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ENERGY

Spanish and Algerian gas firms agree to ‘revise’ prices

Algerian state energy firm Sonatrach has agreed with Spanish buyer Naturgy to revise prices on gas deliveries through a key undersea pipeline, as Europe gears up for a winter energy crunch.

SPAIN-ALGERIA-PRICES-GAS
Naturgy is Spain’s top buyer of Algerian gas, which represents over a fifth of the firm’s total gas purchases.(Photo by FETHI BELAID / AFP)

“Sonatrach and its partner Naturgy have agreed to revise the prices of the existing long-term gas supply contracts taking into account market developments,” the Algerian firm said in a statement.

It did not say which way they would be revised, but natural gas prices have more than doubled in Europe since Russia’s February invasion of Ukraine, as Russia cuts back supplies in suspected retaliation against Western sanctions.

Algeria, Africa’s top natural gas exporter, has signed a flurry of deals with southern European governments and energy firms seeking to offset the fallout, delivering a cash windfall for Algeria.

But experts have cast doubt over its ability to boost production in the short term.

The Spanish government in July urged energy firms to reduce their imports of gas from Russia.

But ties between Madrid and Algiers have been cold since the government of Pedro Sanchez in March dropped decades of neutrality on the Western Sahara conflict, backing an autonomy plan drafted by Algeria’s arch-rival Morocco.

Algeria in June suspended its 2002 friendship treaty with Spain, but has said gas deliveries will continue.

Sonatrach supplied more than 40 percent of Spain’s natural gas imports in 2021 through the deep-sea Medgaz pipeline.

Naturgy is Spain’s top buyer of Algerian gas, which represents over a fifth of the firm’s total gas purchases.

Spanish gas regulator Enagas says Algeria was the country’s second gas supplier (24 percent) in August, behind the United States (26.5 percent).

But Algeria’s share has dropped in recent months as Spain has increased its imports from other sources.

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ECONOMY

Spain posts strong growth for 2022 despite inflation

Spain's economy grew faster than expected in 2022 as strong domestic consumption and a surge in investement offset worries over high inflation, officials figures showed Friday.

Spain posts strong growth for 2022 despite inflation

Despite soaring energy and food prices fuelled by the war in Ukraine, the economy grew by 5.5 percent, similar to the previous year and well above the government’s target of 4.4 percent, according to an initial estimate by the National Statistics Institute (INE).

“Despite the prophets of doom, we have strong economic growth, the lowest inflation in Europe and record employment,” tweeted Prime Minister Pedro Sánchez, saying the figures showed “the strength and resilience of the Spanish economy”.

The INE said the growth figures reflected a strong performance in spring when gross domestic product rose by 2.2 percent between April and June thanks to steady household consumption.

That boost offset a sharp slowing of activity towards the end of the year – when GDP grew by just 0.2 percent in the third and fourth quarters – in a context of high consumer prices that affected economies across Europe.

In Spain, inflation reached an average of 8.4 percent last year, peaking at 10.8 percent in July, INE figures showed.

But it has slowed in recent months, falling to 5.7 percent at the end of December, one of the lowest figures in the Eurozone.

Spain “has demonstrated a notable resilience” in a “very difficult” context, Economy Minister Nadia Calvino said earlier this week, noting its growth levels were well above the European average, estimated by Brussels to be 3.3 percent.

“We are starting 2023 on a good footing.”

The government believes the dynamic will enable Spain to maintain solid growth this year although its target of 2.1 percent is far lower than the figure for 2022.

Even so, the prediction is far more optimistic than that of institutions like the IMF which sees the economy growing by 1.1 percent.

Among Western economies, Spain was one of the worst hit by the economic fallout of the pandemic, with its GDP collapsing by 10.8 percent in 2020, largely due to its heavy dependence on tourism.

The IMF believes Spanish growth will only reach pre-pandemic levels in 2024.

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