(Bloomberg) -- Spain is stepping up capacity for natural gas imports as a global shortage triggers a rush to secure supplies, while long-standing flows from Algeria remain uncertain.
Network operator Enagas SA has allocated 23 additional slots to import liquefied natural gas in the nation's six terminals for the next 12 months, adding to the 22 secured in September. Competition for LNG has intensified as Asia is willing to pay a premium to prepare for a cold winter, leaving less tanker-borne gas available for Europe.
The move is “a preventive measure to contribute to supply security in the coming months, in a context of great volatility in the energy markets,” Enagas said in a statement.
Spain will have to fight for cargoes, and potentially pay a hefty price for it. China, for example, is urging state companies to purchase LNG at any cost to ensure winter supplies. Spot prices of the super-chilled fuel in Asia have spiraled to record high, having increased about six-fold over the past year.
With the additional slots, there are now 136 allocated for LNG purchases for the November-March period, Enagas said. That compares with the 86 ships unloaded in Spain last winter, according to the company.
The country, which is heavily dependent on imports, is at risk of losing access to a pipeline that meets about a quarter of its gas demand. A 25-year deal that brings the fuel from Algeria via Morocco through the Maghreb pipeline expires at the end of this month, with a renewal remaining uncertain after the two countries cut diplomatic ties.
In case the deal is not renewed, Algeria could still honor its export commitments through the expanded direct Medgaz pipeline and potentially with some LNG cargoes during peak winter demand, the Oxford Institute for Energy Studies said in a note last month.
Algerian President Abdelmadjid Tebboune promised to deliver LNG to Spain if there's no pipeline agreement, Asharq Al-Awsat newspaper reported this week.
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