European gas market faces more strain after Western Sahara dispute flares

After the Western Sahara conflict erupted, the European gas market was put under even more strain.

Sitting in a snug European home, one can sip organic tea in the evening and watch dystopian American politics play out on television.

Much more sad, of course, if the lights and television were to go off and the tea kettle stay cold. That is not a distant risk, thanks in part to Europe’s energy geopolitics. By now, everyone has heard about a squeeze on European gas supplies benefiting Russian group Gazprom and the Moscow’s influence.

Less discussed is how conflicts in north Africa are likely to reduce Spain’s winter gas supplies, while potentially adding to upward pressure on power prices for the rest of Europe.

On October 30, Algeria plans to shut a pipeline transporting Algerian gas to Morocco, Spain and Portugal. This is part of a long simmering feud between Algeria and Morocco that arguably began with the former’s independence from France in 1962.

Morocco is angry with Algeria for its support of the Polisario Front, which wants independence for Western Sahara. Morocco insists that it has sovereignty over the long-disputed territory. Relations deteriorated further this summer when Algeria accused Morocco of having a role in starting several serious forest fires on its territory.

The tensions have reached the European Court of Justice, which this week handed a legal victory to the Polisario Front, ruling that a broad economic treaty between the EU and Morocco could not be automatically extended to cover Western Sahara.

Spain is the European country most affected by the CJEU decision. Western Sahara is a former Spanish colony. Some Polisario members have Spanish passports. And, in recent decades, the Spanish fishing fleet has come to depend on Western Saharan waters (and Moroccan licenses) for up to a third of its catch.

European ties with Morocco extend far beyond fish. There are migration flows, European investments including auto manufacturing, sometimes-rocky security arrangements, tourism, and the supply of Moroccan vegetables to European tables.

France and Spain have special legal relationships with Morocco that extend beyond the scope of other EU treaties. Algeria also has many ties to Europe, but it stands a bit apart. Its colonial-era struggle for independence from France is part of its national identity. Its armed forces buy a lot of kit from Russia and China.

And Algeria sells a lot of gas to Italy, Spain and Portugal. The gas to Italy goes directly through an undersea pipeline. The gas to Spain and Portugal has been flowing through two other undersea pipelines. The first, built between 1996 and 1997, passes through Morocco, which uses some of the gas for its own generators. The second, commissioned in 2011, goes directly from Algeria to Spain.

This is where EU and Spanish foreign relations now get even more problematic, especially in a tight international gas market and with insufficient European energy storage ahead of winter.

On September 29, the day the CJEU decision on Western Sahara was announced, Josep Borrell, the EU’s foreign policy supremo, issued a joint statement with his Moroccan colleague reaffirming a strategic partnership. They also vowed “to take the necessary measures to ensure the legal framework” for trade relations. This might antagonise Algeria and harden its resolve in its dispute with Morocco.

Tellingly, the next day the Spanish foreign minister and energy secretary landed in Algeria for meetings with their counterparts on, among other topics, the imminent 25 per cent expansion of the direct Algeria-Spain gas pipeline’s capacity. Even with the additional gas, Spain will struggle to import gas supplies this winter through its LNG terminals.

Spanish consumers are already enraged by high power prices. This has prompted Madrid to make a €3bn raid on profits of Spanish energy companies, like renewables star Iberdrola.

With the pipeline shut down, Morocco will have to find ways of doing entirely without Algerian gas, though its energy sector has already been planning for this contingency. It has coal power plants it can use, and could switch to other imported fossil fuel sources for its gas generators.

Europeans would be mistaken to think that Algeria and Morocco frame this dispute around economic and technical factors. There are profound sentiments about sovereignty, military balance, and culture at work here. It will not be easy for the EU to navigate such an environment to secure supplies.

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