Sonatrach Has 7 Arguments To Crush Spanish “Naturgy Energy” In The International Courts

What was expressed by the Spanish group “Naturgy Energy” about reviewing its gas supply contracts with Sonatrach and resorting to international arbitration, is only a reaction to the severe economic repercussions of the Corona pandemic crisis on its financial situation, which has declined greatly during the first quarter of this year, Energy expert Bouziane Mahamah told Echorouk.

“The controversial points raised between the Spanish group Naturgy Energy and the national company Sonatrach will not push the Spanish party to go to arbitration in the first place. In my assessment, at least, there will be no actual talk about resorting to arbitration, for the time being, I am aware that the Spanish side is looking for a media crackle through which it will try to pressurize the Algerian side”.

“Sonatrach has 7 arguments, which will make it triumph against Naturgey Energy, and recalled the importance of the French Total case and how it was fueled in the media by what constituted a real nightmare for the national public opinion. Let us remember how it ended as a distinct Algerian gain”.

“There is a contract that was signed by the Spanish company Naturgy Energy with Sonatrach for a period of 10 years that extends to 2030, whereby quantities of gas are supplied to Spain estimated at 8 billion cubic meters annually in the framework of renewing gas supply contracts with various European partners. These contracts are based on a positive rule of compliance with an agreed item “Receive or Pay”.

“These contracts allow an additional review, concerning the reference prices contracted around, and they are usually regular reviews that take place every 3 years, and now we have not yet passed even the first year of the contract’s renewal date”.

“In the first ten months of March, with the beginning of the eruption of the Corona pandemic and its expansion in Spain, an agreement was signed between Sonatrach and the Spanish gas company Naturgy, which requires an investment of 67 million euros in Algeria. This would allow Algeria’s exports to Spain to be increased by 2 billion cubic meters of gas from 2021, with a target of 16 billion cubic meters in 2031”.

“As the fifth argument in favour of the Algerian party, only a few weeks ago, the national company Sonatrach and the Spanish Natyrgy Energy group managed to reach the completion of the deal agreed upon in October of last year, under which the percentage of contributions will increase and Sonatrach’s share will reach 51%, while Naturgy will own the remaining 49% in the “Medgaz” pipeline that transports natural gas from Algeria to Spain, and the Spanish Naturgy will pay 445 million Euros in exchange for the acquisition of the 34% share that was held by its ex-partner who came out of the contract”.

“Spain as a country, or its company Naturgy Energy as an energy company, will not risk compromising its energy security and the sustainability of supplies, especially since “energy security” concerning the European Union space, has tended to expand its concept to be based on a strategic vision that envisaged to obtain sufficient, varied and easily accessible energy resources”.

“The supplies reach the Spanish from southern Algeria and with the quantities, they want in less than 24 hours, while if they risk turning their backs on this safe and sustainable option, the best opportunity available to them will come from the Nigerian liquefied gas that takes to reach the Spanish coast from 7 to 9 Completely days”.