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ENERGY

Spain worries about gas with pipeline to shut as winter nears

Will Spain have enough gas to heat homes this winter and at what price? Those questions are troubling Spanish authorities as a key pipeline is due to shut this weekend.

Flames of a lit burner of a gas stove
Photo by Ina FASSBENDER / AFP

Algeria on Sunday is planning to halt shipments through the Gaz-Maghreb-Europe (GME) pipeline, which has been carrying almost 10 billion cubic metres (bcm) per year.

The pipeline, which traverses Morocco before crossing the Mediterranean at the Strait of Gibraltar, is a victim of the crisis in relations between Algeria and Morocco.

With Algeria having severed diplomatic ties with Morocco in August, a renewal of the pipeline contract that expires on Sunday is unlikely, threatening one of Spain’s main sources of gas.

With technical constraints limiting alternative sources and the risk of further price increases, Spain “finds itself in a complicated situation” even if “the risk of shortages is limited,” said Gonzalo Escribano, an energy expert at the Elcano think tank in Madrid.

He called the decision “bad news … at a bad moment” for Spain, which depends on Algeria for half of its natural gas needs.

Despite a big push into wind and solar, Spain remains dependent on imported energy.

What will the impact of GME’s closure be on Spain?
Spain’s Ecological Transition Minister Teresa Ribera sought to sound reassuring during a meeting in Algiers earlier this week, speaking of  “arrangements taken to continue to assure, in the best way, deliveries of gas through Medgaz according to a well-determined schedule”.

Medgaz is a second pipeline that runs directly between Algeria and Spain under the Mediterranean.

It can carry eight bcm a year, and planned works could see its capacity reach 10.5 bcm.

Algeria also proposes increasing deliveries of liquefied natural gas (LNG) by sea.

‘Theory and practice’
“On paper, it is enough to ensure the same level of deliveries. But there is theory and practice, and Spain isn’t safe from bad surprises,” said Thierry Bros, a specialist on the geopolitics of energy who teaches at Sciences Po university in Paris.

Work on increasing the capacity of Medgaz is expected to last into December.

“Valves need to be changed, tests conducted … You can’t rule out delays,” Bros said.

But he believes the main problem to be with LNG, which is transported by special ships that keep the gas very cold so it remains condensed in liquid form. 

“It could be complicated to find such ships, especially at the moment when there is strong demand for gas in Asia” and shipowners prefer the most profitable routes, Bros said.

And given that Spain has limited storage capacity but plenty of LNG gas terminals, the risk is less about a shortage than the price paid.

“The country will manage to cope” with potential supply problems, “but that will have an impact on the price”, said Escribano, noting that gas transported by ship is more expensive than that by pipelines.

In recent months natural gas and LNG prices have soared as the global economy gears back up.

In addition to homes linked to the gas network for heating and cooking, Spain is also reliant on gas-fired power plants and electricity prices have already shot higher.

Soaring energy prices are weighing on Spanish consumers who have already been battered by the coronavirus pandemic, and the government has already moved to temporarily lower electricity taxes.

In one sign the situation is concerning, Spain has recently reached out to its other LNG suppliers — the United States, Russia and Qatar — in order to ensure deliveries, according to a source close to the discussions.

Meanwhile, local operators are also making preparations to receive additional supplies.

Enagas, which operates four LNG terminals and the national gas grid, has opened up extra slots for ships.

“We are doing everything possible to contribute to the security of gas supplies,” its president, Antonio Llarden, said earlier this week.

Meanwhile the Spanish government is emphasising the preparations that are being made.

“We’ve increased the level of reserves” and “the capacity to receive LNG ships”, Ribera said in a radio interview on Friday.

Ribera said she believes the risk of electricity blackouts this winter to be “very limited”.

READ ALSO: Energy costs push Spain’s inflation to 29-year high

READ ALSO: How the right orientation of your Spanish home can save you hundreds on energy bills

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ENERGY

How millions are being left out in the cold by Spain’s soaring energy prices

In her flat on the outskirts of Madrid, Pamela Ponce no longer turns on the heating despite the biting chill coming in through the windows.

