Global Race To Win The Gas Before Winter

Gas prices rose during the last hours to record levels, breaking the record set in July 2008, amid a global race between countries to win additional quantities of this energy resource and ensure the supply before next winter.

On Tuesday, according to what was reported by international media sources, natural gas prices in the United States of America jumped to unprecedented levels since the summer of 2008, as the energy crisis in Europe spread to America, where natural gas futures contracts in the United States recorded a rise of nearly 4%. On Monday, it settled at $9.68 per million thermal units, the highest closing price since July 2008.

In a statement to Echorouk, the economist and energy expert, Abderrahmane Aya, said that Algeria exports 3 types of gas, namely, liquefied petroleum gas, of which 2.4 billion cubic meters were marketed in 2019, and liquefied natural gas, of which 3.7 billion cubic meters were marketed in the same year, and natural gas for pipelines, as 7 billion cubic meters were marketed during the same period.

Piped gas is linked, according to Abderrahmane Aya, to contractual prices, similar to those concluded with Italy and Spain, which are subject to long-term contracts, which can be reviewed if the price of gas in the global market improves or decreases, but the margin for this increase is low, and usually does not exceed two dollars per million thermal units.

As for the second type of gas, it is converted into its liquid form and sold in tankers to several countries such as Turkey, which remains an important customer for Algeria in this type of deal, and the Algerian authorities give priority to countries with which they have a friendly relationship.

Most of the European countries, amid the Russian-Ukrainian war, are seeking to obtain the largest share of gas in the deals concluded before the winter of 2022, as confirmed by Abderrahmane Aya, or to benefit from the increase in the pumped quantity, or to obtain new ways of supply in light of the continuation of the war and the possibility of Russia stopping the supply of gas to Europe, “however, the price hike scenario will continue for another 3 years”, he added.

For his part, the Italian geostrategic expert, Daniele Rovanetti, confirms in an interview with Echorouk that the European energy crisis led to higher prices and created greater demand for gas supplies that were affected by the war in Ukraine, which gave Algeria more influence in the international space, adding, “European countries contact the Algerian authorities every day to discuss potential sales.”

“Europe can have tactical and strategic proximity in some aspects with Algeria, although we know that Algeria will maintain good relations with Moscow. We do not doubt that gas energy served Algeria well. I imagine that the price of gas will continue to be high for some time in the future, although it is difficult to say for how long because it depends on several variables, not just the course of the Russian-Ukrainian war”, he added.

Meanwhile, Algerian supplies cover more than a quarter of Spanish and Italian demand for gas, at a time when Sonatrach remains the third largest exporter to Europe after Russia and Norway, while Algeria is counting on maximizing revenues from high prices to improve the living and economic standard of citizens, especially after the statements of President Abdelmadjid Tebboune, who confirmed; “If there are additional revenues this year, I am committed to increasing wages and helping jobless.

“Algeria is struggling to restore dignity. President Tebboune is preparing a new social pact thanks to the additional energy revenues”, Rovanetti added.

Rovanetti concluded his speech by saying; “In addition to the expected reforms, the rise in global oil and gas prices after the Russian-Ukrainian war could help improve the financial situation in Algeria and fill the state treasury”.