Despite Tensions, Naturgy Hopes to Revive Spain-Morocco-Algeria Pipeline

Spanish multinational natural gas company Naturgy is holding talks with Morocco and Algeria in an attempt to reach an agreement that would extend the contract of the Maghreb Europe Pipeline.

Algeria’s government announced the termination of the contract on October 31, declining to extend the agreement even after Spain and Morocco both showed they wanted to maintain the regional pipeline.

The decision came amid growing tensions between Algeria and Morocco, and the Algerian government justified its move by accusing Morocco of “hostile” acts.

The pipeline had been operational since 1996 and was supplying Spain with gas through Morocco.

According to the website of US-based trading company S&P Global, Naturgy has continued talks with Moroccan and Algerian parties to see if the concession for the pipeline could be extended.

Jon Ganuza, Global Head of Controlling at Naturgy, said on November 10 that extending the contract of the now halted regional pipeline would be "sensible" for all parties and "create value for all."

Algeria’s decision caused mounting concerns among European countries due to the “tight gas market and high prices,” S&P Global acknowledged.

When announcing the termination of the Europe-Maghreb Pipeline, Algeria reassured Spain that it would continue supplying the European country with gas through the Medgaz pipeline.

Despite Algeria’s reassurance, some recent reports by both international and Algerian sources have cast doubt on the country’s ability to deliver amid its deepening economic crisis and food insecurity.

Recently, Algerian news outlet Algerie Part Plus reported that Algeria’s decision to end the gas pipeline contract with Morocco was in fact due to a sharp drop in the country’s gas production capacity.

The report said Algiers' decision was also due to a substantial increase in domestic consumption of gas that exceeds 52% of the total quantity of gas produced by Algeria.

“Since 2020, Algeria can only export 45 pr 49 billion cubic meters per year of natural gas whereas it exported more than 65 billion cubic meters per year at the beginning of the 2000s,” Algerie Part Plus said.

With reports of continuing talks to revive the Europe-Maghreb Pipeline despite increasing tensions between Algiers and Rabat, it remains to be seen whether Naturgy will be able to convince the Algerian and Moroccan parties to reach an agreement.