The fall in natural gas prices has caused the Spanish company Naturgy, the country’s main importer of gas, to demand from the Algerian state-owned company Sonatrach, the most important state-owned company in the African nation, a reduction to the prices agreed several years ago.
The COVID-19 crisis has had a brutal impact on the Algerian economy, a country with nearly 50 million inhabitants, with a health system considered the worst in the region and with hardly any industrial fabric, and a nearly non-existent agricultural sector. It is, however, the ninth gas producer in the world, and its survival depends on Sonatrach, which accounts for more than 95 percent of its exports. The country’s difficulties with popular revolts and the drop in gas prices are added to international corruption cases affecting the Sonatrach. The first of these cases relates to the acquisition of an Italian refinery, Augusta, through bribes, and the second 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 because of 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 imports from Algeria to 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 a promoter of the Maghreb-Europe pipeline that now also bears his name. This is the other way of bringing 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 neighbour in exploiting this infrastructure.
By chances or design, Naturgy and Sonatrach are partners precisely because of a 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. Sonatrach took the case to arbitration and won, and by way of payment obtained shares of the then Natural Gas, which it still owns.
