With the Spanish government recalibrating its stance on Western Sahara, tensions with Algeria have intensified, signaling potential economic and trade repercussions. The cabinet continues to assess the implications of Algeria’s decision to terminate the bilateral friendship treaty and suspend direct debts linked to trade between the two nations. The focus remains on gas shipments to Spain.
Naturgy, Spain’s primary consumer of Algerian gas, notes that despite the diplomatic strain and market volatility, its oil dealings remain uninterrupted, described by the company as operating “absolutely normal.” Algeria’s Sonatrach agrees that no immediate changes are expected in this area, aligning with statements from stakeholders within the energy group.
There is no visible risk to the gas purchase agreement in force through 2032, and the plan remains to secure supply over the next decade. Relations with Algeria, which holds a 4.1% stake in Naturgy, are reported to be stable—suggesting that cooperative ties remain intact despite political frictions.
As authorities monitor the economic fallout from Algeria’s measures, the executive asserts that existing contracts for energy and other goods do not present a risk. Nevertheless, if Algeria fails to honor its commitments, affected companies could pursue legal remedies to defend their interests.
Vice President and Minister for Ecological Transition, Theresa Rivera, stated that the current gas procurement relationships between Sonatrach and Spanish utilities are commercial in nature, with contractual obligations expected to be honored. Naturgy has reiterated that all contracts contemplate the possibility of international arbitration in the event of a dispute, though this option is not currently on the table and conditions do not warrant immediate action.
For months, Sonatrach and Naturgy have been negotiating the pricing terms of the principal gas supply contract, a process that began in late October. Price negotiations occur on a triannual cycle, and Naturgy describes the ongoing review as a routine yet notably complex due to the volatile global gas market.
As international gas markets oscillate and set record highs, the likelihood of a price increase during renegotiation appears strong. The Spanish government has emphasized the need to distinguish between the Sahara policy shift and the subsequent strain with Algeria, a long-standing ally of the regional Saharan movement. Sonatrach’s stance during a price crisis has been to maintain parity across all gas-buying countries, a position that Spain reads differently, signaling a potential price re-evaluation slated for 2024.
Francisco Reynés, a high-level executive, remarked a few weeks prior that maintaining current prices would likely yield the best outcome for Sonatrach’s negotiations. He cautioned against expecting a price drop purely from Algeria’s current posture, and when pressed about the probability of a price increase, he answered, “We’ll see.”