Naturgy agrees to review the prices of its gas contract with Algeria

by time news

The president of Naturgy, Francisco Reynés, traveled to Algeria yesterday to conclude an agreement in the afternoon to revise the prices of the gas contract. It was a partial agreement, which establishes a price for this year, while the figures that will be applicable from January 2023 continue to be negotiated.

The Spanish gas company and its Algerian supplier, the state company Sonatrach, have supply contracts signed 20 years ago. Valid until 2030 for an annual volume of 5 billion cubic meters of gas, these contracts have a price review clause every three years. At the end of October last year, the two companies began negotiations for the three-year period 2022-2024, but the volatility of the cost of gas, with an extraordinary rise in the prices of this raw material as a result of pressure from Russia and the subsequent invasion of Ukraine, led the oil company to press upwards during the negotiation of the new prices to be applied.

Naturgy had to trade down and the timing of this pricing agreement was one of the keys. Until now, prices were agreed at a certain amount for three years, but in the current situation of instability, fixing an amount as high as the market dictates for such a long time made a high risk appear. Finally, it has been decided to set a price for this year, which will be applied retroactively, while the next two years are still negotiated to avoid volatility.

“Prices will rise”

“It will not be complete good news because the prices will not be what they were. Prices will rise, although it is not being said in some forums that point to complicated figures”, explained the president of Naturgy, Francisco Reynés, yesterday morning in a forum that was organized by CEOE and Cepime. The agreed price is unknown. But according to the statement sent by the Spanish company to the National Securities Market Commission (CNMV), “it takes into account market conditions”.

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