Spain scrambles to stem gas storm with supplier Algeria | Economic news


By ASHIFA KASSAM, Associated Press

MADRID (AP) – Algeria has threatened to suspend its gas exports to Spain, the latest twist in a complex triangle of diplomatic tensions between the gas supplier, the gas importer and their common neighbor Morocco – all against the backdrop of soaring prices driven by Russia’s war in Ukraine.

Spain is in talks with Morocco to help the North African kingdom increase its gas supplies. This could possibly be done by allowing Morocco to use processing facilities in Spain that could handle ship imports of liquefied natural gas, which could come from a variety of suppliers. The gas could then be transported to Morocco via an existing gas pipeline that crosses the Strait of Gibraltar.

However, Spain also imports natural gas from Algeria. And Algeria is in the midst of a diplomatic freeze with Morocco, with which it shares a land border. Algeria severed relations with Morocco last August. Then he choked off one of Morocco’s gas sources by shutting down a gas pipeline that crosses their common border.

Morocco have turned to Spain to try to make up the shortfall – a prospect that seems to have Algiers cringe.

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In a statement on Wednesday evening, Algeria’s energy ministry warned that the gas supply it sends to Spain via a separate pipeline under the Mediterranean could be suspended if the gas is then diverted elsewhere. Such diversion could be considered a breach of contract, “and, therefore, could lead to breach of contract,” the ministry warned.

With Spain heavily dependent on Algerian gas, its energy ministry hastened to calm the storm, saying in a statement that “under no circumstances will the gas acquired by Morocco come from Algeria”.

Until last October, part of the deliveries of Algerian gas to Spain passed through the gas pipeline passing through Morocco. Morocco secured a share of this supply, obtaining enough gas to produce 10% of its electricity. But the kingdom lost that power source when the 25-year gas distribution agreement ended on October 31, with Algeria refusing to renew it.

Algeria still sends gas to Spain via a second, longer pipeline directly from Algeria to Almería on Spain’s southeast coast and as LNG shipped in tankers.

But deprived of gas from its neighbour, Morocco must go hunting much further.

Spain’s energy ministry said Morocco could acquire LNG from international markets and unload it at a regasification plant on the Spanish mainland. Once processed, the gas could then be exported to Morocco by sending it through the gas pipeline which, until October, carried Algerian gas to Spain.

The Spanish ministry said the plans were drawn up after being approached by Morocco to help ensure its energy security. The ministry said it had spoken to Algeria over the past few months about activating this mechanism and communicated its plans to Algeria’s energy minister on Wednesday.

Spain wants to strengthen its ties with Rabat, a key player in EU efforts to manage a rise in immigration from Africa to the north.

The triangular tensions over gas come amid a wider international crisis over the supply and prices of fossil fuels – fueled by the war in Ukraine.

Russia’s main supplier is using gas as leverage against countries that oppose its invasion of Ukraine. Russian energy giant Gazprom informed Poland and Bulgaria, both members of the European Union and NATO, this week that it was suspending supplies. Polish and Bulgarian leaders have accused Moscow of blackmail.

As European countries seek alternatives to Russian gas, supplies from Algeria have taken on increased importance. Italy, which is also struggling to wean itself off Russian energy, struck a deal this month to boost gas imports from Algeria. Spain is a leader in wind and solar power, but continues to rely on energy imports, with Algeria supplying more than a third of its natural gas.

The feud between Morocco and Algeria has forced Spain into a delicate balancing act.

The feud between Morocco and Algeria is largely rooted in the disputed region of Western Sahara, a former Spanish colony in phosphate-rich North Africa and bordering fertile fishing grounds. It was annexed by Morocco in 1976.

Algeria supports the Polisario Front independence movement in Western Sahara. In March, he recalled his ambassador to Madrid in protest when Spain backed a Moroccan plan to give more autonomy to the disputed territory.

AP writer John Leicester contributed to this report from Paris.

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