Spain Threatens To Reduce Gas Prices Or To Resort To International Arbitration For The Termination Of Contracts

The Spanish company “Naturgy” (formerly Natural Gas Fenosa) openly threatened Sonatrach, along with Algeria, to resort to international arbitration, for an exceptional review of the contracts to supply gas to this European country, or the termination of contracts, and this is because of the economic and health crisis that affected the company’s business.

Spanish media reported that the crisis (economic and health), caused the decrease in the prices of liquefied natural gas (GNL) (reaching the country by gas tankers across the sea), by rates ranging between 20% and 30%, which prompted the company Naturgy to request a reduction in natural gas prices from its international partners (the gas that connects the country via pipelines), explaining that the most important request for the reduction was directed to Sonatrach, which is the first gas supplier to Spain, by about 9 billion cubic meters annually.

According to the same sources, this Spanish threat to Algeria was announced on April 29, during the presentation of the financial outcome of the company Naturgy formerly known as “Gas Natural Fenosa”, where 3 law firms specializing in international arbitration are candidates to take up an arbitration case against Algeria in Paris or Geneva to reduce Gas prices which are; are “Three Crowns”, “King & Spalding”, and the third office is “Herbert Smith”.

The Spanish company, Naturgy, “Natural Gas Fenosa”, is seeking to reduce the price of one million British thermal units (BTU) below seven dollars, but according to the same sources, there is a fear in the Spanish company circles of this step, especially since the previous international arbitration’s spectrum within the framework of what is known as the gas pipeline “Medgas” and gas marketing in Spain, which Sonatrach gained in 2010, and was compensated by the Spanish company by about $ 1.9 billion, and the case led Sonatrach to enter the capital of the Spanish company by 4.1%