Italy, Algeria Sign 15 Agreements to Boost Gas Deliveries

Italy, Algeria Sign 15 Agreements to Boost Gas Deliveries

/ Financial News / Tuesday, 19 July 2022 10:47

Italian Prime Minister Mario Draghi sealed 15 agreements with Algeria's president, ahead of the expected conclusion of another deal to boost gas deliveries and reduce Italy's reliance on Russian supplies.

Draghi was received by President Abdelmadjid Tebboune, and the two went on to sign agreements and memorandums of understanding in areas ranging from energy to sustainable development, justice and micro-enterprises.

The energy agreement signed is “a testament to our determination to achieve even more in this domain,” Draghi said, ahead of the expected signing of an oil and gas supply deal between Algeria and a clutch of companies including Italian energy giant Eni.

This contract will allow “the development of a site situated in the Berkine perimeter, and which should generate more than a billion barrels” of hydrocarbons, a government source commented.

Tebboune said the deal was worth $4 billion.

The government source confirmed that Algeria will also increase gas exports to Italy by four billion cubic meters in the coming days.

Italy buys the majority of its natural gas from abroad, with some 45% of its imports historically coming from Russia. But Rome has increasingly looked to Algeria, customarily its second biggest supplier, to reduce that dependence after the war in Ukraine sparked sanctions against Moscow and sent energy prices soaring.

Algeria has therefore supplanted Russia to “become in recent months the biggest supplier of gas” to Italy, Draghi mentioned.

According to APS, Algeria was set to furnish Italy with a total of around 20 billion cubic meters of gas in 2022 as a whole, before the latest deal.

Draghi previously visited Algeria in April, when he concluded a deal to progressively increase, from 2022, Algerian deliveries to Italy through the Transmed pipeline by up to nine billion cubic meters per year in 2023-24.

In May, Eni signed a memorandum of understanding with Algeria's Sonatrach to boost gas exploration in the North African country.

The MoU “will allow Sonatrach and Eni to evaluate the gas potential and opportunities for accelerated development at specific fields already discovered by Sonatrach in Algeria,” Eni said at the time.

Algeria is Africa's biggest gas exporter and supplies around 11% of the natural gas consumed in Europe.

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