Algeria's Sonatrach mulls new formulas to raise gas prices for European buyers-
-
Loading... - Farhan Hosen
- 05 Aug 2022
- 86 Views
- 0 Like
- 0 Comment
Algeria's state oil and gas producer Sonatrach is negotiating ways to benefit from significant global gas price rises in its long-term contracts with European buyers, two sources familiar with the matter told Reuters.
Sonatrach is considering several options, including a partial link to spot price gas prices in contracts that have historically been linked to the price of Brent crude, the sources said.
Concern over Russian gas supply to Europe has sent benchmark front month and day ahead Dutch TTF gas contracts up more than 80% and 110% respectively so far this year, with the market hitting record highs in March following Russia's invasion of Ukraine. Brent rose 55% in the same period.
Algeria's role as a gas supplier for Italy, Spain and other Southern European countries has heightened significance due to the conflict in Ukraine and Europe's imposition of sanctions against Moscow.
Russia recently reduced supply to Europe via the Nord Stream 1 pipeline to 40% of its capacity, with politicians warning that flows could be completely suspended.
Algeria and other sellers are trying to find ways of recouping lost revenue stemming from long-term contracts being reliant on a single pricing index.
But the pricing reviews come at a difficult time for Europe, as countries scramble to fill storage facilities ahead of the winter heating season and draw up contingency plans for the potential disruption of Russian flows.
"Sonatrach has very strong bargaining power because it has got the gas, and realises that Europe needs it," one source said.
"Buyers now realise they are being stuck between a rock and a hard place," he added. Read More...
