Morocco will come out unaffected if Algeria puts end to GME – Financial Times

The kingdom of Morocco will strive to meet its energy needs if Algeria presses ahead to terminate at the end of this month the gas transit agreement for the Maghreb-Europe gas pipeline (GME), Financial Times notes.

 

Algeria and Morocco have seen their ties go further sour in recent weeks with Algiers adopting a string of measures including cutting diplomatic ties, closing its skies to Moroccan flights, and deciding to not renew the GME agreement with Morocco and Spain that is expected to expire October 31st.

 

Built in 1996 by Spain, the GME snakes through Morocco to supply Spain and Portugal with Algerian gas. Algeria has opted to rely on the MEDGAZ, a direct gas pipeline from Algeria to Spain, and to some extent on LNG supplies, to transport its gas to the Iberian Peninsula.

Through GME and MEDGAZ, Algeria boasts a combined export of about 20 billion cubic meters (Bcm) (12 Bcm for GME and 8 Bcm for MEDGAZ), the Oxford Institute for Energy Studies notes.

Morocco gets less than 10 per cent of gas from GME for its energy needs. the London-based Financial Times notes that the North African kingdom can fall back on coal-fired power plants and may eventually turn to other sources of fossil fuels for power plants that have so far been supplied by Algerian gas.

However, the Algerian threats will hard hit Spanish consumers, especially during the winter peak period.

“Spanish consumers are already angry about high electricity prices. This has prompted Madrid to impose a one-time tax of around 3 billion euros on the profits of Spanish energy companies,” the London-based financial media notes.