Can Europe Impose A Price Ceiling On Algerian Gas?

The price ceiling on Algerian gas that is exported to Europe is unlikely and almost impossible to realize, this is what experts and analysts agreed upon after European voices have increased for a while, calling for a maximum price for Algerian gas and quantities of gas coming from other countries that supply the old continent with this energy source through pipelines, at the height of the global energy crisis sparked by the Russian-Ukrainian war.

Among those calling for the imposition of this step on Algeria are the former CEO of the Italian company “Eni” Paolo Scaroni and the chair of the Committee on the Environment, Public Health and Food Safety at the European Parliament, Pascal Canfin and other officials as well.

Paolo Scaroni, who previously held the position of CEO of both “Enal” and “Eni”, and is currently in charge of the “AC” Milan football club affairs, and is the vice-president of the “Rothschild Foundation & Co”, said in an interview with the Italian agency AGI; “Theoretically, the gas that we can set a price ceiling on is the one that comes to us via pipelines, like Norway, Algeria, Libya and Azerbaijan”.

“Therefore, Norway and Algeria can only sell this gas to us, because the pipeline is connected to us only (it means Europe has no other alternatives)”, he added.

A few days ago, the head of the Committee on Environment at the European Parliament, Pascal Canfin, who belongs to French President Emmanuel Macron’s “LREM” party, called for a ceiling on gas prices that Europe imports through pipelines, not only from Russia but also from Norway, Algeria, Libya and Azerbaijan.

In this context, the expert and former official in Sonatrach, Mourad Preure, told Echorouk that the European Union is the party that caused this situation in the continent, ruling out setting a ceiling for Algerian gas, and even if that happens, Algeria has alternatives for marketing.

“The European Union is responsible for the disruption in the gas market, with its decision in 1995 when it created a secondary market for this energy source, which is the free market, to be added to the long-contract market”, he added.

“The market for long-term contracts was for periods of up to 25 years, with the price of gas linked to the price of crude oil, and the contracted quantities if the customer did not take them, then it is also required to pay for them according to the “take or pay” principle.”

“The free market has gradually become the guide for the long-term gas contracts in the market, and thus matters have reached the current situation at very high prices. Europe is responsible for the situation in which it is currently living.”

Mourad Preure ruled out the ceiling of Algeria’s gas price destined for the old continent because the Europeans in their negotiations with Algeria cannot give orders, but rather seek that and ask to negotiate if it is official.

“We can export Algerian gas to India or other markets because we have great liquefaction capabilities. “Even if Europe wants to impose a ceiling on the price of gas, Algeria can reduce supplies through pipelines, as happened with Spain, and direct quantities towards liquefaction and marketing in other countries”, he explained.

“These voices in Europe are caused by the outrageous price hike that affected both industrialists and the population and the accompanying inflation. European politicians are trying to calm things down among the population and industrialists by talking about ceilings on gas prices”.

“Algeria has its interests, and this is a trade, and it must take advantage as much as possible from the situation, and between what the Europeans want and what they can do with Algeria is a very big difference. Europe is now between a rock and an anvil, on the one hand, the high prices, inflation and gas scarcity, and on the other hand the pressure of industrialists and the population.”

Preure concluded by emphasizing that it is wrong to say that Algeria does not have alternatives to marketing gas through pipelines, because the agreements allow gas even to pass to other European countries and not necessarily Spain or Italy.

The analyst and expert, Farid Benyahia, said that the current European situation regarding gas and energy does not allow it to negotiate with Algeria over the ceiling of the prices of this vital energy resource.

He explained that the Algerian negotiator should not open the file of negotiating the ceiling of the gas to Europe, given that the papers are not in the hands of the old continent.

“We must negotiate with the Europeans about the quantities (volumes) that we export to them, especially since the next thirty years will witness a rise in demand for gas, especially in India and China, which means prices will get higher and this will allow Algeria to obtain significant incomes that must be used to develop the rest of the sectors outside of hydrocarbons, which are still neglected”.