A fierce economic war behind the diplomatic crisis between Algeria and Madrid

Behind the diplomatic crisis that characterizes the relations between Algeria and Spain, there is a fierce economic war that has gone beyond the sanctions imposed by Algeria on the exporters of Spanish goods after the government of Pedro Sanchez sided with the Moroccan regime in the Western Sahara issue about two years ago.
Before the outbreak of the complex crisis between Algeria and Madrid, many Spanish companies, after winning contracts, completed huge projects in many sectors of the economy, especially in the energy sector in the oil, gas and petrochemical industries, which are the most money- and wealth-generating, at a time when the northern neighbor was turning into a European energy center.
Today, the worsening crisis between Algeria and Spain is casting a shadow over one of the largest Spanish companies active in the energy infrastructure sector (oil production, refining, petrochemicals, natural gas production), Tecnicas Ronedas, which is now being asked by Sonatrach to pay no less than 850 million dollars, according to the Spanish newspaper “El Confidencial”.
The case is still at the international arbitration level, but the Spanish party is afraid of losing the case, which is expected, and if that happens, this multinational company will go bankrupt if it is forced to pay the financial penalty demanded by the Algerian company. The details of this case date back to 2022.
The GTG consortium, formed by Sonatrach and its counterpart, Neptune Energy, is demanding that its Spanish counterpart pay 760 million euros in compensation for losses estimated at 90 million euros, bringing the total to 850 million euros, according to the same source.
In return, the Spanish company demanded an amount of 80 million euros at the beginning of the international arbitration, says the same source.
The Spanish party links the lawsuit filed by the Sonatrach-Neptune Energy consortium against Tecnicas Runidas in international arbitration to the worsening diplomatic crisis between Algeria and Madrid. However, the Algerian consortium denies the retaliatory nature and confirms that the case is purely contractual and is the consequence of the Spanish party’s breach of its contractual obligations.
The Spanish company was entrusted with the engineering, supply, construction and operation of the gas processing facilities of the Touat project in Adrar. Sonatrach and its partner Neptune Energy initially tried to resolve the dispute amicably, but the Spanish party was adamant, forcing them to resort to the International Court of Arbitration, which caused Tecnicas Runidas great difficulties in meeting its loan repayment obligations, bringing it to the brink of bankruptcy.
According to the newspaper, Tecnicas Runidas was not the only company affected by the diplomatic crisis between Algeria and Madrid. There are many Spanish companies that export their products to Algeria that have declared bankruptcy and whose owners have organized themselves into associations of industrialists and exporters that have launched protests demanding that the Prime Minister, Pedro Sanchez, provide them with aid, as the one who caused the diplomatic crisis between the two countries, they are the ones who paid the price.
It is not unlikely that new victims will appear among Spanish industrialists and producers, after the diplomatic crisis tended to escalate, at a time when exporters and economic actors in the Iberian Peninsula believed that this crisis was nearing its end, before being surprised by its return to square one, after the failure of the Spanish  Foreign Minister’s visit to Algeria.