Major gas exporter Algeria is against price caps introduced by EU
Algeria, the leading gas exporter in Africa, protested on Tuesday against the temporary mechanism put in place by the European Union (EU) to cap wholesale gas prices.
"Algeria does not support the idea of capping prices," said Minister of Energy and Mines Mohamed Arkab, quoted by the official APS agency, during a press conference on the sidelines of the "4th Algerian-German Energy Day".
“Energy markets must remain free in order to be able to continue upstream achievements and investments,” he added.
“Algeria is considered a reliable and secure supplier for Europe and we are in full agreement with our European partners regarding long-term prices,” the minister continued.
EU member states on Monday approved, after a month of tough negotiations, a temporary mechanism to cap wholesale gas prices, an agreement that unlocks other emergency measures to make bulk purchases of gas and boosting renewable energies.
Mentioned device, adopted by the European Ministers of Energy, aims to block transactions on the wholesale markets beyond a certain threshold, and thus prevent any surge in prices which would affect businesses and consumers.
Subject to strict conditions, the device must come into force on February 15 for one year. It will be triggered automatically as soon as the price of the monthly contract (for delivery the following month) reaches 180 euros/megawatt-hour for three consecutive days.
Another condition for activation: a price at least 35 euros higher than the international price of liquefied natural gas (LNG).
Algeria is the first African exporter of natural gas and the 7th in the world.
Before the Russian invasion of Ukraine, Algeria, whose proven reserves of natural gas amount to nearly 2,400 billion m3, supplied around 11% of the gas consumed in Europe, against 47% for Russia.
Several European countries seeking to reduce their dependence on Russian deliveries since the invasion of Ukraine have turned to Algeria, especially Italy.