Thursday, May 30, 2024

Break Between Algeria And Morocco Threatens The Gas Supply To Europe

Algeria’s recent decision to cut diplomatic relations with Morocco has increased uncertainty and concern about the strategic future of the Maghreb-Europe gas pipeline (GME), which since its commissioning in October 1996 has sent millions of cubic meters of gas from the Algerian desert to Spain through Moroccan territory and is vital for the three countries and Europe.

Although the flow has not been interrupted, the possibility of a significant change in its conditions and even closure now looms more strongly, as the signed contract expires on October 31 without the negotiations to extend it appear to progress.

Weeks ago, and in statements to the local newspaper “Le Jour”, the general director of the Moroccan office of Hydrocarbons and Mines , Amina Benkhadra, assured that her country was in favor of renewing the contract for the so-called “gas highway”, a pipeline of carbon steel of more than 1,400 kilometers in length through which nearly 9,000 million cubic meters of gas transit each year.

An enthusiasm that Algeria does not seem to share , according to the statements of local analysts cited by state media, such as the local news agency APS, who on August 21 described Morocco’s interest as “a pure lie, shared by the Alawite sovereign “

“Although it is not its first lie, by venturing into the economic field in general and gas in particular, which seem unknown to it, the Makhzen adds two lies. Algeria, with full sovereignty and autonomy of decision, has not yet decided to renew it” , said the expert cited by the official agency.

Damage for Morocco
Considered key in the Mediterranean energy policy, the exploitation of the GME, promoted in the 1980s by the Spanish Enagás and the Algerian national hydrocarbons company Sonatrach, requires extensive and constant collaboration between Algiers, Rabat and Madrid in the four sections in those who are divided.

The passage through its territory reports to Morocco with about 800 million cubic meters of natural gas to cover a part of its energy needs, plus an amount in commissions that is around 7% and represents around 200 million euros per year.

Aware of the situation, and although the gas pipeline is not as vital to its energy strategy as it appears to be for Algeria and Europe, “Morocco has taken steps in recent years to shore up its own energy security needs.”

“It has given a boost to plans in favor of local renewables, for example, and is also working on a possible LNG import plan, through a floating storage and regasification unit (FSRU)”, explains the energy analyst Ed Reed, expert in the area.

Algeria bets on the Medgaz alternative
Apart from the GME, managed by the company ” Europe-Maghreb Pipeline (EMPL) ” -in which the Spanish group Naturgy, the Portuguese energy company Transgas and the Moroccan SNPP participate-, Algeria supplies gas to Spain and Europe through another gas pipeline that starts from the same desert and crosses the Mediterranean to end in Almería.

Known as Medgaz, this pipeline starts in the town of Beni Saf, runs 700 kilometers to Perdigal beach, on the Spanish coast, and currently has an annual transport capacity of about 8,000 million cubic meters of gas.

Managed by Sonatrach (51%) and Naturgy together with the investment fund BlackRock, these companies are working together to increase their capacity by 2,000 million cubic meters per year by the end of 2021, an amount that in no case would compensate for a possible closure of the Maghreb gas pipeline Europe.

Algeria would thus lose the possibility of sending close to 6,000 million cubic meters of gas annually to Europe, which would cause serious damage to its weakened economy, totally dependent on fossil fuels: oil and gas account for 95% of its exports yearly.

Negotiations continue

“Behind the bellicose diplomatic positions of Rabat and Algiers, the negotiations continue. Morocco cannot do without the 7% of gas it takes. Algiers cannot do without the services of its neighbor, at least for the moment. But, of course, the Algerian decision will have an impact and will condition the final wording of the agreement, “diplomatic sources in the area assure Efe.

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