Over the past year, Europe has been scrambling to secure natural gas supplies while cutting its heavy dependence on Russia. Amid an energy crunch and market volatility driven by the war in Ukraine, every European nation has sought alternatives to protect energy security and fill storage to shield households and industries from price shocks. Kremlin influence has driven this urgency.
Since Russia’s military intervention in Ukraine, Spain has highlighted a guaranteed supply due to its relatively low reliance on Russian gas, the diversity of its suppliers, and a large regasification capacity. With one-third of the EU’s total regasification capacity, Spain can respond quickly to gas deliveries by ship, helping stabilize the market during disruptions.
Naturgy, the leading gas operator in Spain, emphasizes its central role in maintaining the country’s energy security during the crisis. In 2022, more than a third of Spain’s gas imports flowed through Naturgy, underscoring its pivotal position in the national energy landscape.
Naturgy closed the war year with historic profit of 1.649m euros
Last year Spain imported a total of 446,200 gigawatt hours of gas from abroad, a 7.4% rise from the previous year, according to the Corporation of Strategic Reserves (Cores). Naturgy’s imports accounted for about 159,000 GWh, representing 35.6% of all gas received in the country during the crisis year.
“Important role”
Naturgy has delivered at every turn to ensure Spain’s energy supply, stated energy group head Francisco Reynés at the annual accounts presentation for fiscal 2022. The company posted a record net profit of 1,649 million euros, up almost 36%. “We played an important role,” he noted.
Naturgy accounted for 52% of the gas volume carried by pipelines last year. Although one of the two Algeria-to-Europe corridors closed at the end of 2021, Naturgy’s operations concentrated just over 66,000 GWh of the 128,000 GWh received through its network.
Additionally, Naturgy represented 29% of all liquefied natural gas (LNG) imports arriving by ship, a swift pace for this trade, with 71% of all Spain’s LNG imports entering by methane carriers. Of the total 318,000 GWh received in the Spanish market, more than 92,000 GWh were services arranged by Naturgy.
However, not all gas imported by Spain was consumed domestically. Gas consumption fell by 3.7% in the year to 364,425 GWh due to softer demand and austerity measures promoted by the government and the EU. A sizable portion of gas reaching the Spanish market was resold, with exports rising by 90% to 68,200 GWh.
“We have not only prevented shortages of gas in Spain, but also ensured sufficient electricity supply,” Reynés said. As renewable output lagged due to low wind and drought impacts, gas-fired plants increased production by 56% to support electricity generation during the crisis.
Algeria and Russia
Algeria had long been Spain’s main gas supplier, but last year it briefly overtook the US as the top seller. This shift followed Algeria’s decision to close one of its two pipelines via Morocco in October 2021, a move tied to tensions with Rabat over Western Sahara.
More than half of Medgaz, the single active Algerian pipeline, is purchases by Naturgy. The Spanish company has renegotiated pricing for this year and next with Sonatrach after a retroactive rate adjustment for 2022. The renegotiation occurred amid diplomatic strains between Algeria and Spain over Western Sahara policy and Spain’s shift in stance toward Morocco’s autonomy proposal.
Reynés described the relationship with Sonatrach as strong and constructive, noting its unique nature as an Algerian partner that also holds stake in Naturgy (4.1%) and co-owns the Medgaz pipeline (51% Algerian, 49% Spanish). The Madrid-based group has sourced Algerian gas for more than 25 years and expects a supply contract beyond 2030. He warned that agreeing on a new price of about 5,000 million cubic meters (5 bcm) for 2023 and beyond will not be easy, given the pipeline’s annual capacity constraints and market dynamics.
For now, the EU has not treated a halt in Algerian gas purchases as a specific measure to curb dependence on Russia or Moscow’s revenue. Naturgy continues to purchase gas from Russia through a long-term contract tied to Yamal, a liquefaction facility operated by a consortium including Novatek, TotalEnergies, and a group of Chinese partners. The agreement envisions supplying just over 3 billion cubic meters per year through 2042. Reynés emphasized Naturgy’s commitment to fulfilling its obligations and maintaining stable supply, even amid geopolitical tensions.
[Citation: European energy market shifts and company disclosures summarized from industry reports and the company’s 2022 accounts.]