MOSCOW (MRC) -- The director general of the Algerian state hydrocarbon company Sonatrach, Toufik Hakkar, revealed on Friday that he has started a negotiation with the Spanish energy company Naturgy on the price of gas and said he is not concerned if the lack of agreement leads to arbitration in late July international, said Cincodias.
In statements to the local press during a visit to the town of In Amenas, on the border with Libya, he recalled that "relations with Spanish companies regarding gas commercialization exceed 50 years", and insisted that "the contractual clauses between both parties they allow the periodic revision of the prices based on the evolution of the energy market ".
"There are other clauses that allow finding solutions to disputes through bilateral negotiations, but also recourse to international arbitration if an understanding is not reached at the end of the deadlines set for the negotiations. It is not a fatality, but rather one of the solutions enshrined in the contracts, to resolve disputes, "explained the senior officer of the Algerian company.
If we go to this extreme "we will give our reasons and we will enforce them. We are not afraid of this process which we will reach in a position of strength," Hakkar stressed before warning that Sonatrach has already been successful in this type of procedure in the past.
In line with this argument, the manager reiterated that this type of contract is signed for periods of up to 30 years, but it includes a degree of flexibility that allows the quantities supplied to be reviewed, as well as the prices. "The clauses are systematically reviewed every 2 to 3 years, to allow both parties to adapt to the new market data," as well as each of them to "defend their economic interests and their achievements," he said.
Naturgy is a partner of Sonatrach in the Med-Gaz gas pipeline -which unites the two countries- and Sonatrach has been able to buy back the shares of the Spanish company, which in Hakkar's opinion "shows the will of both parties to preserve their good relations".
"We have had nine negotiation meetings since Naturgy asked to revise down the prices of Algerian gas, this is not a short-term controversy that will lead us to the breakdown of these relations," he concluded. Algeria is mired in a serious economic crisis since the abrupt drop in oil and gas prices in 2014, which it mistakenly considered to be circumstantial.
The crisis has been exacerbated by the collapse of prices as a result of the coronavirus health crisis, which has sunk the price of oil and gas, materials that account for 95 percent of Algerian exports.
As MRC informed before, in January 2020, Turkey and Algeria announced that they will jointly establish a petrochemicals plant in Adana on the Mediterranean coast. Turkey’s Ronesans Holding and Algeria’s state-owned energy company Sonatrach will take part in the project, Arkab said on the margins of the Turkey-Algeria Business Forum. The petrochemical facility is estimated to cost around USD1.4 billion, according to the Algerian minister, who also said stakes of Ronesans Holding and Sonatrach in the project will be 66 percent and 34 percent, respectively. The facility is planned in Seyhan industrial zone for petrochemical development and will have production capacity of 450,000 tons per year of polypropylene (PP).
According to MRC's ScanPlast report, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.