Algeria would consider canceling its gas deliveries to Naturgy if the Spanish company’s shares were sold to another company, the British agency Reuters reported on Monday, citing a source close to the matter.
Although the source did not specify the identity of this company, it is indeed the Emirati company TAQA of Abu Dhabi which had recently announced that it was in talks with the three main shareholders of Naturgy, suggesting the possibility of a complete public purchase offer.
Naturgy holds a stake (49%) in the Medgaz gas pipeline linking Algeria to Spain, in addition to contracts with the Sonatrach group, the main gas supplier to Spain via this pipeline.
A Naturgy spokesperson told Reuters that the company had signed “take or pay” supply contracts with Algeria until 2032. He also stressed that Naturgy was not involved in negotiations over the owned by the company, as was clearly stated in documents published at the time.
The Spanish energy ministry declined to comment on the matter, while TAQA confirmed it was in talks with private equity firms CVC and GIP, as well as Naturgy’s main shareholder, Criteria, regarding a possible deal. partnership.
The talks aimed at acquiring Naturgy come at a time when relations between Algeria and the United Arab Emirates are not at their best.
Algeria was Spain’s main gas supplier in the first three months of the year, accounting for around a third of total gas imports according to Enagas, the Spanish gas network operator. Most of these supplies are transported by pipeline.
TAQA wants to acquire 40% of Naturgy
Last April, TAQA confirmed that it was in talks with Naturgy’s main shareholders to buy more than 40% of the Spanish company’s shares. These discussions could lead to a total public takeover offer from the Spanish energy group, of which the Sonatrach group holds 4.1% of the shares.
The negotiations concern the sale of shares in Criteria, which owns 26.7% of Naturgy, as well as three foreign investment funds, notably the global private equity fund (CVC) which holds 20.7%, the fund d investment Global Infrastructure Partners “GIP” (20.6%) and the Australian investment fund IFM Global Infrastructure (15%).
According to the Spanish newspaper La Vanguardia, TAQA could spend at least 10 billion euros to acquire this share of Naturgy.
To comply with Spanish regulations, which require a tender offer when a buyer wishes to acquire more than 30% of a listed company, TAQA will need to obtain approval from the Spanish government, given Naturgy’s importance in the country’s energy system.
This situation sparked a debate in Spain on the sale of a strategic gas company, particularly in the current situation. Naturgy, Spain’s largest gas company, is also active in renewable energy, with an installed capacity of around 6.5 GW. It has gas contracts with Algeria and a long-term contract to import Russian LNG.
The Spanish CNMV has lifted the suspension of trading in Naturgy shares, confirming ongoing discussions. However, TAQA had clarified that no official agreement has yet been concluded with Criteria Caixa, CVC, or GIP and that there is no assurance that the operation will go ahead. In addition, TAQA declares that it has not taken any direct action with Naturgy.
Naturgy owns 49% of the Medgaz gas pipeline
As a reminder, Naturgy also owns 49% of the Medgaz gas pipeline, which connects Spain to Algeria, its main gas supplier.
Sonatrach has been the majority shareholder of the gas pipeline with 51% of the shares since May 2020, following the acquisition of shares in the other Spanish company Cepsa.
The Medgaz is 210 km long connecting the town of Beni-Saf (Ain Temouchent) to Almeria (southern Spain). The Medgaz company, operating the gas pipeline between Algeria and Spain since 2011, recorded a record profit of 135.937 million euros in 2022, marking a 28.3% increase in profits compared to 2021.
This record profit for Medgaz in 2022 was entirely devoted to the distribution of dividends to its shareholders, distributed according to their participation in the company. Thus, Sonatrach received more than 69.3 million euros in dividends, while Naturgy and BlackRock will share approximately 66.6 million euros.
The gas pipeline’s turnover reached 295.761 million euros in 2022, recording an increase of more than 19% compared to the previous year. At the same time, operating profit amounted to 211.997 million euros.
Algeria’s main gas supplier to Spain
In 2022, the transport capacity of the gas pipeline was increased to 10 billion cubic meters per year, compared to 8 billion previously. This extension represented a cost of 81.76 million euros. Through the contracts binding it to Naturgy, Sonatrach has delivered more than 83 billion m³ of gas to its Spanish customers over the last decade.
As a reminder, Algeria ended the year 2023 at the top of gas suppliers to Spain. Algeria, which supplied 29.2% of the quantities of gas imported by Spain, managed to dethrone the United States, which now occupies second place, followed by Russia, according to Enagás, the main transport company of natural gas of Spain and technical manager of the Spanish gas system.
Since the start of the year (January to March 2024), Algeria has supplied 33.1% of Spain’s total natural gas needs, followed by the United States (24.5%) and Russia (23. 1%).
Last March, Algeria consolidated its position as Spain’s main natural gas supplier, covering 42% of the country’s total imports last month, ahead of Russia (25.7%) and the United States. (18.2%). Algeria thus dominates Spanish imports of natural gas for the third consecutive month (January, February, March 2024).
Relations between Algeria and the United Arab Emirates
In recent months, relations between Algeria and the United Arab Emirates have not been in good shape. At the end of last March, during his periodic interview with representatives of the national media, the President of the Republic, Abdelmadjid Tebboune, described the actions of an Arab country against Algeria as “illogical” acts. The head of state spoke of the United Arab Emirates without mentioning them by name.
President Tebboune had specified about this country that “all Arab brothers testify that we have not used any violent language”. He affirmed that Algeria still considers this country – whose name he did not mention – which has hostile actions towards it, as “a brother country”, hoping that this country will stop this behavior.
“Algeria will not bow to anyone” he declared, calling on this country to “learn lessons from the great nations that we respect and who respect us”. “He is mistaken who believes he can impose on Algeria what he imposes on other nations,” he assured, stressing that Algeria had sacrificed “5 million and 630 thousand martyrs for its sovereignty and that the teaching was clear throughout the history of the land of the martyrs.”
The President of the Republic recalled the use by this same country of funds in events taking place in neighboring countries, urging it to avoid fitna. Last January, during a meeting chaired by President Tebboune, the High Security Council expressed “its regrets regarding the hostile actions against Algeria, emanating from a brother Arab country”.
It should also be remembered that in March 2022, relations between Algiers and Madrid took a difficult turn following a change of course by the Spanish government regarding the conflict in Western Sahara. However, tensions eased slightly after the appointment of an Algerian ambassador to Spain last November, followed by the resumption of trade between the two countries, which had been suspended for more than 18 months.
It is important to note that even during the suspension, gas and oil deliveries have not been affected, with Algeria having repeatedly reaffirmed its commitment to respect its contractual obligations. However, Algiers had set a single condition to continue deliveries: that Algerian gas not be resold to Morocco, with which Algeria has decided to break diplomatic relations.
