Algerian state energy firm Sonatrach has agreed with Spanish buyer Naturgy to revise prices on gas deliveries through a key undersea pipeline, it said Thursday, as Europe gears up for a winter energy crunch.
“Sonatrach and its partner Naturgy have agreed to revise the prices of the existing long-term gas supply contracts taking into account market developments,” the Algerian firm said in a statement.
It did not say which way they would be revised, but natural gas prices have more than doubled in Europe since Russia’s February invasion of Ukraine, as Russia cuts back supplies in suspected retaliation against Western sanctions.
Algeria, Africa’s top natural gas exporter, has signed a flurry of deals with southern European governments and energy firms seeking to offset the fallout, delivering a cash windfall for Algeria.
But experts have cast doubt over its ability to boost production in the short term.
The Spanish government in July urged energy firms to reduce their imports of gas from Russia.
But ties between Madrid and Algiers have been cold since the government of Pedro Sanchez in March dropped decades of neutrality on the Western Sahara conflict, backing an autonomy plan drafted by Algeria’s arch-rival Morocco.
Algeria in June suspended its 2002 friendship treaty with Spain but has said gas deliveries will continue.
Sonatrach supplied more than 40 percent of Spain’s natural gas imports in 2021 through the deep-sea Medgaz pipeline.
Naturgy is Spain’s top buyer of Algerian gas, which represents over a fifth of the firm's total gas purchases.
Spanish gas regulator Enagas says Algeria was the country’s second gas supplier (24 percent) in August, behind the United States (26.5 percent).
But Algeria’s share has dropped in recent months as Spain has increased its imports from other sources.