Naturgy and Sonatrach reach agreement on their gas contracts

Within the framework of the official visit led by the President of the Spanish Government, Pedro Sánchez, to Algeria, the President of Naturgy, Francisco Reynés (who was part of the business delegation accompanying the Spanish government delegation), and the President and Director of Sonatrach, Toufik Hakkar, met in Algiers after signing the revision of the commercial conditions of the gas supply contracts of both companies.

The agreement on these modifications strengthens the alliance between Naturgy and Sonatrach, whose commercial relationship dates back to 1970 and who also share a stake in the Medgaz gas pipeline, which connects the two countries, with 49% and 51% of the shareholding package, respectively.

At this meeting, both directors presented other possibilities for future cooperation between the two entities and analysed the best ways of expanding their commercial relations. 

On the occasion of this meeting, Toufik Hakkar explained that "the oil and gas industry has been strongly affected by the COVID-19 pandemic" and that "Sonatrach is overcoming, in close collaboration with its clients, the effects of this pandemic on commercial activities". "The agreement reached between Sonatrach and Naturgy reflects the strategic nature of the long-term and trusting relationship that unites them and with which they intend to consolidate their position in the Spanish market", stated the Chairman and Board Member of the Algerian company with regard to the latest agreement reached.

For his part, Francisco Reynés stressed the desire to maintain the link between the two companies for a long time. "This agreement demonstrates the willingness of Sonatrach and Naturgy to continue their long-term partnership, which began decades ago. This strategic alliance is key to the competitive and secure supply of gas to the Spanish market, and therefore key to the economic and social development of both countries". The President of Naturgy underlined this Thursday that the agreement reached with the Algerian company Sonatrach, which revises the gas purchase contracts, is good news because it converts these contracts into flexible and adapted to the market.

In a meeting with the press before the economic conclave in Algiers on the occasion of the official visit to Algeria of the Spanish President Pedro Sanchez, Reynés defined this agreement as a "step forward" that allows to continue having gas as an energy source "compatible" with the ecological transition, with which his company, he emphasized, is committed.

He also explained that the new contract, which runs until 2030, allows for supply via a gas pipeline, which is "much more stable" and provides "additional value".

He also stressed that this agreement should not only be assessed from an economic point of view, but also as "excellent news" in bilateral relations between Spain and Algeria.

He did not wish to give many details of the agreement in order to preserve confidentiality, but assured that it guarantees supply at competitive prices that benefit both households and industry. This is possible because the contract is flexible and "adapts to market conditions".

The agreement between Naturgy and Sonatrach, which has been reported to the National Stock Market Commission (CNMV), was reached during Pedro Sánchez's official visit to the North African country accompanied by a group of Spanish businessmen, including Reynés himself.

In an informal conversation with the press, Reynés insisted that the new contract is good for Spain because it guarantees a stable source of supply and gives greater security of supply. And he assured that it does not go against the energy transition, but on the contrary consolidates it, because natural gas is a much more environmentally friendly source than other fuels.

The president of Naturgy also recognized that official trips like this visit of Sanchez to Algeria are always a "revulsive" for the companies that helps them to accelerate and to close agreements, as it has happened in this occasion. He also stated that the Spanish government, whatever it may be, has always provided significant assistance in this regard.