Spain begins gas re-exports to Morocco via the GME pipeline: Enagas

Strong points

First piped gas to transit from Europe to Africa

1.1 million m3 exported on June 28: Enagas data

Algeria interrupted gas supply to Morocco in November

Spain began re-exporting gas to Morocco in reverse flow through the GME pipeline, data from Spanish gas network operator Enagas showed on June 29, marking the first direct flow of piped gas from Europe. towards Africa.

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The southward flow of gas via the GME pipeline – which was previously used to send Algerian gas via Morocco to Spain – began at 10:00 a.m. local time (08:00 GMT) on June 28, with a total of 1.1 million m3 of gas exported.

According to the data, an additional 83,000 cubic meters are expected to cross the link on June 29.

Spain and Morocco agreed earlier this year to consider using the GME pipeline for the reverse flow to the North African country, with gas to come from the global LNG market.

The network operator did not specify where the gas came from for the first exports, although two LNG carriers were unloaded over the weekend of June 25 and 26 in the nearest ports of Huelva and Cartagena. , according to data from Enagas.

Sources told S&P Global Commodity Insights that the Huelva terminal would be the most logical option as it is located close to the entry point of the GME line.

Supply from Morocco

The start of Spanish re-exports to Morocco is a key development for the region’s gas sector and will come as a relief for Rabat, which was cut off from Algerian gas supplies – previously its only external source of gas – in November of Last year .

Algeria previously supplied gas directly to Morocco via the GME link, partly in lieu of payment for transit, with deliveries estimated at around 1 billion m3/year.

Most of the gas was consumed by two gas-fired power plants at Tahaddart and Ain Beni Mathar which were supplied from Algeria, but the plants were shut down after the GME flow stopped.

The country also has limited domestic production which is supplied to local industrial customers, including car manufacturers and paper mills.

It has also launched a tender to install a floating LNG import terminal in the country as it seeks to increase its gas supply.

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Gas price cap against electricity in Spain led to a 50% drop in cogeneration production: Acogen

Regional relations

The decision to halt flows in the GME gas pipeline – which supplied almost 6 billion m3 of gas to Spain in 2021 before the suspension of supplies – came amid deteriorating relations between Algeria and the country. Morocco and the ongoing dispute over the autonomy of Western Sahara.

Algeria only supplies gas to Spain via the direct Medgaz gas pipeline, the capacity of which has been increased to around 10.7 Gm3/year.

Relations between Algeria and Spain have also deteriorated in recent months after Madrid changed its stance on autonomy for the Western Sahara region in March, reversing a decades-old policy of neutrality.

Algeria threatened in April to terminate gas supply contracts between state-owned Sonatrach and Spanish buyers if Algerian gas was re-exported to Morocco.

The threat has seen Spain seek to develop a new gas origin certification system so that any molecule delivered to Morocco via the GME gas pipeline operating in reverse flow can be proven to be non-Algerian.

The tensions come as gas prices in Europe remain at high levels, mainly due to Russian supply uncertainty.

Spanish gas remains one of the cheapest European gas hubs, largely thanks to its access to global LNG through its six operational LNG terminals.

The PVB day-ahead contract was priced on June 28 at 113.53 euros/MWh, with only the UK NBP day-ahead price lower among hubs traded in Europe, according to Platts price assessments by S&P Global Commodity Insights.

The day-ahead PVB also had a discount of nearly 16.50 euros/MWh compared to the Dutch equivalent of the TTF.