BY: Hana Saada
ALGIERS- In a significant achievement highlighting the robustness of energy collaboration between Algeria and Spain, the Medgaz company, responsible for operating the gas pipeline connecting the two nations since 2011, reported a record-breaking profit of 135.93 million euros in the year 2022. This notable feat reflects an impressive 28.3% surge in profits compared to the previous year, as per reports by the esteemed Spanish media outlet, Europa Press.
Medgaz’s remarkable financial success is poised to significantly impact key stakeholders. The Algerian national hydrocarbon company, Sonatrach, possesses a majority share of 51% in Medgaz, translating into substantial dividends. Simultaneously, the remaining 49% stake is distributed among Naturgy and the American investment giant BlackRock, channeled through the Medina Partnership.
As a result of these staggering profits, Sonatrach is set to receive dividends amounting to more than 69.3 million euros, while Naturgy and BlackRock collectively share approximately 66.6 million euros. The financials of Medgaz for 2022 further underscore the pipeline’s exceptional performance, with the pipeline’s turnover reaching an impressive 295.761 million euros, marking an increase of over 19% from the preceding year.
The operational profits, as detailed in the company’s filings with the commercial register, reached an impressive 211.997 million euros. These figures collectively reinforce Medgaz’s position as a vital conduit for energy trade between Algeria and Spain.
Undoubtedly, the availability and reliability of the infrastructure play a pivotal role in Medgaz’s success. The pipeline operated at an exceptional 103.7% availability in 2022, remaining operational for 363 days, surpassing the contractual commitment of 350 days for the year. This commitment to uninterrupted service underscores Medgaz’s dedication to maintaining consistent energy flow.
Furthermore, the majority of the company’s revenues, accounting for almost 97%, emanate from existing transport capacity reservation contracts, securing the entirety of planned capacity with the primary customers. The residual income originates from additional on-demand transportation services, often referred to as pay-per-use contracts. These contractual arrangements, spanning two decades and potentially extendable by 15 years, encompass “ship or pay” provisions, ensuring invoicing for gas transport services irrespective of customer utilization.
A Landmark Infrastructure Expansion for Algeria
Medgaz, since its integration into the Spanish gas pipeline network in April 2011, has admirably fulfilled the role of facilitating gas transport from the Algerian installations at Béni Saf to the shores of Almería in Spain. The year 2022 witnessed a milestone expansion of the Medgaz facilities. The commissioning of a fourth turbocharger at the Béni Saf station, situated in the Aïn Témouchent wilaya in western Algeria, bolstered transport capacity to an impressive 10 billion cubic meters annually, marking an elevation from the earlier capacity of 8 billion cubic meters.
The CEO of Sonatrach emphasized the strategic importance of this enhancement, highlighting that it fortifies the supply of Algerian gas to the Spanish and Portuguese markets in line with contracted quantities, while also catering to potential surges in demand. The CEO, Hakkar, expressed confidence in Algeria’s capacity to meet its contractual obligations with Spain, an estimated 10.5 billion cubic meters through the Medgaz pipeline, with remarkable efficiency.
In the backdrop of this accomplishment, Medgaz’s ascent has a deeper narrative. The company supplanted the Maghreb Europe gas pipeline (GME) subsequent to the Algerian authorities’ decision to close the pipeline linking Algeria to the Iberian Peninsula via Morocco in October 2021. This transition, while strategic, has not hampered Algeria’s gas supply to Europe, showcasing the resilience of Algerian energy initiatives.
Sustaining Dominance: Algeria’s Continued Role as Spain’s Main Gas Supplier
Amid these developments, 2023 witnesses Algeria’s unwavering stature as Spain’s primary supplier of natural gas. In July, Algeria secured its leading position among gas exporters, accounting for a substantial 9,106 gigawatt hours (GWh), covering a commendable 28.7% of the Spanish monthly demand. Data sourced from Spain’s gas operator, Enagás, reaffirms Algeria’s pivotal role in Spain’s energy landscape.
Evidencing this consistency, Algeria’s gas supply to Spain for the first seven months of 2023 surpassed 59,100 GWh, effectively fulfilling 25% of total demand until July. Algeria maintains its supremacy, overshadowing competitors like Russia, which supplied 49,909 GWh and captured 21.1% of Spanish natural gas demand. This triumph further solidifies Algeria’s position as a critical player in the European gas market.
In conclusion, the Medgaz success story in 2022 serves as a testament to the efficacy of cross-border energy partnerships. Not only does it underline Algeria’ significance as a gas supplier to Spain, but it also showcases the fruitful collaboration between nations and corporations in the pursuit of energy excellence. As global energy dynamics continue to evolve, such achievements set a remarkable precedent for sustainable energy cooperation.
