BlackRock Abandons Medgaz Pipeline Expansion Amid Spain-Algeria Diplomatic Tensions

Spain and Algeria had agreed to increase the capacity of Medgaz from 8 to 10 billion cubic meters per year to meet Spanish demand after the closure of the Maghreb-Europe gas pipeline (GME) by Algeria last October. The work has been carried out but the necessary authorizations have not been obtained for its commissioning, reports Merca2.

The diplomatic crisis between the two countries, born in the wake of Spain’s support for Morocco’s autonomy plan for the Sahara, has complicated matters. Not only has it blocked the effective expansion of Medgaz to 10 billion cubic meters per year, but it has also pushed Blackrock, an American investment fund that manages Medgaz with Naturgy and Sonatrach, to abandon its project to increase the capacity of the infrastructure to 16 billion cubic meters per year, through the construction of a second underwater gas pipeline.

To read: Algeria Halts Medgaz Pipeline Expansion Amid Spain-Morocco Sahara Dispute

Sources consulted confirmed that "BlackRock commissioned a feasibility study of the project at the beginning of the conflict between Russia and Ukraine, but after the meeting between Pedro Sanchez and King Mohammed VI in April, the technical department of Medgaz was informed that the project has been canceled".

The Algerian national energy company, Sonatrach, has already informed Naturgy and BlackRock of the Algerian authorities’ intention to review the price of the gas supplied to Spain via Medgaz. Subsequently, the Algerian Minister of Energy, Mohamed Arkab, warned that his country will not hesitate to terminate its gas contracts with Spain if it supplied its gas to Morocco via the GME in the reverse direction. His Spanish counterpart, Teresa Ribera, reassured that Spain’s role will be limited to transporting liquefied natural gas (LNG) purchased by Morocco on the international market, after having it transformed in its regasification plants.