Algeria and Spain Trade Exceeds $10 Billion as Relations Thaw
Image: Echorouk
Takeaway
The increase in Algerian gas flows to Spain via the Medgaz pipeline, potentially reaching its maximum capacity of 32 million cubic meters daily, presents a strategic opportunity for European energy companies. Utilities and LNG traders should closely monitor Medgaz pipeline operations and consider potential investments in expanding its capacity to capitalize on Algeria's commitment to supplying stable gas volumes to the Spanish market.
Trade between Algeria and Spain has surpassed $10 billion, signaling a strong rebound in economic relations. This milestone reflects a revitalization of economic ties, supported by the reactivation of the Treaty of Friendship, Good Neighborliness, and Cooperation. The official visit of Spanish Foreign Minister José Manuel Albares to Algiers on March 26, 2026, marked a turning point in these relations, according to Abdellah Seriai, President of the Algerian-Spanish Business Forum.
The renewed cooperation follows a period of strained relations after Algeria suspended the Treaty of Friendship in June 2022 when Spain shifted its stance on Western Sahara. The Bank of Algeria authorized the resumption of banking transactions between the two countries, effectively lifting a blockade that had significantly hampered trade. This move has facilitated the recovery of trade relations and reduced reliance on alternative trade routes. In 2025, bilateral trade reached €8.5 billion, driven by a 10% increase in Algerian gas supplies and a tripling of Spanish exports after trade restrictions were lifted.
Algeria has become Spain's leading supplier of natural gas for the third consecutive year. Discussions are underway to increase Algerian gas supplies to Spain by approximately 12% to mitigate the impact of Middle East tensions on energy markets. Algeria is expected to raise daily gas flows through the Medgaz pipeline to about 32 million cubic meters, up from 28 million cubic meters earlier in the year, bringing volumes close to the pipeline's maximum capacity. The Medgaz pipeline, jointly operated by Sonatrach, Naturgy, and BlackRock, is currently running at full capacity, with potential for expansion by an additional billion cubic meters per year.
The strengthened relationship benefits both nations, particularly in the energy sector, with Algeria ensuring a stable gas supply to Spain amid regional instability. Spanish exports to Algeria experienced a 270% increase in 2025, reaching €2.133 billion. The resumption of trade is expected to improve transit times and costs, as well as increase bureaucratic and financial agility in transactions. The top exports from Algeria to Spain in December 2025 were crude petroleum (€261 million) and petroleum gas (€237 million). The main imports of Algeria from Spain in December 2025 included sheep and goat meat (€13.5 million) and bovine meat (€12.5 million).
Looking ahead, both countries are focused on strengthening economic exchanges, energy partnerships, and regional coordination. The reactivation of the Treaty of Friendship is expected to foster closer collaboration and create new opportunities for partnership. The opening of the Cervantes Institute in Oran on March 27, 2026, underscores the growing cultural ties, with approximately 40,000 Algerian pupils studying Spanish in primary and secondary education, and around 3,500 at the university level. Monitor upcoming decisions regarding infrastructure, joint analysis, and potential new investments in the energy sector, as these will be key indicators of the deepening relationship.