CEZ secures Algerian gas, covering 2 pct of Czechia's annual needs

Prague, Oct 31 (CTK) - Czech semi-state energy group CEZ has concluded a contract for gas supplies from Algeria and will buy approximately 2 percent of the Czech Republic's annual gas consumption from Algerian company Sonatrach, corresponding to the consumption of about 100,000 households, CEZ told CTK today.

Deliveries began in October and the gas will flow to Europe via a submarine pipeline. CEZ will buy the gas on its own account but did not specify the financial terms.

CEZ has been in talks about gas supplies from Algeria for two years and has now concluded the contract with the state's support. The gas flows from Algeria via Tunisia, then via a submarine pipeline to Italy and then to Czechia.

"We have taken another step to strengthen our energy security. In addition to gas supplies from German suppliers, from Norway and from our LNG terminal in Eemshaven (the Netherlands), we will now also import gas from fields in North Africa. Negotiations with the Algerian state-owned company Sonatrach were constructive and were brought to a successful conclusion," said CEZ CEO Daniel Benes.

The contract helps expand the geographic range of potential suppliers and provides another route for gas supplies to the country in case of gas shortages on the domestic market, CEZ said.

"Cooperation with trustworthy partners and maximum diversification of gas supplies is essential for the Czech Republic's energy security. The more trade routes we have for the supply of this essential commodity, the less we will be affected by possible supply shortages elsewhere. Our aim is to continue to link Czech traders with alternative suppliers. Algeria is one such partner," said Industry and Trade Minister Lukas Vlcek.

Foreign Minister Jan Lipavsky described the agreement as one of the successes of Czech diplomacy.

According to Capitalinked.com analyst Radim Dohnal, the expansion of the portfolio of gas suppliers to the Czech Republic is good news. It diversifies the risk of non-delivery or the blackmailing techniques of some suppliers, he said. At the same time, the route via Tunisia is historically safer than via Morocco, according to Dohnal. "Europe continues to become a hub for gas from around the world, which is better than the previous higher dependence on Russia. The question remains why CEZ signed such a contract and not another gas trader that is more established in gas supply than CEZ," he added.

CEZ currently purchases gas from several foreign sources. Two years ago, the Czech Republic acquired a capacity of three billion cubic meters of gas per year at the Eemshaven liquefied natural gas (LNG) terminal. In its two years of operation, the terminal has received 43 ships carrying 3.86 billion cubic metres of gas destined for the Czech Republic.

At the end of last year, CEZ acquired additional LNG capacity of two billion cubic meters per year for 15 years with an option to extend to 25 years at a newly built onshore terminal in Stade, Germany. Construction of the terminal began this spring and it is scheduled to be operational in the second half of 2027.

Czechs consumed 6.76 billion cubic metres of gas last year, down 10.4 percent year-on-year. The vast majority of gas supplies to the Czech Republic, namely 92 percent, came across the border from Germany last year, consisting mainly of gas from Norway and liquefied natural gas from the Netherlands. The remaining 8 percent came from Slovakia, where many experts say it comes mainly from Russia.

help,tam/er

CZ0005112300