Global increase in gas demand: Has Algeria favored the spot market?

LSpain and Italy have recorded in recent weeks a drop in gas volumes from Algeria via the various pipelines connecting the country to southern Europe.

The flows are said to have fallen by 15 to 30% in Italy and by around a quarter in Spain, where a significant increase in electricity tariffs has been recorded due to the cold snap that hits the country.

The energy supply situation is rather tense in both countries, which are struggling to find the necessary quantities from other distant suppliers.

The approach is in fact thwarted by the exceptional demand for gas also recorded in Asia, and the surge in prices on the spot market, emboldened by the voracious consumption of China and Japan in the grip of a strong cold snap. LNG imports from the two countries reached record levels last month.

If Sonatrach has justified, according to the Spanish press, the drop in gas flow sent by the two gas pipelines connecting Algeria to Spain by problems at the level of these refineries, voices are being raised, via the press, in Spain to accuse Algeria of favoring the Asian market in order to benefit from more attractive prices.

The Spanish press also evokes the possibility of clauses in long-term contracts, signed between Naturgy and Sonatrach, giving Algeria the right to place its gas in Asia, during opportunities similar to those presented on the market. spot for a few weeks.

If no official information has filtered out on the state of gas sales by Sonatrach to its European partners, nor on the precise content of the interview granted on Thursday by Abdelmadjid Attar to the Italian ambassador in Algeria, Giovanni Pugliese – at the latter’s request – the Minister of Energy seems to give clues as to the strategy to be traced for Sonatrach in terms of the sale of gas on the spot market.

Speaking in an interview with Russian news agency Sputnik, the Minister of Energy believes that Algeria is a reliable partner and has the capabilities “To fulfill our international commitments in terms of natural gas supply”. He further states that “The competition imposed the sale in spot valuation, at the price of the day. However, Sonatrach continued to defend long-term divestitures. Studies say that by 2025, more than half of the quantities of LNG will be sold on the spot market ”.

For Minister Attar, “Sonatrach should have had a trading vision to adapt to the market”. “This situation means that we are on the defensive when we have to be offensive. It was only when American LNG began to take market share from us in Europe that we understood that we had to react ”, said the Minister of Energy, believing that “The commercial vision for the next five years must be drawn up today”.

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