The handshake between Naturgy and Sonatrach to close the price contract for gas from Algeria is imminent. This has been advanced by the president of the Spanish gas company this Thursday, confirming the messages that have arrived in recent days from the other side of the Mediterranean. At this moment, talks are being finalized, which have been long and are about to come to an end. The final amount to be paid, completely confidential, will be around the current market price. That is, it will be high and will have an impact on the company's balance sheet.
Reynés has revealed in an informative breakfast organized by the CEOE that "the will on both sides is and is being very good". For this reason, according to the president of Naturgy, "the negotiations are progressing well or very well". “We hope to give good news soon”, he added, specifying that “it will not be very good news”.
Naturgy closed its last three-year price contract with Sonatrach in a situation that is very different from the current one. The energy crisis has caused price indices to be soaring at this time and this will be reflected in the agreement whose specific figures will not be known.
The European gas benchmark index, the TTF, has experienced a historic increase. In January 2021 the price per MWh was 16 euros. In 2022 it reached 232 euros, according to graphs prepared and projected by the company's president. Now that curve has moderated and is around 164 euros. In other words, Naturgy will take advantage of this moment and pay a high price, but not as high as Reynés has admitted.
The agreement will put an end to a period of uncertainty that guarantees the security of the Algerian gas supply. It will also be closed while the diplomatic crisis between Algiers and Madrid is still open after the turn of the Spanish Government with Morocco. This caused the withdrawal of the Algerian ambassador, who still has not returned. In this context of political crisis, Naturgy will close an agreement in which the Executive of Pedro Sánchez has not intervened at any time.
The price contract with Algeria includes a 'take or pay' clause. In other words, Naturgy has to take it through the gas pipeline or by ship, or pay for it. The situation, therefore, has been conditioning the income statement of the Spanish gas company and will do so in the coming years. That is why Reynés has admitted that they have not been "easy" conversations with Sonatrach.
The regular review of gas supply prices between Algeria and Spain has traditionally been negotiated for three years. Both parties began to sit down in November 2021, at which time the previous agreement expired -a contract supporting low prices in better conditions than the current ones-, to try to close the pact for the years 2022, 2023 and 2024. The agreement will arrive, for Therefore, on the first anniversary of the first scores and will be added to what the Algerians have already achieved with Italy and France.
Sonatrach is a shareholder of Naturgy, with 4.8%, and participates in the general meetings, as Reynés stated this Monday. "My respect and thanks as shareholders." Both companies have also been partners in the Medgaz gas pipeline for thirty years and they still have another 10 years of relationship ahead of them, if they do not end up renewing the agreement.
As of June 2022, Naturgy has imported 3 bcm of gas from Algeria, far from the 7 that arrived in 2021. The Spanish gas company's main supplier is currently the United States, which implies that a diversification of the sources of supply to guarantee supply.
