After more than two years, Algerian bitumen importers are gearing up to restart shipments from Spain, following a recent green light from the Algerian government to resume trade relations.

The suspension of trade stemmed from a diplomatic fallout in June 2022, when Algeria halted a friendship and cooperation agreement with Spain. The dispute arose after Spain publicly backed Morocco’s autonomy proposal for Western Sahara, resulting in the immediate termination of planned bitumen shipments between the two nations.

On November 6, Algeria’s central bank issued a directive permitting local companies to engage in transactions with Spanish counterparts under standard trade guidelines. This has allowed both public and private bitumen importers in Algeria to reopen discussions on sourcing Spanish bitumen cargoes for distribution within the domestic market.

Although no agreements have been finalized yet, private Algerian importers operating at ports such as Ghazaouet, Oran, and Arzew stand to benefit due to their proximity to Spanish export hubs in Tarragona, Huelva, and Cadiz. These locations offer logistical advantages over existing suppliers in Italy, Greece, and Turkey. For example, shipping costs for a 5,000-tonne bitumen tanker from Tarragona to Ghazaouet hover around $35 per tonne, significantly lower than the $50 per tonne required for transport from Augusta, Italy.

Industry stakeholders, including Spanish and international suppliers, remain cautious as they seek further assurance from relevant authorities before proceeding with cargo negotiations. Some anticipate that shipments between Spain and Algeria might not fully resume until early 2025, especially as winter conditions slow road construction and other bitumen-intensive activities in Algeria.

State-owned energy company Sonatrach, which manages imports for numerous Mediterranean terminals in Algeria, is less likely to prioritize Spanish bitumen. Since 2020, Sonatrach has relied heavily on shipments from its Augusta refinery in Sicily, acquired from ExxonMobil in 2018. Occasional cargoes from Greece’s Motor Oil Hellas refinery at Corinth also supplement its supply.

Market dynamics further support the possibility of renewed imports from Spain. Falling Mediterranean high-sulphur fuel oil (HSFO) prices and weakening seasonal bitumen price differentials have made Spanish cargoes increasingly attractive. Premiums for Spanish bitumen over Mediterranean HSFO have dropped significantly, from $10 per tonne in mid-October to $2-3 per tonne in early November. Meanwhile, Spanish bitumen export prices have declined from $498-499 per tonne to $458 per tonne during the same timeframe.

As economic and logistical conditions align, Algerian importers appear well-positioned to reestablish trade ties with Spanish suppliers, potentially revitalizing the flow of bitumen between the two countries.