Algeria may raise gas prices for Spain

by Lorraine Williamson
Algeria gas pipeline
ASSSA

MADRID – Spain had recommended Algeria to other Europeans as a reliable business partner for gas supplies. As a result, it could reduce dependence on Russian gas in the longer term. However, a conflict with Algeria may now throw a spanner in the works. 

The North African country has been the main supplier for the Spanish market for years. State-owned Algerian oil and gas company Sonatrach has now threatened Spain with a “recalculation” of the gas price amid the energy crisis and the highest inflation numbers in Spanish history. 

Algeria outraged 

The Algerian leadership has been outraged by Spain’s role in the Western Sahara conflict since Spain’s dramatic turnaround two weeks ago. Prime Minister Pedro Sánchez revoked Spanish neutrality in this conflict after more than 40 years to put an end to the diplomatic crisis with Morocco. The Spanish prime minister called the Moroccan autonomy plan for the former Spanish colony the “most serious, realistic and credible basis for a solution to the conflict”. 

“Betrayal” 

Spain thereby indirectly recognised that Western Sahara is and will remain a part of Morocco. From the Algerian perspective as the protector of the Polisario Front fighting for the independence of Western Sahara, this was a “betrayal” that could cost Spain dearly during the war in Ukraine. 

Other countries keep contract prices 

Sonatrach CEO Toufik Hakkar spoke with the Algerian state news agency APS. Firstly, he reassured the other European customers. “Since the beginning of the crisis in Ukraine, gas, and oil prices have skyrocketed. Algeria has decided to maintain relatively correct contract prices for all its customers. However, we may recalculate the prices with our Spanish customer,” said Hakkar. 

According to Spanish press releases, there are currently regular talks about updating the price with the Spanish importer Naturgy, which praises the good relationship with Algiers. 

Morocco is a priority for Madrid 

Moreover, about 40% of Spanish natural gas comes from Algeria. Most of this gas goes through a pipeline under the Mediterranean. Italy, which is supplied via a line from Tunisia, has now become the most important European customer of the North African country, in which interest has been growing since the outbreak of the war. 

Double capacity within four years 

However, the people of Algiers know that too. At the moment, Algeria cannot replace Russian gas, said Sonatrach boss Hakkar, “but given the pace of our exploration, our capacity will double within four years, offering promising prospects for our European customers”. 

Algerian measures against Spain 

The chance that Spain will benefit from this has deteriorated for the time being. On March 19, Algiers recalled its ambassador from Madrid. Furthermore, Algeria did not include the new permits for the Spanish company Iberia to fly to Algeria. According to press reports, Algeria has also suspended the repatriation of illegal migrants, who are increasingly coming to Spain. 

Aggressive response 

The Spanish government had not expected such an aggressive response. In Madrid, restoring relations with Morocco, a key partner in the fight against illegal migration, was a priority. After 15 months of diplomatic deadlock, even the Moroccan king came to the rescue of the Spanish prime minister. Mohammed VI is also heavily criticised at home for his new Western Sahara policy. 

Beginning of the “new phase” 

A trip by the Spanish foreign minister planned for this Friday was cancelled. Nevertheless, the monarch would like to seal the start of a “new phase” together with Sánchez in the coming days. The visit takes place during Ramadan and Sánchez could attend an ‘iftar’, the evening meal is eaten immediately after sunset during the fasting month, which is considered a special honour. 

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