Algeria will no longer transport natural gas to Spain via the Maghreb-Europe Gas Pipeline (MEG), which runs overground through Morocco. Instead, all supplies will be diverted to the Medgaz pipeline, which provides a direct link between Algeria’s Hassi R’mel field and the international market.

After months of deteriorating relations owing to differences over the sovereignty of Western Sahara, Algeria announced the breakup of diplomatic ties with neighbouring Morocco. Algeria is focusing on alternate solutions to maintain a regular export supply to Spain, including the Medgaz pipeline, after cutting all relations with its neighbour.

The decision to stop utilising the MEG pipeline was also influenced by the uncertainty of Morocco’s decision on whether or not it will extend the MEG transit agreement as the deal expires in October 2021. Algeria has chosen alternate export possibilities and relations between Morocco and both Spain and Algeria have worsened.

Algeria has also announced the expansion of the Medgaz pipeline to ensure export capacity is maintained despite the diversion, with the country exporting about 9.06 billion cubic metres (bcm) of natural gas to Spain in 2020; 3.67 bcm via the MEG pipeline and 5.39 bcm via the Medgaz pipeline. The $90 million expansion will enhance the pipeline capacity by 2 billion cubic metres per year (25%), bringing the overall capacity to 10 billion cubic metres per year. Whether or not the MEG transit agreement is renewed, Algeria will still be able to maintain export volumes to Spain as a result of the expansion.