Algeria for the benefit of the United States; And for Algeria this was a hard blow.
The pipeline that crosses Morocco was renamed Pere Duran Farell Pipeline. This Catalan industrialist was one of the drivers of Gas Natural, which he presided over in the 1990s, and promoter of the Maghreb-Europe that now also bears his name. This is the other way of entering Algerian gas into Spain. In 2021, the Kingdom of Morocco had to re-tender the concession of the Maghreb pipeline, both Naturgy and Enagas had shown interest, but have subsequently made alternative international investments, which may pose a difficulty for Algeria’s neighbor in exploiting this infrastructure.
By chances of life or causalities of it, Naturgy and Sonatrach are partners precisely because of a reverse trade dispute in the past. The high global gas prices then prompted a complaint from Sonatrach, who wanted to raise the price of long-term contracts. He went to arbitration and won, and as a way of payment obtained shares of the then Natural Gas, which he still owns.