In 2010, close to 40% of natural gas purchases were made in Algeria, as natural gas, 58% were acquired to Nigeria as liquefied natural gas and the remaining 2% in the spot market. Natural gas supply in 2010 reached 5.0 billion m³.
In order to cover the planned needs of natural gas in Portugal, a purchase agreement of 2.3 billion m³ for a period of 23 years was signed with Sonatrach, a company owned by the Algerian state.
The entry into force of this agreement as well as the first deliveries of natural gas occurred in January 1997. The Europe-Maghreb pipeline was connected to the transportation and distribution network in Portugal at the same time. Three contracts were signed for a period of 20 years with NLNG, a Nigerian company, for the purchase of 3.4 billion m³ of liquefied natural gas.
The supply under these contracts has started in 2000, 2003 and 2006, respectively.
Purchase agreements of natural gas and LNG
| NLNG I (LNG) |
Nigeria |
420 |
20 |
2000 |
| NLNG II (LNG) |
Nigeria |
1,000 |
20 |
2003 |
| NLNG+ (LNG) |
Nigeria |
2,000 |
20 |
2006 |
| Sonatrach (natural gas) |
Algeria |
2,300 |
23 |
1997 |
The purchase price of natural gas under long-term supply contracts is generally calculated according to a pricing formula based on the price of alternative fuels, such as the crude oil benchmarks and other elements, namely inflation and exchange rates. Typically, the pricing formula of these contracts provides the periodic adjustment based on the variations of the chosen benchmark.
Generally, long-term contracts establish an annual minimum purchase amount and a flexibility margin for each year. These agreements usually establish a take or pay clauses, which bounds the purchase of agreed amounts of natural gas, regardless of need. These agreements allow the transference of amounts from one year to another within certain limits, if demand is lower than the annual minimum purchase amount.
Although they are valid for 20 years, the long-term supply contracts provide for the possibility of renegotiation during the contract's validity according to the rules provided there in.
In 2008, Galp Energia started selling natural gas in the Spanish industrial market, and at the end of 2010 the sales to industrial and residentia market already accounted for 155 million m3. To explore the potential of the Iberian market, Galp Energia aims to increase its supply capacity diversifying its supply sources, namely by entering the LNG upstream and midstream business in Angola and in the Santos basin in Brasil.