After many years of deteriorating diplomatic ties between Algeria and Morocco, the relationship between the two northern Africa nations took an ugly turn after Algeria decided to sever ties with Rabat.

Algeria also declined to extend the gas supply contract to Spain via Morocco beyond October 31, 2021. The simmering tensions between the two neighbours over a territorial dispute is heightening with sooner improvement in the relations, not in-sight.

With Algeria’s decision to stop supplying gas to Morocco, Rabat says the impact would be “insignificant” without mentioning how the country would cover for the gas deficit caused by Algeria’s decision while it adopts a long-range plan to boost the import of liquefied natural gas (LNG) and renewables.

Despite the historic diplomatic strain between Algeria and Morocco, the two countries reached a deal in 1996 to construct a 1300-km pipeline to transport natural gas from Algeria to Spain through Morocco, which enjoyed 7% of gas as royalty. Cumulatively, Morocco received 700 million cubic meters of gas annually.

Morocco also relied on Algeria’s gas to produce about 10% of electricity for its two power plants located in the northern part of the country. The plants produce about GigaWatthours (GWH) used only as backup during peak demand periods.

According to a senior Morocco official, other power plants could ramp up their electricity output if need be, Leaderpost reported. The official also added the electricity demand in Morocco is attributed to industrial output, which was significantly reduced due to the effects of the pandemic.

Over the recent years, Morocco has had surplus electricity, making it start exporting the surplus 1400 MW to Spain via two undersea cables since 2018. Morocco generates most of its power from coal, natural gas, fuel oil, and renewables.

While Rabat has not disclosed a concrete plan on how the country would fill in for the gas deficit, the senior official revealed the country is assessing various options, including reaching out for Spain to supply the country with natural gas through the now-abandoned pipelines.

However, two traders said Spain wouldn’t give in for such a deal since it depends heavily on Algerian gas.