Algeria has concluded a major gas deal with Italy, supplying 10 billion cubic meters of natural gas annually and thereby strengthening Italy's (as well as the rest of the EU's) security of supply.

The gas will be shipped through the Transmed pipeline and will meet 16 percent of Italy's natural gas requirements.

The deal comes at a time when Algeria is particularly vulnerable, as, like most oil-producing countries, it has suffered a big decrease in oil revenues in an over supplied market. As a result Algeria will need a barrel price of $110 to maintain macro-economic balance at a moment economic analysts warn of an upcoming budget crisis if oil prices remain at current levels around $50 per barrel.

Perhaps anticipating that things will get worse before they get better, Algeria this month took a 900 million-euro loan from the African Development Bank.