In the diplomatic conflict between Morocco and Algeria, the latter has decided to use gas as a weapon. On 26 August, following a meeting with ambassador Fernando Morán concerning gas exports to Spain, energy minister Mohamed Arkab affirmed Algeria’s intention to only use the Medgaz pipeline, which directly links the Beni Saf installations (110km west of Oran) to those of Almeria (southwestern tip of Andalusia).
A right of passage paid for in gas
According to the energy minister, President Abdelmadjid Tebboune’s government intends to put an end to Algerian participation in the Maghreb-Europe gas pipeline, which also starts in Algeria but passes through the Cherifian kingdom before reaching Cordoba. Until now, the Moroccans had been given a ‘right of passage’ on this pipeline by the Algerians. According to the tri-national agreement dating from 1991, which is due for renewal before the end of October 2021, this was paid for in natural gas exports.
“Algeria exported 9bn cubic feet to Spain in 2020 and up to 17bn cubic feet annually before that. We estimate that 60% of these volumes were exported through Medgaz and 40% via Maghreb-Europe, i.e. through Morocco,” says analyst Pravi Joshi, head of North Africa at Rystad Energy.
The Rystad Energy expert adds that Morocco produces around 12% of its electricity from Algerian gas. In contrast, this figure was at around 17% in 2017. However, this percentage is significant enough to put Moroccan electricity production at risk, should Algeria decide to no longer participate in the Maghreb-Europe gas pipeline.
Few alternatives to Algerian gas
In the short term, the Cherifian kingdom does not have many alternatives to Algerian gas. “There are several gas extraction projects taking place in Morocco, but most of them are not due to come into effect until 2025, and the volumes they produce will be too small to counterbalance the end of imports from Algeria,” says Pranav Joshi.
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“Moreover, despite several regasification projects, particularly in connection with fertiliser production, Rabat still does not have the facilities to compensate for the cessation of Algerian [exports] by importing liquefied natural gas (LNG) from elsewhere, particularly from sub-Saharan Africa,” says Francis Perrin, director of research at the Institut des Relations Internationales et Stratégiques (Iris) in Paris.
“As for the Nigeria-Morocco gas pipeline project, which is supported by Rabat and Abuja, it is a long-term initiative that is in the making and for which no funding has yet been raised,” says the French specialist, who is also an associate researcher at the Policy Center for the New South in Rabat.
More polluting or more expensive alternatives
According to Perrin, the only way to avoid power cuts following a stoppage of the Maghreb-Europe gas pipeline would be to push conventional – and more polluting – power plants to full capacity by importing more coal and fuel oil. This strategy is counteractive to Morocco’s ‘green’ ambitions, which are to promote solar and wind power plants on the continent.
When contacted on the subject, neither the Moroccan energy ministry, headed by Aziz Rabbah, nor representatives from the Office National de l’Eau et de l’Electricité (Onee) wished to comment.
It remains to be seen whether the Algerians really want to carry out their threat. “In terms of flexibility and security of supply, it is preferable – both for the supplier and gas consumer – to benefit from two pipelines rather than one, as there may be technical incidents or blocking [of] maintenance operations,” says Perrin, for whom the Spaniards – and their European Union (EU) partners – will play a pivotal role in the matter.
“Medgaz, which has a current capacity of 8bn cubic feet (compared to 12bn cubic feet for Maghreb-Europe), would not – at present – be able to transport the 9bn cubic feet that the Algerians exported to Spain in 2020. Even if there are plans to add 2bn cubic feet of capacity, this would not be enough to meet Spain’s future needs, which are growing significantly,” says Joshi, who believes that the Algerians’ only solution is to supplement their deliveries via Medgaz with LNG.
Race against time
“Sonatrach has liquefaction capacity and Spain has regasification plants, so it is possible; but the Spanish and Algerians will have to come to an agreement very quickly on the subject since Maghreb-Europe must be renewed before the end of October,” says Perrin.
The latter reminds us that if Spain were to rely on LNG – more expensive because of the liquefaction and regasification operations – then it would in fact be less dependent on the Algerian gas pipeline, since it can import LNG from all over the world, which would force Algiers to become more competitive in this area.
“Given that the current Maghreb-Europe agreement expires at the end of October, this pipeline’s future should be decided quickly,” says the French researcher.
The Algerians and Spanish hold most of the cards, while Morocco is in a delicate situation. However, this very tight schedule may force the different parties to agree to extend the Maghreb-Europe deal for several months. This would give Madrid and Algiers enough time to update the Medgaz and LNG export agreements, and Morocco a longer period to readjust their energy mix; unless Algiers – under pressure from its European customers, who want to benefit from the security of supply of two pipelines rather than one – changes its mind.
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