How millions are being left out in the cold by Spain's soaring energy prices
Pamela Ponce at her home in Madrid. The 32-year-old says she hasn't been able to pay her electricity bills for the past three months. (Photo by OSCAR DEL POZO / AFP)

“The prices have gone up a lot, I have no choice,” sighs Ponce, a young Peruvian mother, her voice resigned.

On this bitterly cold January morning, the temperature outside is hovering around five degrees Celsius (41 degrees Fahrenheit). And inside, it’s barely much warmer.

“It can also be very cold inside, above all when there’s no sun,” she says, walking through the three rooms where she lives with her mother and two children in Leganes.

This 32-year-old says she hasn’t been able to pay her electricity bills for the past three months with prices in Spain soaring by a staggering 72 percent over the last year, one of the highest increases within the European Union.

The hike has been in part driven by Spain’s excessive dependence on gas to produce electricity and the lack of a major power provider like in many other countries to help keep prices in check through reduced tariffs.

“Before I was paying between €35 and €60 a month but now, it’s more than €100, without even mentioning gas which has also gone up,” explains Ponce, who hasn’t worked since catching Covid which left her with severe after-effects, notably affecting her left hand.

“I just don’t know what to do,” says the former cleaning lady who admits she’s reliant upon her ex-partner to pay the rent and buy food.

“I feel like I’m drowning,” she whispers, her voice choked with emotion.

According to Spanish government estimates, around 4.5 million people in Spain are affected by ‘energy poverty’, either because they’re incapable of paying the energy bills to cover their basic needs or because they have to put a large part of their earnings towards them. 

In an attempt to heat the flat, Pamela has bought a heater that runs off a gas bottle which she moves from room to room depending on what they need.

“It’s cheaper,” she says. But everything else is strictly rationed.

“My kids only take a shower every other day (and) I generally cook for 2 or 3 days at a time so I don’t have to turn the cooker on so much,” she explains.

SPAIN-ENERGY-SOCIAL-POVERTY

Electricity prices in Spain soared by a staggering 72 percent over the last year, one of the highest increases within the European Union. Photo: Oscar del Pozo/AFP

More and more families affected

And there are countless others like her.

“More and more families are struggling to pay their bills” and “have to chose between paying for food or light at the end of the month,” says Sara Casas, head of environmental issues at the Spanish Red Cross.

Last year, Spain’s left-wing government announced a series of tax cuts to try and bring down household bills but even this has not compensated for the huge rise in prices.

According to the UOC, Spain’s largest consumer organisation, the average annual home electricity bill in Spain has risen from 675 euros in 2020 to 949 euros in 2021, a rise of 41 percent.

The previous record jump, in 2018, was 18 percent.

Vulnerable people, such as “single mums with children, older people with a low income and migrants” are particularly badly hit because many “struggle to get benefits because there’s a lot of red tape and you have to bring in a lot of paperwork,” says Casas.

Layering up, homemade heaters

According to an awareness campaign being run by Medicos del Mundo, some 6.8 million of Spain’s 47 million residents are suffering to one degree or another from “energy poverty”.

Such a situation brings with it “a higher risk of suffering from chronic bronchitis, depression and anxiety,” the NGO says.

One of those struggling is Raul, a 55-year-old computer technician who lives with his wife, daughter and 82-year-old mother-in-law in the
northwestern city of A Coruña.

“Whenever we turn something on, we have to think about how much the bill will go up,” says Raul who hasn’t worked since suffering a stroke in March 2021, with the family living off his wife’s salary.

“My neurologist told me I should avoid stress but it’s very difficult when you don’t know if you’re going to be able to pay next month’s bills,” he says, admitting they have barely switched on the heating this winter, despite the cold and the humidity.

“We bought a heated blanket for my mother-in-law” and “inside the house, I always wear lots of jumpers or coats,” he says.

He has also been trying to cobble together a home-made heater.

“It’s a temporary solution,” shrugs Raul, who says he is keeping his fingers crossed “that the prices will eventually come down”.

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