Algeria is experiencing a significant increase in its liquefied natural gas (LNG) exports to the Mediterranean, reflecting a strategic evolution in its energy policy. This trend, observed in September 2024, is part of Sonatrach’s efforts to strengthen its position in the LNG market.
As of September 20, 2024, Sonatrach’s LNG exports reached 700,000 tonnes, representing thirteen cargoes. These figures mark a substantial increase from the 450,000 tonnes exported in August, equivalent to nine cargoes. It should be noted that these volumes remain lower than the 800,000 tonnes (sixteen cargoes) exported during the same period in September 2023.
Several factors contribute to this increase in LNG exports. Inspection work on the underwater section of the Medgaz gas pipeline, scheduled for September 17-27, has led to a reduction in gas flows to Spain. LNG exports partially offset this decline. Algeria’s proximity to European markets provides a significant logistical advantage.
Transporting cargo from Arzew to Barcelona takes only two days, compared to fourteen days for more distant ports. Freight rates have decreased, reaching 21 cents/MMBtu for an Algeria-Southwest Europe route as of September 19, 2024, compared to 40 cents/MMBtu for the same period in 2023. In addition, Sonatrach employs a diversified approach to pricing, including components linked to oil prices, thus allowing adaptation to market conditions.
Implications for the Mediterranean LNG market
The Algerian strategy effectively responds to the growing demand from Mediterranean countries, particularly where spot prices are higher than contractual levels. This situation promotes the attractiveness of Algerian LNG in the regional market.
The impact of Medgaz maintenance reduces flows to Spain, going from an average of 28 million m3/d to 13 million m3/d. However, the increase in LNG exports demonstrates Algeria’s capacity to adapt its supply strategy.
Sector analysts anticipate a continuation of this upward trend in the coming weeks, with exports already planned for October. This dynamic could strengthen Algeria’s position as a reliable supplier of natural gas to Europe, in a context where the diversification of energy supply sources is a priority for many countries.
