HIGHLIGHTS
Suggests non-renewal of key Morocco gas transit deal
Importers nominate 7 TWh of gas via Medgaz for November
Algeria has made preparations for re-routing GME gas
Spanish gas importers have nominated zero Algerian gas imports through the GME pipeline via Morocco for November, according to the latest data published by gas grid operator Enagas.
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The zero nominations suggest the long-term transit agreement between Algiers and Rabat — which is due to expire at the end of October — may not be renewed after relations between Algeria and Morocco broke down in August amid heightened tensions.
Algeria has previously said a number of times that it can meet Spanish gas demand using only its direct subsea Medgaz line and LNG deliveries.
Volume nominated through the Medgaz link has been scheduled at 7 TWh (0.6 Bcm) for November, Enagas said.
Amid the standoff with Morocco, Algeria on Sept. 30 gave a guarantee to Spain that gas supplies would be delivered to meet Spanish demand.
Cited by Algerian state news agency APS, Spanish Foreign Minister Jose Manuel Albares said: “Concerning energy, I have received a guarantee from Algeria on the adequate supply of gas to Spain.”
Algeria’s energy minister, Mohamed Arkab, said in late August that preparations had been made to divert all gas from the GME pipeline into Medgaz.
In May, Arkab formally inaugurated a new 197 km pipeline from El-Aricha on the border with Morocco to Beni Saf, the starting point of the Medgaz pipeline, to allow for supplies into GME to be moved instead into Medgaz.
In addition, the capacity of Medgaz is being increased to the equivalent of 10.5 Bcm/year, up from 8 Bcm/year currently.
The GME pipeline already transited 5.54 Bcm of Algerian gas via Morocco to Spain in the first nine months of 2021 — an average of 20 million cu m/d — S&P Global Platts Analytics data showed.
That is around 25% of Spain’s annual gas demand.
By contrast, the Medgaz pipeline has supplied some 5.86 Bcm of gas to Spain, or 21 million cu m/d, in the January-September period.
Total supplies in the first nine months of 2021 in the two pipelines are already as much as the expanded capacity of Medgaz, suggesting that pipeline would not be able to meet all Spanish gas demand in the future.
Morocco options
Morocco, meanwhile, would be compromised by an end to the transit deal with Algeria as it receives gas as part-payment for transiting Algerian gas to Spain.
It has only very limited gas production, and new projects such as the Sound Energy-operated Tendrara gas field and Chariot’s Anchois offshore development are some way off first production.
Morocco relies on gas for around 10% of its power generation needs and Rabat is reportedly interested in reversing the GME line so that it can import gas from Spain.
The uncertainty over the future of the GME pipeline comes as global gas prices hit repeated record highs due to winter supply concerns.
The S&P Global Platts JKM spot Asian LNG price hit a record high of $56.33/MMBtu on Oct. 6, while the TTF day-ahead contract in Europe reached a high of $39.50/MMBtu on Oct. 5.
