- Algeria increased LNG exports to 700,000 metric tons in September to offset reduced gas flows from the Medgaz pipeline maintenance.
- Algeria’s proximity to Europe and competitive LNG prices strengthen its role as a critical natural gas supplier to the Mediterranean market.
- Falling sea freight rates and flexible sales options allow Algeria to maintain a strong presence in the European energy market during pipeline disruptions.
Algeria increased liquefied natural gas (LNG) exports following maintenance on the Medgaz pipeline, which reduced gas flows to Spain. The country shifted focus to maintain its energy supply in the Mediterranean market.
Since September 15, 2024, when the Medgaz pipeline maintenance began, gas flows have dropped from 28 million cubic meters daily to 13 million. The scheduled work, set to end by September 27, temporarily disrupted deliveries to Spain.
Algeria responded by ramping up LNG exports. Shipments reached 700,000 metric tons in September, rising sharply from 450,000 tons in August. This move shows Algeria’s ability to redirect its energy exports despite pipeline challenges.
Demand for LNG in the Mediterranean remains strong, and Algeria capitalised on this by offering more Free-On-Board (FOB) cargoes. These deals allow buyers to manage their transport. Sales to Eastern and Western Mediterranean regions already occurred in September and October at competitive prices.
Algeria’s proximity to Europe gives it a logistical advantage. A cargo from the port of Arzew reaches Barcelona in two days, compared to 14 days for US shipments. This short travel time helps Algeria meet European energy demand quickly, especially with falling sea freight rates for LNG.
Higher prices at Mediterranean LNG hubs benefit Algeria’s exports. The country links its pricing model to oil using a “slope” mechanism. Contracts indexed to 12% Brent sell at $9.19 per MMBtu, while a 13.5% slope raises prices to $10.33 per MMBtu. These competitive rates draw buyers from across the Mediterranean.
Algeria swiftly adapted to pipeline maintenance. Since starting work, the country sent additional LNG shipments to major markets, including Spain and Italy. This adaptability shows Algeria’s capacity to meet market changes while maintaining strong ties with European customers.
Algeria also benefits from lower logistics costs. In September, shipping cargo to Southern Europe cost 21 cents per MMBtu, much lower than last year’s rates. This reduction, combined with its proximity, allows Algeria to maximise profits while keeping its LNG competitive.
Algeria’s LNG exports will likely continue rising in the coming months. By maintaining attractive prices and flexible sales options, the country strengthens its role as a major European natural gas supplier. Even during infrastructure maintenance, Algeria’s ability to adjust its export strategies solidifies its position in the European energy market.