Over the past year, all of Europe has been maneuvering to secure natural gas supplies while reducing its enormous dependence on Russia. In the midst of the energy crisis, in the midst of market turmoil in the heat of the war in Ukraine, all European countries began to seek alternatives to protect their energy security and to fill their warehouses to provide a shield against the pulse of energy. Kremlin.
Since the military occupation of Ukraine at the behest of Vladimir Putin, the Spanish Government and the national energy sector itself have strongly emphasized: Spain had a full supply guarantee due to its low dependence on Russian gas.due to the diversity of supplying countries and the enormous park of regasification facilities (focusing on one-third of the EU’s entire capacity) allowing it to trigger gas delivery by ship.
Naturgy, the largest gas operator in the Spanish market, brags about the throes of the markets and the industry, emphasizing its strategic role to fully guarantee the security of the country’s energy supply during the energy crisis. And this More than a third of all gas imports to Spain in 2022 they were channeled directly through the ancient Gas Natural Fenosa.
Last year, Spain purchased a total of 446,200 gigawatt hours (GWh) of gas from abroad, an increase of 7.4% year-on-year, according to the Corporation of Strategic Reserves (Cores). Naturgy imported gas arrived in Spain and concentrated 35.6% of all gas, with a total of approximately 159,000 GWh. It was taken by the country in the war year.
“Important role”
“Naturgy has given everything it can to guarantee Spain’s energy supply,” energy group head Francisco Reynés told the press this Wednesday on the occasion of the presentation of its fiscal 2022 accounts. recorded a record profit of 1,649 million euros, almost 36% more. “We played an important role”
Naturgy channeled 52% of all gas volume from the pipeline last year. Although one of the two corridors connecting to Algeria closed at the end of 2021, just over 66,000 GWh of the 128,000 GWh received was concentrated in company operations.
and group it also accounts for 29% of all liquefied natural gas (LNG) import business, arriving by ship, in record time for this type of trade (71% of all imports from Spain come by methane tankers). Of the total 318,000 GWh received in the Spanish market, more than 92,000 GWh were orders from Naturgy.
However, not all of the gas imported by Spain is consumed in the national market. As a matter of fact, gas consumption in the country decreased by 3.7% last year to 364,425 GWh due to the slowdown in demand and austerity measures promoted by the Government and the EU. And a significant part of the gas that reaches the Spanish market is then resold. Exports last year amounted to 68,200 GWh with a rapid increase of 90%.
“We have not only contributed to ensuring that there is no shortage of gas in Spain, but also that there is no shortage of electricity,” Reynés said. At a time when the contribution of renewable energy sources was low due to the lack of wind or hydraulics due to drought and light exports to France and Portugal, the company increased the production of gas plants by 56% to generate electricity. in the middle of the crisis.
Algeria and Russia
Algeria was the main gas supplier to Spain for more than half a century, until last year when it replaced the US as the top seller. It’s a historic turn produced by Algeria’s decision to unilaterally close one of the two gas pipelines through Morocco in October 2021, due to Algeria’s bad relations with Rabat due to Western Sahara.
Slightly more than half of the gas from Medgaz, the only gas pipeline from Algeria currently in operation, is purchases made by Naturgy. If the Spanish company is now renegotiating the gas sale price for this year and next year with the Algerian state giant Sonatrachafter agreeing on a retroactive rate increase for all of 2022 last October.
The renegotiation between Naturgy and Sonatrach took place at a time of diplomatic confrontation between Algeria and Spain, due to the change of Pedro Sánchez’s Government’s position in Western Sahara and its support for the autonomist solution advocated by Morocco. Despite the blockade that Algeria has imposed on trade relations with Spain (energy products excluded) and Algeria’s apparent ease in reaching agreements with other countries, such as Italy, to extend supply contracts, Naturgy denies the implied implication of the diplomatic crisis. An obstacle in relations with his Algerian partner.
“The relationship with Sonatrach is not in jeopardy, but it is an excellent one,” Reynés said. A special relationship different from other international energy groups, because Sonatrach is a shareholder in Naturgy (4.1% capital), because both are partners in the Medgaz gas pipeline (51% Algerian and 49% Spanish) and Madrid-based as the group has been a buyer of Algerian gas for over 25 years and now joins with a supply contract after 2030. “It’s pretty hard to think we have a bad relationship.”
The Reynes chairman predicted that agreeing on a new price of about 5,000 million cubic meters (5 bcm) for supplied gas “would not be an easy negotiation in 2023, as it was in 2022.” Approximately half of Medgaz’s total carrying capacity each year. “Intelligence will prevail to maintain this commercial, industrial and financial relationship” with Sonatrach and Algeria.
For now, the EU has not included the blockade of gas purchases among the measures it has taken to reduce dependence on Russian gas and cut the Kremlin’s revenue to finance the war in Ukraine. AND Naturgy continues to buy gas from Russia as a result of a long-term contract with Yamal, a liquefaction plant controlled by the private Russian group Novatek, French Totalenergies and a consortium of Chinese companies.
The contract envisions a gas supply of just over 3 billion cubic meters per year by 2042. “Naturgy does two things: always deliver on its commitments and deliver on them,” Reynes added. “There must be a reason for breaking. And as of today there is no reason”, condemning the head of Naturgy to defend the supply from Russia.