Algeria Signs 1st Gas Supply Deal via Pipelines with Germany

German utility company VNG signed the first deal to supply gas via pipelines to Germany with the Algerian energy giant "Sonatrach".

Ulf Heitmüller, CEO of VNG, said on the sidelines of a German business delegation’s visit to Algeria, “The concluded contract is only a small step, and we are looking forward to expanding it.” 

Bloomberg previously reported that the agreement entered into force as of last January. Other details, including the deal period and the volume to be delivered, were not immediately available.

Germany, the largest economy in Europe, has recently struggled to find alternative supplies after Russia's shipments (the country's former largest gas supplier) were reduced following its war on Ukraine. The region has largely filled the gap by relying on liquefied natural gas (LNG). Long-term gas delivery contracts are still scarce in Germany, as importers rely mainly on the volatile spot market.

The deal also highlights the region's relationship with Algeria to meet its energy needs. The North African country represents about 14% of total EU pipeline gas and LNG imports, according to the latest market data from the European Commission, with Algeria sending gas via pipelines to southern Europe and shipping LNG to all parts of the continent.

On its part, the United States - one of the largest global suppliers of liquefied natural gas - imposed a voluntary moratorium on new export licenses in order to study the climate and economic impacts of these exports, which afflicted the market with a state of uncertainty.