Algeria-Morocco pipeline closure could add to tensions

Significance

The pipeline transit agreement is set to expire at the end of October. It comes as tensions between Morocco and Algeria have escalated, with the latter cutting diplomatic ties with Rabat and closing its airspace to Moroccan airplanes.

Impacts

• Algeria will argue that trans-Morocco gas can be replaced with extra volumes via the Medgaz line and with liquefied natural gas.
• The supply implications mainly affect Spain and Morocco, and will have little relevance for other European gas projects.
• In the East Mediterranean, the costs of a pipeline to Europe remain prohibitively high.