Algeria is aligning itself to boost gas exports to Italy by 50%,seeking to become Italy’s main supplier of gas.
The North African nation will aim to increase supplies to Italy by 9 to 10 billion cubic meters on an annual basis by as early as the end of 2022. In 2021, Italy received around 21 billion cubic meters from Algeria.
The export boost would probably see Algeria replace Russia as Italy’s largest gas supplier. Nevertheless, Algeria’s energy industry has been hindered in recent years by a lack of investment and political instability. The country is also trying to meet growing domestic demand as its population rises, leaving less room for exports.
Algeria’s state energy firm, Sonatrach, in early April said it only had a few billion additional cubic meters of gas, but that it was stepping up gas exploration and that it may be able to double production capacity in four years.
Italy’s Prime Minister, Mario Draghi is seeking to reduce the country’s dependence on Russian natural gas. He is due to meet Algeria’s President Abdelmadjid Tebboune to sign an agreement that will include joint investments in renewable energy as well as gas.
Italy, which relies on Russian imports for about 40% its gas consumption, is seeking alternative supplies as European Union leaders consider taking a harsher stance against alleged Russian atrocities in the Ukraine war.
Algeria sends gas to Europe via three pipelines. Two land in Spain and another, called TransMed, arrives in Italy. One of the Spanish pipelines runs through Morocco and was recently shut off amid a diplomatic dispute between Algiers and Rabat.
Italy’s plan is to increase imports from Algeria to about a third of its total gas needs in the coming months. The country currently accounts for about a quarter of Italy’s gas imports.
Italy’s Eni, which has long-term gas contracts with Algeria, has been in discussions with Sonatrach over how to boost supplies.
Last month, Eni and Sonatrach announced a large oil and gas discovery in the Berkine North Basin in the Algerian desert, with an estimated size of about 140 million barrels of oil. In December last year, they signed a $1.4-billion production sharing agreement for oil and gas output from the southern part of the basin.
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