Algeria’s Opportunity To Export Gas To Spain At Record Prices

A historic opportunity emerged for Algeria and Sonatrach, to fill Spain’s strategic reservoirs of gas, whose levels have decreased dramatically and now cover only 20 days of internal consumption, in light of a historical rise in its prices.

In this context, the Spanish newspaper “La Vanguardia” reported, on Tuesday, quoting Spanish parliamentary blocs, that the government of Pedro Sanchez responded in a written document that the country’s strategic reserves of gas are sufficient for 20 days.

According to the same source, the Spanish authorities have initiated procedures through the Spanish company Enagas, which is responsible for managing the internal network of the Spanish gas to receive the largest number of LNG ships from Algeria, in addition to the additional capacities of the Medgaz, which will reach 10 billion cubic meters annually.

Spanish data shows that Algeria, which guarantees about half of the Spanish needs of gas, will have the opportunity to fill the empty Spanish reservoirs, whose reserves are currently sufficient for only 20 days, given the levels of gas prices that have reached unprecedented historical figures, and are currently exceeding $30 per million British thermal units.

As for gas prices within the long-term contracts, which represent the majority of Algerian gas sales, the prices are related to the level of crude oil, as the higher the crude price, the higher the gas prices, and vice versa, which means that gas prices within the long contracts will also have significant revenues given the level of crude that exceeded 83 dollars per barrel, provided that Sonatrach pumps to the maximum capacity to take advantage of the situation through adopting very attractive prices.

A source from Sonatrach confirmed that the large part of gas supply through the Medgaz pipeline, which will amount to 10.5 billion cubic meters annually, will be allocated to Spain and Portugal, in the form of natural gas-directed for consumption.

The rest of the supply, estimated at 2.5 billion cubic meters, will be guaranteed in the form of liquefied natural gas via ships from the Skikda (eastern Algeria) and Arzew (western Algeria) production companies, especially with the upcoming receipt of the new LNG shipping terminal at the port of Skikda, which will receive giant LNG ships.