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Algeria fails to meet gas export target to Spain

December 6, 2021

Spanish media is ranting at the government after a drop in the gas flow leaving households facing a wave of freezing cold without a proper heating system and casting doubt on Algeria’s promises.

Spanish paper Okdiario reported that the guarantees of the Spanish Prime Minister regarding the steady flow of gas were too political and ignored the reality of Spanish dependence on an unreliable energy partner: Algeria.

Pundits have warned that the Medgaz pipeline had already hit maximum capacity of 8 billion cubic meters and that the closure of the Maghreb Europe pipeline would undermine Spain’s energy imports and leave it dependent on a single, mostly offshore pipeline prey to leaks and malfunctions.

Two freezing days were enough to raise serious questions in Spain about alternatives to Algeria’s gas whose pumping capacity is shrouded in doubt.

Spain depends for about 60% of its gas on Algeria. But by taking such a self-harming decision of halting the Maghreb Europe pipeline, Algeria is rather projecting an image of an unstable energy supplier to the European market where competition is fierce.

Since 2019, Algeria’s gas consumption volumes are nearly two-fold its exports. That same year, Algeria exported 25.2 Toe of gas and consumed locally 43.6 Toe, according to an internal Sonatrach report cited by independent news outlets.

The report was not released and Algerian officials turn a blind eye to the inevitable scenario of Algerian running out of gas for exports.

Algeria’s energy minister Abdelmedjid Attar has however warned that the country will have to give priority starting from 2025 to supplying the local gas market, hinting without saying to the demise of Algeria’s gas export capabilities.

Therefore, starting from 2025, Algeria will no longer be a major gas exporting country. This in part explains the counter-intuitive decision taken by the military junta in Algiers to put an end to the Maghreb Europe gas pipeline.

On the surface, Algerian officials said the non-renewal of the pipeline deal was directed to hurt Moroccan interest after Algiers unilaterally cut diplomatic ties with its Western neighbor. But in fact, Algerian officials are aware of the inability of their country to meet gas demand in Europe.

Algeria is also losing its status as a major oil exporting country on par with Libya or Gulf countries due to a rise in domestic consumption.

The country is burning more of the fuel in local power plants as its population rises, leaving less room for exports.

Even with oil prices improving to edge above $60, Algeria is still in crisis as it needs $135 a barrel to balance its budget.

With 95% of exports composed of oil and gas, Algeria’s finances will be hit hard and its foreign exchange reserves are almost depleted leaving the country with the only choice of resorting to foreign debt which comes with conditions on top of which cutting subsidies on which Algiers fragile social peace hinges.

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