Naturgy and Sonatrach seal gas price deal for 2022 but do not disclose amount
The energy multinational Naturgy and Algeria’s Sonatrach have reached an agreement on the price of the natural gas supply contract for 2022 and will continue negotiating to agree on the price from 2023 onwards. Although none of the parties have given details on the price of gas that has been agreed, Algeria insisted months ago that the price would rise, and Reynés himself admitted before the summer that gas is currently more expensive than it was three years ago.
Naturgy has reported this important agreement in a communication to the CNMV, the Spanish stock exchange supervisor.
This agreement is substantial because the contract between the two companies is the most important contract for the entry of Algerian gas into Spain, a supply that is received through the Medgaz pipeline.
Algerian hydrocarbons company Sonatrach also announced this afternoon the agreement on the contract for the purchase and sale of natural gas through the Medgaz pipeline, the only pipeline currently available since the closure of the Maghreb Europe (GME) pipeline last year.
“Sonatrach and its partner Naturgy have agreed to review the prices of existing long-term gas supply contracts in light of market developments, thus ensuring the balance of their contract on a win-win basis,” the Algerian company said in a statement, without specifying the new costs.
Nor has Naturgy given details of the agreed price, something usual in this type of confidential agreements.
The energy company has assured that the agreed price will be applied retroactively – from 1 January – until the end of 2022 and that it will take into account “market conditions”.
“The two companies continue to negotiate within the framework of the contractual clauses the prices applicable from 1 January 2023,” Naturgy said, referring to the talks being held to try to seal an agreement on the price of gas for 2023 and 2024.
“The contracts currently in force between Naturgy and Sonatrach were signed more than 20 years ago and are valid until 2030 for an annual volume of around 5 bcm -5,000 million cubic metres- and involve firm volume commitments, both in terms of supply for Sonatrach, as well as the obligatory withdrawal of gas for Naturgy via ‘take or pay’ clauses,” the Spanish company assures.
Naturgy recalls in the communication to the stock exchange that the first contract between the two parties dates back to 1965, two years after the creation of Sonatrach, and notes that the agreement has been approved by the board of directors of Naturgy and is subject to ratification by the highest Algerian government authorities.
Both companies have been trying for months to close this ordinary revision of the gas prices of this contract, contacts that have taken place in a climate of tension between the Spanish and Algerian governments due to Spain’s new position on the Sahara.
However, Naturgy’s chairman, Francisco Reynés, had already assured in June that Algeria’s position with respect to Spain did not have to affect the current gas supply contract, as both parties were willing to renew it, he said.
