Wednesday

6th Jul 2022

Spain to import more gas by sea after Algeria reduces exports

  • Spain's ecological transition minister Teresa Ribera said arrangements are in place 'to continue to assure, in the best way, deliveries of gas' from Algeria to Spain (Photo: UNclimatechange)
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Algeria's decision to halt gas exports to Spain via Morocco, due to increasing tensions with Rabat, will force Madrid to import more liquefied natural gas on carrier ships to reduce the risk of shortages – amid an energy crisis that has triggered skyrocketing electricity prices in the country.

The geographical isolation of the Iberian peninsula makes it difficult for Spain to access to international grids as easily as its European neighbours.

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As a result, more than half of all natural gas used in Spain annually comes from Algeria.

Algeria has been using the Maghreb-Europe gas pipeline (MGE) to deliver some six billion cubic metres (bcm) of natural gas per year to Spain since 1996.

But the 25-year MGE operation contract expired at midnight on Sunday (31 October) and deteriorating relations between Algeria and Morocco prompted the Algiers government to announce earlier this year that the agreement will not be renewed.

Spain's ecological transition minister Teresa Ribera travelled last week to Algeria to discuss the impact of the MGE closure, saying arrangements were in place "to continue to assure, in the best way, deliveries of gas through Medgaz according to a well determined schedule".

Algeria has vowed to increase the capacity of this second pipeline that connects the country's gas fields directly to the Spanish southeastern city of Almería - but there is still a shortfall that could be covered by increasing imports of liquefied natural gas by sea.

The Medgaz supplies eight bcm of natural gas to Spain annually, and it is expected to be able to transport 10,000 bcm before the winter – leaving a remaining shortfall of 4,000 bcm.

While Algeria has proposed increasing deliveries of liquefied natural gas by boat, these operations are expensive, especially since shipping costs of LNG carriers have also increased due to the rise in the demand of gas globally, Spanish newspaper El País reported.

In Spain, natural gas supplies are not only necessary for industry and the heating sector, but also for combined-cycle power plants that generate about a third of all electricity consumed in the country.

The cost of electricity has increased by 44 percent over the last year in Spain, prompting the government to intervene in the energy market - and sparking an intense political blame-game.

Spain has mooted building a "strategic gas reserve" for the whole EU. As with EU vaccine strategy, this idea is based on a common procurement scheme that would enable internal redistribution among member states, if necessary.

According to Enagás, leading energy operator in the Iberian Peninsula, Spain has now enough natural gas in storage for the equivalent of 40 days of consumption.

"There are no objective signs of a situation of lack of gas supplies in the coming months," the company said on Sunday in a statement.

Tensions between Algeria and Morocco have been increasing for months over the disputed territory of Western Sahara, which the United Nations classifies as a "non-self-governing territory".

Earlier this year, Algeria decided to close the country's airspace to all Moroccan civil and military aircraft.

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The first topic leaders discussed at the EU summit were the continent's soaring gas prices, which have lead to a spike in household energy bills - amid widespread disagreement on how to solve the issue.

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