2.1.1. Price Demands and Discontinued Supplies in 1980

In the early 1980s, with growing oil prices, Algeria's contractual base gas price of \$1.30/MBtu was unattractive. In comparison, the UAE increased its LNG price from \$2.36/MBtu to \$4/MBtu [22]. In January 1980, Sonatrach (the Algerian state-owned exporter) informed El Paso (USA) and Gaz de France (France) that its LNG price was increasing to \$6.11/MBtu [23]. That doubled the price for France and tripled it for the USA. After three months of unsuccessful negotiations, on 1st April 1980, Algeria stopped sales to both buyers.

In the spring of 1981, the contract with El Paso (USA) was written off. Algeria claimed that deliveries to France in April 1980 were cut due to technical problems at the Skikda liquefaction plant. French technical advisers, however, found no problems at Skikda. Algeria also had spare liquefaction capacity at its Arzew plant once it cut deliveries to the USA [23]. Hence, these price demands resemble a hold-up rather than a result of market price change. Additionally, Algeria was flexible with export agreements of short duration and low volumes. A contract with Distrigas (USA) for less than 1.5 bcm (billion cubic meters) per year continued uninterrupted at the original price. In autumn 1980, Algeria agreed to extend an LNG contract with British Gas (UK) by nine months at \$4.60/MBtu and \$4.80/MBtu in the first and second halves of 1981. Beyond 1981, the parties agreed on fixed annual increases of 12%.

Non-opportunistic relations with France were restored in May of 1981, as the new Algerian government attempted to improve the relations. Gas deliveries to France were resumed with prices to be negotiated later. Later that year, Algeria and France agreed on the price of \$5.118/MBtu. The parties applied the price retroactively to January 1980 [23].

### 2.1.2. Price Demands and Discontinued Supplies in 1981

In the autumn of 1981, Algeria unilaterally cancelled its LNG contracts with the Netherlands and West Germany. Distrigaz (Belgium) agreed to pay a higher price of \$4.80/MBtu. In mid-1981, when the pipeline Algeria-Tunisia-Italy was more than half completed, Algeria informed SNAM (Italy) that the price demand increased from \$3.50/MBtu to \$5.50/MBtu. Consequently, the pipeline stayed idle for one year.

Non-opportunistic relations were restored in mid-1982, SNAM agreed to pay the higher price with the Italian government's 12% subsidy. Algeria's demands of higher prices from Belgium and Italy came at the cost of reduced export volumes.
