Algeria and Spain agree revised 2022 fuel costs

October 6, 2022

ALGIERS, Oct 6 (Reuters) – Algeria’s Sonatrach and Spanish energy group Naturgy (NTGY.MC) have revised fuel costs for 2022 however delayed worth talks for subsequent yr and past amid surging demand and after a diplomatic spat between the international locations.

Sonatrach provides round 5 billion cubic meters of fuel a yr to Spain by contracts signed greater than twenty years in the past and legitimate till 2030 with periodic worth opinions.

Naturgy stated the businesses had established a brand new worth retroactively relevant for volumes equipped to the tip of 2022, and had additionally agreed to proceed negotiating costs relevant from subsequent yr.

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A Sonatrach assertion stated the businesses had agreed to revise costs with out giving additional particulars, however Algeria’s Ennahar TV reported Sonatrach Chief Government Tewfik Hakkar as saying the worth revision was a part of a three-year contract.

“The contract was simply renewed for 2022 as at present excessive volatility and uncertainty round fuel costs would not permit for excellent visibility within the medium time period,” a supply with information of the matter stated.

Neither Sonatrach nor Naturgy gave any particulars on the brand new pricing preparations, however each referred to market situations. World fuel costs have risen sharply this yr as Russian provides to Europe fell after its invasion of Ukraine.

“The willingness of each events is excellent to be able to favour two issues: to not put safety of provide in danger and to attain worth stabilisation,” Naturgy CEO Francisco Reynes stated earlier on Thursday.

“Costs are going to go up,” he stated, however not by an “exorbitant” quantity, he added.

Algeria, the place decrease vitality costs after 2014 induced issues for the long-term way forward for its public funds, desires to benefit from increased demand for its fuel and has signed new provide offers with Italy.

It has additionally stated it would persist with contractual obligations to produce fuel to Spain regardless of withdrawing its ambassador to Madrid in June as a part of a dispute over Western Sahara, the place Algeria backs an independence motion.

Madrid angered Algeria by saying Morocco’s plan to supply Western Sahara not more than autonomy as a part of its personal territory was probably the most critical, credible and sensible proposal to finish the battle.

Spanish Prime Minister Pedro Sanchez stated final month that he backs a “mutually acceptable political resolution” to the Western Sahara battle.

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Reporting by Lilian Wagdy, Lamine Chikhi, Jesus Aguado and Emma Pinedo Gonzalez; Writing by Angus McDowall
Modifying by Marguerita Choy

Our Requirements: The Thomson Reuters Belief Ideas.

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