Morocco says Algeria’s decision to end gas supply has 'little impact'

RABAT - Morocco said on Sunday that the Algerian decision not to renew a gas supply contract with Morocco has "little impact" on the national electricity system, Morocco state-run 2M television tweeted, citing a statement by the National Office for Electricity and Drinking Water.

The office also added that necessary arrangements have been made to ensure the continuity of electricity supply and that other options are being studied for sustainable alternatives in the medium and long terms, 2M TV reported.

Algeria, which has cut off diplomatic ties with Morocco, will stop supplying natural gas to the country through the Maghreb-Europe pipeline from November 1, three sources with direct knowledge of the matter told Reuters earlier this week.

The 13.5 billion cubic-meter (bcm) Maghreb-Europe pipeline links Algeria to Spain. Algeria will keep supplying Spain using the Medgaz undersea pipeline with an annual capacity of 8 bcm, which does not go through Morocco, the sources said.

Analysts say technical issues relating to Algeria's plans to expand the capacity of the Medgaz pipeline could escalate the energy crisis in Spain at a time of soaring gas bills across Europe.

Algeria will use ships to transport liquefied natural gas (LNG) to Spain.

Analysts say that would mean Sonatrach having to charter more vessels, fuelling further LNG price rises due to shipping rates having more than doubled from earlier this month.

LNG prices have soared in recent months due to structural shortages in Europe and expectations of a cold winter and high demand.