Europe turns to Algeria as winter gas security concerns grow

Europe is heading into winter with less room for error in its gas market. Storage levels stood at about 64.7 percent in early September, prices have climbed to levels not seen in years, and the war in the Middle East has disrupted Qatari supplies.

The Dutch TTF benchmark reached roughly 69.90 euros per megawatt-hour, its highest level since January 2023, as concerns grew over liquefied natural gas supplies from the Gulf. Europe must refill storage while competing with Asia for the same LNG cargoes, making any additional supply disruption more expensive.

Algeria is moving into the spotlight as one of the main alternatives available to European countries on the Mediterranean. It can supply gas through pipelines as well as LNG shipments. Germany is taking a more serious interest in long-term contracts with Algeria, and Foreign Minister Johann Wadephul said during a visit to Algiers that diversifying supply sources had become necessary.

Germany’s VNG and Algeria’s Sonatrach signed a new gas supply contract in July, with deliveries due to begin in 2027. The two countries also highlighted plans to expand gas supplies and cooperate on the Southern Hydrogen Corridor, pointing to an energy relationship designed to extend beyond immediate winter needs.

Algeria’s role also reflects its position in the oil market. It has belonged to OPEC since 1969 and produces about one million barrels of crude oil a day, including the high-quality Sahara Blend.