Rome, which received gas supplies from Algeria about 21 billion cubic meters in 2021, compared to about 29 billion cubic meters from Russia, plans to cut its dependence on Moscow gas, following the recent war in Ukraine.
The Italian company “Eni” agreed to purchase additional quantities of Algerian gas, which would increase its purchases from the Algerian state energy company “Sonatrach” by an additional 9 billion cubic meters annually during the years 2023 and 2024, equivalent to 12 percent of Rome’s consumption of gas last year.
agreement with Algeria
Algeria is the first African exporter of gas and the seventh in the world, but the old infrastructure and the increase in domestic consumption impede the increase in its exports.
On Monday, Algeria and Italy reached an agreement to increase the quantities of gas imported by the latter, with the aim of reducing its dependence on Russian gas.
Sonatrach said in a statement that it had set new prices for gas sales for the years 2022 and 2023 with its Italian counterpart.
The signing took place in the presence of Algerian President Abdelmadjid Tebboune and Italian Prime Minister Mario Draghi, according to a statement issued by Sonatrach.
The agreement stipulates that the new additions “will gradually increase from 2022 to reach 9 billion cubic meters in 2023-2024” via the Enrico Mattei “Transmed” pipeline, which connects the two countries via Tunisia and the Mediterranean.
Algeria’s gas reserves amount to nearly 2,400 billion cubic meters, and contribute to providing about 11 percent of the gas used in Europe, compared to 47 percent for Russian gas.
Many countries seeking to reduce their dependence on Russia have headed to Algeria, Moscow’s historical ally, but this country’s export capabilities are limited.
Italian priority
The Italian Democratic Party’s general secretary, Enrico Letta, says that abandoning Russian oil and gas is an absolute priority for Italy.
“Accelerating this means accelerating the end of the war and accelerating peace processes,” Letta added to the Italian newspaper Il Folio.
For his part, the Algerian expert in energy affairs, Mahma Bouziane, says that gas contracts are commercial contracts between energy companies, not political agreements between governments or countries.
He added to Sky News Arabia: “Increasing gas production in any country is linked to the possibility of additional production capacities, but the reality of the gas industry today globally is under the influence of the investment deficit, which limits the possibility of raising production.”
And he added, “Italy is a strategic and historical partner for Algeria, but the European market is supplied through the pipeline network, which has a propulsion capacity of 42 billion cubic meters of natural gas and LNG thanks to a production capacity of more than 50 million cubic meters of LNG and a fleet of 6 tankers. “.
Required conditions
As for the Algerian expert, Abdel Rahman Ayah, he says that the agreement must be compatible with practical steps from Rome aimed at attracting investments in hard currency, and securing energy extractive capabilities in order to prepare the appropriate ground for gas extraction.
He adds that the two countries have a great interest in the agreement, especially that Algeria needs additional income in order to strengthen its economy, and Italy will also find an alternative to Russian gas.
The new deal with Italy may push Algeria to become Rome’s largest gas supplier, but it imposes an increase in production despite the lack of investment and the lack of capabilities in this Arab country.
Italian Energy Minister Roberto Cingolani says that his country aims to dispense with Russian gas within 24-30 months.
He adds that “since Russia attacked Ukraine, Italy has intensified its efforts to secure alternative sources of gas and has discussed with Qatar, which is rich in liquefied natural gas, the possibility of this.”
Algerian investment
Anthony Dworkin, an expert at the European Council on International Relations, asserts that Algeria is trying to take advantage of the current context of the war in Ukraine.
“It also wants to appear as a reliable partner for Europe in terms of energy, and it also wants to increase its gas revenues,” he added.
Algeria, as a historical ally of Moscow, has repeatedly emphasized that its capabilities to export additional quantities of gas to Europe are very limited, and it cannot replace Russian gas.
According to Dworkin, Algeria “will most likely adhere to a balanced policy to maintain its relations with Russia and Europe at the same time.”
He pointed out that Algeria is a historical customer of Russian weapons, but it also imports from European countries such as Italy and Germany. It also abstained from voting or voted against decisions taken by the United Nations to impose sanctions on Russia after the outbreak of the war.
But he considered that “preserving relations with Russia does not mean that Algeria will miss commercial opportunities to reap profits from exporting its gas.”
Italy uses gas to generate about 40 percent of its electricity, and imports more than 90 percent of its gas needs from Russia.
The Russian attack on Ukraine raised energy security concerns, prompting Europe to seek plans to diversify its supply of fossil fuels away from Moscow and shift more quickly to renewable energy.
Algeria has two gas pipelines, one of which is called “Transmed”, which connects Algeria to Europe, with a length of 2485 km, and guarantees the supply of Tunisia, Italy and Slovenia with natural gas, and it is currently transporting about 60 million cubic meters per day of Algerian gas to Italy.
As for the latest, it is “Galsi” with a length of 860 km, and it is expected to start operation during the second half of this year, heading towards Italy, and guaranteeing an estimated capacity of 238 billion cubic feet annually.
#Gas #gains #Algerian #profits #womb #Ukraine #war