Algeria-Morocco Rift Jeopardizes Spain’s Natural Gas Supply

The Algerian Minister of Foreign Affairs, Ramtane Lamamra, announced on August 24 the severance of diplomatic relations with Morocco. Spanish households fear that this decision will affect Algeria’s regular supply of natural gas to Spain, reports El Pais. A few days after this announcement, the Algerian Minister of Energy, Mohamed Arkab, had declared that his government would not renew the GME concession contract which expires at the end of October.

The situation is worrying the Spanish government. "We are following the evolution of relations between Algeria and Morocco, two neighboring countries, and we call for dialogue. We hope that the supply of gas to Spain will in any case be guaranteed and will not be affected by the current situation," said a Spanish diplomatic source.

To read: Algeria Boosts Gas Supply to Spain with Medgaz Pipeline Expansion

But Algeria has taken steps to not submit to Morocco’s "blackmail" in the event of non-renewal of the GME which crosses Moroccan territory and the Strait of Gibraltar before reaching the city of Cordoba in Spain, and has the capacity to transport around 8.7 billion cubic meters of natural gas per year. Algeria is rather counting on the Medgaz, connecting the Hassi R’mel gas fields to the city of Almeria network since 2011, with a current capacity of 8 billion cubic meters of gas. The Spanish and Algerian governments even signed an agreement last summer to increase the capacity of this infrastructure to 10 billion cubic meters per year as of January 2022.

To read: Algeria Halts Gas Pipeline to Spain Amid Diplomatic Tensions with Morocco

Moreover, the non-renewal of the GME will affect Algeria, Spain and Morocco. Morocco could lose two advantages: its 7% toll on the value of the gas exported by the pipeline, or around 200 million euros per year, and the amount of gas drawn from the pipeline transit which contributes to producing 12% of the electricity consumed by Moroccans. As for Algeria, it will see its export capacity drop from November, going from 16.7 billion cubic meters per year to only 8 billion, then to 10 billion from January. "It is clear that Algeria will not be able to export as much gas to Spain and southern Europe, at least in the short term," explains Matt Cunningham, energy expert at the Barcelona think tank Focus Economics. Spain, on the other hand, "will be able to meet its gas needs by obtaining it from elsewhere, or by comparing it to other energy sources, but costs will increase," notes the expert.