Mon, 25 Sep 2023

Algerian energy giant Sonatrach wants to take advantage of rising prices, Reuters reports

Algeria's state oil and gas producer Sonatrach is negotiating long-term contracts with EU buyers, hoping to cash in on rising energy prices, sources familiar with the matter told Reuters.

The company is reportedly considering several options, including a partial link to spot prices in contracts that have historically been linked to the price of Brent crude.

Concerns over Russian gas supply to Europe have sent benchmark Dutch TTF contracts up more than 80% and 110% respectively so far this year, Reuters data shows. Brent crude soared 55% in the same period.

Meanwhile, Algeria's role as a gas supplier for Italy, Spain and other southern European countries has been growing due to the conflict in Ukraine and Western sanctions on Moscow.

Reuters sources pointed out that 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.

"Sonatrach has very strong bargaining power because it has got the gas, and realizes that Europe needs it," one of the sources said, adding that "buyers now realize they are being stuck between a rock and a hard place."

A second source told the media that Sonatrach is seeking to review prices with companies that receive gas through the undersea Medgaz pipeline, including Naturgy, Cepsa and Endesa in Spain, Engie in France and Galp in Portugal.

For more stories on economy & finance visit RT's business section

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