Spain hopes for quick deal with Algeria over gas prices

 

Spain hopes that Gas Natural will reach a quick agreement with Algerian state-owned oil and gas company Sonatrach in a spat over gas prices which may cost the Spanish company up to $2 billion, a government spokeswoman said on Monday.

Industry minister Miguel Sebastian was in Algeria, Spain's largest natural gas supplier, on Monday to discuss energy issues including the dispute between Gas Natural and Sonatrach, the spokeswoman confirmed.

"Both governments would like the two companies to reach an agreement as soon as possible, talks are at an advanced stage" the spokeswoman said.

An international court of arbitration ruled at the beginning of October that Gas Natural would have to pay a retroactive cost increase and possible damages to Sonatrach, which supplies gas to Spain through one pipeline and is about to bring a another on stream.

Gas Natural has said it will contest the ruling.

"Although the ruling initially looked bad for Gas Natural, the Spanish government has some leverage in the issue ... the pipelines are in place and it will cost Sonatrack a lot more to send future gas elsewhere" Capital markets equities strategist Flemming Barton said.