Algeria Eyes Gas Price Hike as Italy Seeks Supply Amid Qatar Disruptions
Image: Algerie Eco
Takeaway
The potential increase in Algerian gas prices will directly impact European utilities and LNG traders. Monitor companies with significant Algerian gas exposure, such as Eni, Naturgy, and Repsol. A shift towards market-based pricing could increase volatility in European gas benchmarks like the TTF and PSV.
Algeria is considering revising its natural gas pricing mechanisms for European sales amidst rising international energy prices and market tensions. This comes as Italian Prime Minister Giorgia Meloni is scheduled to visit Algeria on March 25, 2026, to bolster negotiations for increased Algerian gas deliveries to Italy. Simultaneously, Spain is also seeking to increase its gas imports from Algeria, which is insisting on applying current market prices.
Algeria has become a crucial gas supplier for Italy, covering approximately 30% of its annual gas consumption, as Rome reduces its reliance on Russian energy following the 2022 invasion of Ukraine. In 2023, Algerian gas supplies to Italy reached 25.5 billion cubic meters, valued at approximately $14 billion. Trade between Algeria and Italy reached $15.9 billion in 2024, with Algeria providing around 36% of Italy's total gas imports via pipeline. However, Italy is now seeking alternative gas supplies after Iranian strikes on Qatar disrupted exports, forcing Doha to halt deliveries to Italy; Qatar previously covered around 10% of Italy's gas demand. Meloni last met with Algeria's president in Rome in July 2025, signing agreements covering energy and telecommunications.
Algeria supplied 19% of the natural gas exported via pipelines to the EU in 2023, ranking second behind Norway (54%). Russia held a 17% share. The EU imported 155 million cubic meters of gas in 2023, a 23% decrease compared to 2022. Algeria's monthly average exports to the EU reached 2.41 billion cubic meters in 2023, compared to Norway's 7 billion cubic meters and Russia's 2.3 billion cubic meters. In November 2024, Algeria became the top natural gas exporter to Spain, supplying nearly 50% of Spain's total natural gas imports. Specifically, Algeria's natural gas exports to Spain reached 13.694 gigawatt-hours (GWh), with 9.971 GWh delivered via the Medgaz pipeline and 3.723 GWh as liquefied natural gas (LNG).
An increase in Algerian gas prices and exports would benefit Sonatrach, the state-owned energy company, and the Algerian economy, which relies heavily on hydrocarbon revenues. European consumers, particularly in Italy and Spain, may face higher energy costs. Companies like Eni, which has long-term contracts with Algeria, will be directly affected by any pricing adjustments. In 2024, Algeria exported $21.7 billion in petroleum gas, with Italy receiving $10.5 billion, Spain $3.96 billion, and France $2.93 billion.
Algeria's move to revise gas prices and Italy's scramble to secure alternative supplies highlight the evolving dynamics of the European energy market. Investors and energy executives should closely monitor the outcome of Prime Minister Meloni's visit to Algeria on March 25, 2026, as well as any announcements regarding new gas supply agreements or pricing mechanisms. Keep an eye on developments related to the Medgaz pipeline and LNG shipments from Algeria to Europe, as these will be key indicators of Algeria's export capacity and its role in ensuring European energy security.