Due to the shift in the Spanish Government’s position in Western Sahara, the diplomatic conflict with Algeria is worsening and threatens to have economic and commercial repercussions. The Spanish Executive is still examining the specific implications of Algeria’s decision to break the bilateral friendship agreement and freeze the direct debts for trade between the two countries. Trade relations focused specifically on gas supply to Spain.
Naturgy, the main Spanish buyer of gas from Algeria, stresses that amid uncertainty and escalating diplomatic tensions, its dealings with oil continue to operate “absolutely normal”. Algerian partner Sonatrach confirms that it does not foresee any change in this regard, and sources from the energy group.
Spanish company It does not see any risk for the gas purchase contract committed until 2032. and it guarantees supply for the next ten years, and its relations with its “friends from Algeria”, which owns a 4.1% stake in Naturgy, remain intact.
While he waits to learn about the economic consequences of the measures adopted by Algeria, the executive insists that supply contracts, energy or other products do not pose any risk. But it is also expected that if Algeria’s contracts are not respected, the affected companies could start a legal battle to defend their interests.
“The current relations between the Algerian gas company Sonatrach and the Spanish companies purchasing gas are commercial with contractual obligations. I believe they will continue to work. Otherwise, it will be a more complex issue to be resolved not through diplomatic relations, but possibly through arbitration or the courts.” Vice President and Minister for Ecological Transition, Theresa Rivera. Naturgy emphasizes that, in fact, all contracts consider the option of resorting to international arbitration in the event of a dispute, but that this is an option “not on the table” and “conditions do not exist”. To justify such action.
State giant Sonatrach and Spanish Naturgy for months negotiation – since the end of October – review of prices of the major gas supply contract. Price negotiations are held every three years, and the Spanish group insists the current review is “an ordinary review” like any other and is particularly complex due to the volatility of the international gas market.
With international gas markets spiraling out of control and setting record prices, the price hike in the renegotiation is almost certain. In any case, the Spanish Government insists on completely distinguishing between the more upward revision of its position in the Sahara than it is likely, and the anger produced in Algeria, a traditional ally of the Saharan movement. Sonatrach was willing to maintain prices for all gas-buying countries amid a price crisis aggravated by Russia’s invasion of Ukraine. To everyone except Spain, where he talks about a “recalculation” of prices by 2024.
Have head naturalnessFrancisco Reynes, said a few weeks ago that the best outcome of Sonatrach negotiations would be to keep current prices anyway. “To think that a price revision in Algeria today will lead to a drop in prices is, I think, extraterrestrial,” the manager said. When asked if the Algerian group took it for granted that they would raise prices, Reynés replied, “We’ll see.”