It is in a context in which Lthe celebrations between Madrid and Algiers are marked by diplomatic tensions which have had a significant impact on economic exchanges between the two countries, as negotiations are underway to revise the price of gas supplied to Spain. Negotiations in which the balance of power is favorable to Algeria, given that Europe is going through an energy crisis.
Thus, after deciding to reduce the volume of its gas exports to Spain, Algeria has also decided to revise the prices of this gas. To achieve this, negotiations have been initiated between the two sides. According to the Spanish newspaper El Confidentcial, the Spanish gas company Naturgy has finally agreed to pay more for this gas for the coming years with retroactive effect, starting in October 2021.
However, the same source claims that negotiations between Naturgy and Sonatrach are continuing to determine the length of the contract. The Spanish company, in fact, is trying to obtain a one-year shortening of the contract which usually sets gas prices over three years. It is on this point that these negotiations still stumble. The Algerian oil company remained uncompromising. He asks to enforce the usual three-year duration, applied from the conclusion of the mega-contract that extends to 2032 For his part, Naturgy is trying to reduce the duration to two years, estimating that in 2024 prices could drop compared to the current record ones .
Spain agrees to readjust the gas price retroactively
The Spanish newspaper indicates that “according to senior officials in Algiers, in the ongoing negotiations, Naturgy has accepted the readjustment of the price of the gas it purchases from Sonatrach, with retroactive effect from October / November 2021, adapting to the prices applied to the Italian Eni and the French Engie “. However, these sources explain that the deal is not closed and that there is still no agreement on the deadlines, due to the Spanish company’s desire to reduce this contract to two years.
It should be remembered that before the start of these negotiations at the expiry of the three-year contract in 2021, the price of gas was indexed to a Brent reference index, rather than to the gas market. However, as gas prices soared, the Algerian group said it wanted to benefit “from the market trend that has reversed and Algeria therefore wants to negotiate the new prices, according to a new reference”.