Reynés affirms that "soon there will be good news" about the contract with Algeria, although prices will rise

MADRID, 6 Oct. (EUROPA PRESS) -

The executive president of Naturgy, Francisco Reynés, has assured that the negotiations with Sonatrach for the review of the natural gas supply contract with Algeria "are progressing very well" and "there will be good news soon", although he has underlined that "good news is It won't be complete, since prices will logically go up."

At the CEOE Cepyme Business Meetings, Reynés pointed out, in any case, that this review of the contract prices with Algeria for the 2022-2024 period will not be as high as "the exorbitant figures that have been said in some forums."

The manager acknowledged that the current situation of skyrocketing prices for natural gas means that the talks with Sonatrach, Naturgy's historic supplier, partner in the Medgaz gas pipeline and shareholder of the company with a stake of more than 4%, have been "long" , although he stressed that the will of both parties "is being very good in order not to put the security of supply at risk."

In any case, Reynés, who asked for the "prudence" necessary for this type of negotiations marked by confidentiality, pointed out that "he would not get nervous" for being at this point in 2022 without having closed a price for the review of the contract, " since now it is somewhat difficult" due to the increase compared to the previous review, which took place in 2020 with market prices around 20 euros/MWh, compared to almost 180 euros/MWh at which gas is currently quoted .

Regarding the Gemini spin-off project for the company, which he announced last February, Reynés considered that, despite the fact that an initial deadline had been set to finalize it at the end of this year, now he must preside over "prudence and have medium visibility and long term" in the current context.

"You can't leave port and decide your course without looking at the weather forecast, we have a weather forecast that says a lot of not very nice things, and that's where we are," he said, adding that the project makes "all the strategic sense, although must preside over prudence before execution".

The Gemini project, which will create two large listed groups, one that will bring together the regulated assets and the other the liberalized ones, to promote its transformation and leadership in the energy transition.

On the other hand, Reynés insisted on requesting that the Dutch TTF be eliminated as a reference for setting the price of natural gas, since "it does not represent anything."

"It has become a reference that must be abandoned as soon as possible," he warned, betting on a "more liquid" index such as the Asian JKM, since "it represents reality much more."

Likewise, he considered that the proposal to cap the price of gas "is dangerous" if it is not defined how it will be compensated. "The gas supplier is not going to sell at the price they are told, that is why it is dangerous to run away from the references of a market that has to be liquid enough to give an image of a real market," he affirmed.

Reynés defended that natural gas "will continue to be necessary in the long term", especially thanks to its decarbonisation, and indicated that energy sources have to be "pragmatically replaced, but without endangering the security of supply".

"It is not an ideological issue, we all want to decarbonize the planet, but we must find a balance between what is possible and desirable, and gas is necessary within the current and upcoming energy panorama," he said, adding the bet of the company for options such as biomethane or hydrogen.