Spain’s Losses as a Result of Crisis with Algeria in 24 Months

Nearly two and a half years after the Spanish government’s shift in position on the conflict in Western Sahara, and its blatant bias toward the Makhzan’s autonomy plan, Madrid lost most of its battles with Algeria, especially the economic ones, as its impact was direct and felt on the Spanish side.

Perhaps the latest of these manifestations is related to a huge contract for the Algerian steel company Tosyali, which is heading to conclude a deal to export quantities of its products estimated at 150,000 tons to this European country, which will enhance the customers of the company that has been expanding in various parts of the world.

Among the “battles” that Algeria won and emerged victorious were those related to gas contracts, with Sonatrach strengthening its position in this energy market, about two and a half years after the outbreak of the crisis.

In this context, and after attempts by the Madrid government to play with fire in search of other suppliers of natural gas to replace Algerian supplies, Spain returned to its senses, after discovering over about 24 months that there was no escape from Algerian gas given its abundance and geographical proximity as well, and especially its prices.

A few days ago, the company “Naturgy” announced the completion of a new agreement with Sonatrach regarding the prices of gas supply contracts, under which the Spanish energy giant will pay retroactive compensation to Algeria, related to the price difference for 2023, another price for 2024, and price review criteria for the next period that extends until 2027.

It is evident from this development that Sonatrach will sell gas to the Spanish party at a higher price and compensation for nearly two years, and also in larger quantities, given its tightening grip on the market several months ago and its transformation into the first and undisputed supplier to the European country of this vital energy source.

It must also be noted in this part that the review of gas prices with the Spanish party took place twice in two years, the first was in the fall of 2022, which means that Sonatrach and Algeria won a double battle concerning this aspect.

Also among the “prominent” battles that Algeria won amid the crisis with Spain was related to the dropping of the Emirati company’s bid to acquire the Spanish Naturgy, which is considered the first customer for Algerian gas, and Sonatrach’s partner in the gas transportation pipeline linking the two countries, in addition to the fact that Sonatrach owns more than 4% of the Naturgy shares.

As is known, the UAE’s Taqa announced in mid-June the end of its offer to acquire Naturgy, partially or completely, after more than two months of negotiations.

Observers considered the recent agreement between Sonatrach and Naturgy regarding the prices of contracts to supply natural gas to Spain, as an official and final death certificate for the Emirati offer, as confirmed by Khaled Boukhalifa, the former General Manager at the Ministry of Energy and Mines, in a statement to Echorouk a few days ago.

During the ongoing crisis since March 2022, Algerian exports maintained their flow to Spain, especially gas, oil and its derivatives, while Algerian importers were reluctant to buy Spanish goods in solidarity with the state’s position on the issue of Western Sahara, following the Spanish government’s shift in position and its bias in favour of the Makhzen’s autonomy plan.

As a result, the trade balance tilted in an unprecedented way in favour of Algeria during 2022 and 2023, and it is likely to continue in the same direction during the current year.