Sonatrach has struck a deal to supply France’s Engie with gas via the Medgaz pipeline.
The Algerian company said the agreement revises price formula and takes into account “market conditions”. It will run for three years, to 2024.
The two sides also agreed that they would extend their LNG and gas agreement. Sonatrach said it would take a larger role in supplying Engie. The deal provides for diversification of supply and energy security, it said.
The two companies also agreed that they would work to reduce their carbon footprint and assess new opportunities, particularly around hydrogen.
Sonatrach head Toufik Hakkar said on the weekend that the company had been renegotiating prices with a number of partners. Reuters has reported one option considered by the company is a link to spot gas prices.
Engie struck a deal with Sonatrach in March 2011 for the supply of 1 billion cubic metres per year via Medgaz. In 2019, Sonatrach agreed to extend its supply deal to almost 10 bcm over a number of years.
Engie said this would gas be delivered both via pipeline and as LNG, in particular via the Fos Tonkin terminal.
According to LNG industry body GIIGNL, Sonatrach has contracted to provide Engie with 1.5 million tonnes per year of LNG for an undisclosed duration.
The Medgaz pipeline runs from Beni Saf to Almeria, in southern Spain. Spain recently reversed the Gazoduc Maghreb Europe (GME) to provide gas to Morocco.