Algeria Tells Spain Not to Re-Export Gas Amid Spat With Morocco

Algeria is unlikely to retaliate against Spain if it pipes gas from other countries to Morocco. Leila Benali, Morocco’s energy minister, said in an interview in February that Morocco wants to buy liquefied natural gas on global markets and send it to Spanish re-gasification terminals. It would then be piped to Morocco through MEG, she said.

“We see the Algerian warning as a reminder that no Algerian gas should go to Morocco,” JPMorgan Chase & Co. analysts including Javier Garrido wrote in a note. “We expect Morocco to announce a specific LNG contract in Spain with specific volumes and this should hopefully address the concerns.”

Still, the quarrel is yet another threat to Europe’s energy security. Russia halted gas flows to Poland and Bulgaria on Wednesday as part of a retaliation against sanctions for its invasion of Ukraine. Algeria provides Europe about 8% of its gas imports, making it the biggest supplier after Russia and Norway.

Gas normally flows through the MEG line from Algeria to Spain via Morocco. But Algeria stopped sending fuel through it late last year when it cut diplomatic ties with Morocco because of a spat over Western Sahara. Algiers recalled its ambassador to Spain last month after Madrid ended a longstanding policy of neutrality toward the territory and backed Morocco’s plans for limited autonomy.

The Morocco-Spain section of MEG is owned by companies from Morocco, Spain and Portugal. They can reverse the flows without Algeria’s consent, according to Morocco.

Spain is still receiving Algerian gas through the Medgaz line, which doesn’t cross Morocco, and as LNG. Algeria also has a gas pipeline that connects to Italy.

The Moroccan energy ministry didn’t immediately respond to a request for comment.

Source: Bloomberg Business News