Brussels, 28/05/2013 (Agence Europe) - Algeria, which is preparing to sign a strategic energy agreement with the EU, seems to be concerned by the downward trend of gas prices in Europe. The official press agency APS reports that the crisis that continues to hold European economies in its grip is beginning to have an effect on gas prices. APS cites the national oil and gas company, Sonatrach, which points out it is faced with requests to revise contracts signed with European import businesses downward.
Sonatrach has challenged a clause in contracts linking it to European companies, known as the “overthrow clause”. This was the case in the contract for the sale of gas linking Sonatrach to the Italian company, Edison, which is a subsidiary of the French group EDF. Sonatrach's challenge was ruled unsuccessful by an arbitration tribunal. Cited by APS, Sonatrach Chief Executive Abdelhamid Zerguine said it is difficult for Algeria to safeguard gas prices in a situation of economic crisis that affects not only demand but also prices. He fears this will entail a domino effect, saying there was not only Edison but also ENI and Gas Natural Fenosa (GNF) involved. Zerguine, moreover, announced on 18 May the postponement, for the third time, of the Galsi gas pipeline project that is to link Algeria to Italy via Sardinia. He told the daily el Watan that this is due to the fall in demand for natural gas in Italy.
Concern is also raised by the increased competition from the United States. Algeria could have considerable worries about its gas especially from 2020 on, Algerian energy experts told the media. This is because the development of US shale gas extraction will make the price of natural gas plummet on the US market (now below $3/5 per million of BTU, or British thermal units, against $10 in Europe and over $15 in Asia, where the Fukushima disaster brought about a surge in Japanese gas demand, experts say).
Professor Abderrahmane Mebtoul, who is a specialist in the sector in question, calls on his country to bring about “energy transition” without delay. He adds: “As energy is at the heart of security in any country, energy transition in Algeria must be carried out with all haste as we shall soon run out of energy, by 2030 - and that is just around the corner”. (FB/transl.jl)