Spain, Algeria Discuss Boosting Medgaz Pipeline Gas Supply

Spain and Algeria are in talks to boost natural gas flows through the Medgaz pipeline, as Europe looks to secure additional supply amid market volatility.

(Reuters) — Spain and Algeria are in talks to increase the supply of natural gas from Algeria, Spanish Foreign Minister Jose Manuel Albares said on March 26 after meeting Algerian President Abdelmadjid Tebboune and members of the government in Algiers.

"We have talked about there being a greater volume (of gas). We spoke about the context of the gas market with the war in the Middle East," Albares told reporters in Algiers.

The countries could increase the supply of natural gas via the Medgaz pipeline from Algeria by as much as 10%, two sources familiar with the matter told Reuters.

A spokesperson for Spain's Foreign Ministry declined to comment, pointing to Albares's comments.

The Iran conflict has upended energy markets and increased volatility, leading some to look elsewhere for their gas. Spanish power utility Naturgy's CEO Francisco Reynes said this week the company wanted to strengthen its relationship with its Algerian supplier and shareholder Sonatrach.

Naturgy has gas contracts with the Algerian state oil and gas company for about 5 billion cubic meters per year, according to figures the Spanish company gave to the market in 2022.

Algerian gas made up more than 29% of Spain's total gas imports in the first two months of the year, according to data from Spanish gas grid operator Enagas.

It comes via the Medgaz pipeline, in which Naturgy is a minority partner and Sonatrach holds a 51% stake. Sonatrach also has a stake of about 4% in Naturgy.

Other countries are also asking Algeria for more gas in the face of disruption caused by the conflict in the Middle East.

Italian Prime Minister Giorgia Meloni ‌said she hoped Algeria would send more gas to her country during a visit to Algiers this week.