Italy reaches Out to Algeria for a New Gas Deal

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Italy reaches Out to Algeria for a New Gas Deal

Wed, 04/13/2022 - 11:47
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Flags of Italy & Algeria (© Shutterstock/NINA IMAGES)
Flags of Italy & Algeria (© Shutterstock/NINA IMAGES)

Italian Prime Minister Mario Draghi is set to visit Algeria and sign an agreement to step up gas imports in an effort to end country’s dependence on Russian gas, sources close to the deal said.

The move comes when Rome, and other European countries seek to diversify their gas sources amid Russia’s invasion of Ukraine. Currently, the country imports 40% of its total gas from Russia and it has been stepping up efforts to tap other sources of energy.

According to a government source, Draghi will travel with Energy Transition Minister Roberto Cingolani, head of Italian energy group Eni and Foreign Minister Luigi Di Maio. Last week, Cingolani announced that Italy has been engaging in talks with seven countries for gas imports. He also disclosed that some talks were already in advanced stages.

In recent weeks, Eni CEO Claudio Descalzi and Di Maio have visited Algeria to strengthen the energy ties.

Since 1983, Algeria has been supplying its gas to Italy through the Transmed pipeline and it’s the second largest supplier after Russia. Algeria has a daily capacity of more than 110 million cubic meters.

The country’s gas exports have however been affected by political instability, underinvestment, increased domestic consumption and closure of pipelines over disputes. According to Rome, the country is seeking to import an additional 9 bcm from Algeria from its current 21.2 bcm.

A source said that in the trip to Algeria, Eni and Sonatrach will deal with the technical aspects while Draghi will sign the corporate agreement between the countries and additional co-investments in potential new renewable energy projects.

Eni and Sonatrach have been in talks seeking to increase gas supply to Italy in short term.

Eni, which is state controlled has long term gas contracts with state-owned gas firm Sonatrach and it announced last month the discovery of around 140 million barrels of oil in an Algerian desert.

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