Algeria is Spain's largest gas supplier, covering almost half of its gas demand through the Maghreb-Europe pipeline.
Algerian President Abdelmadjid Tebboune has ordered state energy firm Sonatrach to halt gas exports to Spain through a pipeline that traverses Morocco due to tensions with Rabat.
Algeria, Africa's biggest natural gas exporter, has been using the Gaz-Maghreb-Europe (GME) pipeline since 1996 to deliver several billion cubic metres (bcm) per year to Spain and Portugal.
But the GME contract is due to expire at midnight Sunday, just over two months after Algiers severed diplomatic ties with Rabat over "hostile actions" – accusations Morocco has dismissed.
"No significant impact"
Tebboune "ordered the cessation of trade ties between Sonatrach and the Moroccan National Office for Electricity and Potable Water (ONEE), and the non-renewal of the contract, which expires at midnight Sunday," a statement from the presidency said.
The move would not have a significant impact, ONEE said in a statement on Sunday night.
"In anticipation of this decision, the necessary measures have been taken to ensure the continuity of the country's electricity supply," it said.
Tebboune took the decision after consultations with the prime minister and the ministers of energy and foreign affairs "in light of the hostile behaviour of the (Moroccan) kingdom which undermines national unity", it said.
An exclusive undersea pipeline
Algerian and Spanish officials Wednesday said Algiers would, from now on, deliver its natural gas to Spain exclusively through an undersea pipeline to avoid Morocco.
But experts have said the alternative undersea line, known as Medgaz, has a smaller capacity than the GME, amid growing concern in Spain of gas shortages and soaring energy prices across Europe.
Spain's Ecological Transition Minister Teresa Ribera sought to sound reassuring during a meeting in Algiers earlier this week, speaking of "arrangements taken to continue to assure, in the best way, deliveries of gas through Medgaz according to a well determined schedule".
Medgaz can carry eight bcm a year, with planned work to increase its capacity to reach 10.5 bcm.
Algeria has also proposed increasing deliveries of liquefied natural gas (LNG) by sea.
Maghreb geopolitics expert Geoff Porter has told AFP that the shipping option did not make financial sense.
Algeria and Morocco had seen months of tensions, partly over Morocco's normalisation of ties with Israel in exchange for Washington recognising Rabat's sovereignty over the disputed Western Sahara.
Rabat has rejected the accusations of hostile acts that Algeria has levelled at its neighbour.