Spain Says Algeria’s Ready to Send More Gas to Europe

(Bloomberg) -- Algeria is ready to send more natural gas to the European Union if Russian supplies of the fuel are disrupted by the war with Ukraine, according to a Spanish government minister, despite the African nation's exports stalling in recent years.

Russia's invasion of Ukraine last week sent shockwaves through energy markets, already strained by multiyear-low gas inventories in Europe and uncertainty over Russian volumes being sent to the continent. The EU is bracing for any supply stoppages as it weighs the possibility that the Kremlin could halt flows in retaliation for sanctions being imposed by the international community.

Spanish Ecological Transition Minister Teresa Ribera, who is in charge of the nation's energy policy, told state-run TVE television on Tuesday that the Algerian government has assured her that “if we or our European partners need more gas through Spain, Italy or via ships they are willing to provide it.”

Algeria's state-run energy company Sonatrach said Monday that it will remain a reliable supplier of gas to Europe. Chief Executive Officer Toufik Hakka said the firm is ready to support its European partners in case of a “difficult situation,” according to remarks published by the APS news agency. Hakkar added that such additional supply, however, depends on the availability of excess volumes.

Algeria's domestic gas consumption has surged over the past decade and it now burns more of the fuel than it exports. The nation's gas shipments are tied to long-term agreements with buyers, many of which are in Europe.

Supply Diversification

Ribera said the war with Ukraine highlighted how dependent Europe was on Russian gas supplies and that the continent must diversify its energy sources. The European Commission is finishing up a second package of measures to ease the impact of higher prices on consumers and businesses, she added.

Last week, Spanish gas network operator Enagas SA said it's working with Algeria on the planned expansion of the Medgaz pipeline's capacity, with tests currently being carried out. The plan involves increasing potential capacity to 10.7 billion cubic meters a year, up from 8 billion cubic meters a year.

The North African nation accounted for 43% of gas sent to Spain in 2021, most of which came through Medgaz and another link. The U.S. and Nigeria were Spain's other main suppliers of the fuel, with shares of 14% and 11% respectively.

Ribera and Spanish Economy Minister Nadia Calvino have proposed that the EU take measures to decouple the country's gas from electricity costs, including implementing a price cap for power generated from the fuel. Calvino said last week that the EU is warming up to their proposal to prevent Russia's invasion of Ukraine from pushing record electricity costs even higher.

The EU's executive arm plans to step up efforts to reduce the bloc's reliance on Russian gas following the invasion of Ukraine. Russia's control of more than 40% of deliveries of the fuel to the bloc aggravated already high energy prices, the EC said in a revised draft of the strategy that was seen by Bloomberg News on Monday.