Local Gas Companies Fear Sonatrach’s Entry into Spain

Concerns over northern Europe’s dependence on Russia for gas are likely to be replaced by debates on Europe’s energy security being threatened by southern Europe’s dependence on Algerian gas, following the laying of two new pipelines – one to Spain and France and the other to Italy, reported The Financial Times.

Algeria’s state-owned oil and gas company, Sonatrach, which is claimed to be a major gas supplier to Italy, Spain, Portugal and Turkey, is likely to complete the laying of its two new pipelines soon, enabling it to market its gas in the countries instead of just supplying it.

The project, which is likely to be completed in the next 18 months, will reportedly place Sonatrach in direct competition with the local gas suppliers in Spain, Gas Natural in particular. It is claimed that the two companies are locked in a price dispute that is likely to have an impact on supplies in the long run.

Gas distributors in Spain have been relentlessly trying to keep the Algerian company away from the home market. Companies from both the countries that are locked in the dispute have reportedly soured diplomatic relations between the two countries.

The situation was temporarily resolved in Algeria’s favor, when Sonatrach threatened to cancel the Medgaz pipeline project to Spain. Algeria reportedly cancelled its contracts with Gas Natural and Repsol for the Gassi Touil gas development project.