Algeria Cuts Gas Supply to Spain, Citing Technical Issues Amid Energy Tensions

After the closure, at the end of October, of the Maghreb-Europe gas pipeline crossing Morocco, Pedro Sanchez assured that Spain’s gas supply would be guaranteed by the increase in the capacity of the Medgaz pipeline, the pipeline directly connecting the country to Algeria, and the supply of more liquefied natural gas (LNG).

While the supply of LNG does not pose a problem, the extension of the Medgaz, which largely depends on Algeria, continues to encounter "technical problems" that have not yet allowed the capacity of this gas pipeline to be increased, reports Ok Diario. Aware of the situation, the Spanish government has reduced its gas supply request from Algeria since February to turn more to the United States, which became Spain’s leading gas supplier in March, according to Enagás data.

"The United States mainly produces shale gas (which is obtained by fracking), the production cost of which is very cheap, around $10 or $15 per MWh, while the gas produced in Amsterdam costs more than $100 per MWh. Therefore, they can sell it below this price and continue to earn a significant margin," explain sources in the sector.

In February, Spain received 8,801 GWh of gas from Algeria, well below the 23% of the total amount of gas that arrived in the country in January and the 45% recorded before the closure of the GME. On the other hand, Spain bought 32% of its total gas from the United States and 21% from Nigeria in February. The gas arrives by methane carriers in liquefied form, which is more expensive than the gas that transits through the gas pipeline. In February, Spain increased its LNG purchases by 70% compared to the same period last year.