Winter Tests European Energy Security... and Algeria Steps into the Spotlight

Europe enters this winter facing a more complex gas equation than in previous years: reserves lower than usual, prices risen to levels unseen by the market in years, and disrupted Qatari supplies due to the war in the Middle East, while Brussels continues its move to phase out Russian gas. At the heart of this equation, Algeria emerges as one of the most important available alternatives, particularly for European countries bordering the Mediterranean, as Germany moves for the first time with greater seriousness to secure long-term gas contracts from Algeria.

The problem in Europe does not appear to be an immediate shortage of gas, but rather a narrowed safety margin before the heating season begins. EU reserves stood at around 64.7 percent at the beginning of September, a low percentage for this time of year, while Germany is at even weaker levels. Meanwhile, the standard Dutch TTF gas price rose to approximately 69.90 euros per megawatt-hour, the highest level since January 2023, amid growing concerns about liquefied natural gas (LNG) supplies from the Gulf.

The situation is becoming increasingly sensitive because the European market not only needs to fill its tanks before winter but must do so while competing with Asia for the same LNG shipments, making any additional supply shortage more costly.

In this environment, Algeria steps into the forefront of the European scene as a nearby supplier capable of providing gas via pipelines, alongside LNG shipments. German Foreign Minister Johann Wadephul, during his visit to Algeria, stated that his country wants to negotiate long-term gas contracts with Algeria, emphasizing that diversifying supply sources has become a necessity and that Algeria represents a reliable source that can help fill Germany’s reserves.

The German move does not come out of nowhere; last July, the German company VNG and the Algerian company Sonatrach signed a new gas supply contract, with deliveries set to begin in 2027, as part of expanding and diversifying the German company’s gas supply portfolio.

Germany and Algeria also reaffirmed in July the importance of their partnership in the energy sector, expressing interest in increasing gas supplies, as well as cooperation on the Southern Hydrogen Corridor project, reflecting an attempt to build an energy relationship that goes beyond securing short-term supplies.