The Assumptions of Gas Price Review Between Algeria and Spain

Sonatrach has included an article in the contract that allows new negotiations about the price every year or every two years, the Economist Abderrahman Mebtoul comments on the statement of Sonatrach’s CEO, Toufik Hakkar, about the possibility of reviewing gas prices exported from Algeria to Spain, in the presence of one case, in which the Algerian party can raise gas prices.

The expert Abderrahman Mabtoul, confirms in a statement to Echorouk that the adjustment of gas prices in the deals linking Algeria with Spain can be done in one case, which is that the contracts include an article that allows reviewing the price in case of its rise or fall within a certain period; “According to my information, the contracts linking Algeria with Spain allow the prices to be reviewed once every two years through renewing negotiations between the Algerian and Spanish parties.

Mabtoul asserted that Algeria has many contracts with foreign partners, but the agreements it signed with Spain as an important partner in the field of gas allow it to review the price once every two years, by the two parties sharing either the excess amount in the price of this substance in the international market or the shortfall, without changing the amount of Algerian gas that Spain will benefit from.

According to Mabtoul, it is not allowed to change the amount of the contracts and deals of exported gas, and this is to ensure Algeria’s commitment to its engagements in the international energy market. In this context, he gave an example of stopping the gas supply pipeline with Morocco, about which the Algerian authorities did not take any step until the agreement officially expired at the end of last October when it was decided not to renew it.

The President and General Manager of Sonatrach, Toufik Hakkar, confirmed that since the beginning of the crisis in Ukraine, gas and oil prices have exploded, and Algeria has decided to maintain the contractual prices that are relatively appropriate to all its customers, but he does not rule out conducting an audit of prices with the Spanish client.

The General Director of Sonatrach explained that the year 2022 is promising and holds promising prospects in terms of oil explorations for the company.

The former Energy Minister Abdelmadjid Attar had previously told Echorouk that gas investments should be of paramount importance during the next stage, although he confirmed the impossibility of amending the current long-term contracts that link Algeria to its customers, and also stated that gas prices will witness an upward increase during the upcoming stage of the gas cycle that will have high curves for at least 4 years, which will positively reflect on the revenues of the Algerian treasury and the profits of the Sonatrach oil company, if it makes good use of the opportunity, and achieves significant gas industries during the next stage.