About a year after the start of the negotiations, naturalness finalizes the announcement of an agreement with Algeria to review your contract prices gas with this country. The Spaniards want to be “cautious” to avoid any leaks that could break the deal, but both companies have publicly acknowledged in recent days that the announcement is imminent. The first was Algerian state-owned company Sonatrach, which claimed last week that negotiations were over. contract to be signed “soon”. And this Thursday, it was Naturgy president Francisco Reynés who realized the news was imminent.
“We hope very soon good news for price stability. It won’t be good news at all, because prices won’t be the same as before. Prices will rise, though not as stated in some forums pointing to complex numbers,” Reynés said at a forum organized by the CEOE and Cepyme. To get an idea, in a previous review three years ago, the gas (Dutch TTF) gas per megawatt-hour in Europe While it was 20 euros, it currently stands at 170 euros per megawatt hour.
The Spanish gas company still has a 10-year gas supply contract with Sonatrach — “if not renewed,” Reynés added — with a price review clause every three months. At the end of October last year, negotiations began between the two companies for the three-year period 2022-2024, but the volatility of gas cost, extraordinary increase in the prices of this raw material Russia’s pressure on the gas tap and subsequent invasion of Ukraine caused the oil company to put upward pressure on negotiating new prices and prolong the negotiations.
However, according to knowledgeable sources, price is not the only important issue in the negotiation, but the duration of this deal was another key point. So far, prices have been agreed at a certain price for three years, which shows that such high prices are much more advantageous for the Algerian side in the current situation. Given the current enormous instability, this is not the case for Naturgy, which has to strike a balance between the two variables to avoid fears in the future. According to Reynés, Short-term return to prices two years ago “difficult”.
And indeed, this long review period (three years) was one of the reasons why the Spanish company’s negotiations were delayed when compared to other Sonatrach price reviews with customers with shorter review times, such as the Italian Eni. According to Reynés.
Impact on consumers
More than looking like a mere deal between the two companies, the deal directly affects Spanish consumers. 20% of the gas consumed in Spain comes from this contract with Algeria.. Therefore, a much higher price than usual will mean more expensive offers for end users.
“Don’t let anyone believe you exist no interest Because marketers, distributors, carriers or generators have gas prices that are so high, it is only manufacturers who benefit,” Reynés insisted throughout his speech and complained that these prices affect the company’s reputation. “Our reputation as responsible energy companies affects us because these indexes that we do not control create aversion to gas companies.”
supply security
Naturgy and Sonatrach share much more than this contract. On the one hand, the Algerian company Shareholder of the Spanish company with 4.8% and according to Reynés, although he does not attend the board of directors, he “always” attends shareholders’ meetings and does not “act passively”. On the other hand, Medgaz has an equal share with Naturgy in the natural gas pipeline.
“This is not an easy bargain, because the same person you talk to at Medgaz or see at the shareholders meeting is the person you discuss prices with every day,” Reynés warned. Nevertheless, both Naturgy, to which Algeria has been a gas supplier for 30 years, and the Spanish Government and gas system operator Enagás have consistently insisted that Algeria is a reliable partner throughout this period. supply was never at risk.