Italian PM says Algeria will boost natural gas exports | Economic news

MILAN (AP) — Italian Prime Minister Mario Draghi struck a deal on Monday for more natural gas imports through a Mediterranean gas pipeline from Algeria, marking the latest push by a European Union country to reduce its dependence on Russian energy after its invasion of Ukraine.

After meeting with President Abdelmadjid Tebboune, Draghi told reporters in the Algerian capital Algiers that an agreement to intensify bilateral cooperation in the energy sector as well as the agreement to export more gas to Italy “constitute a significant response to the strategic objective” to quickly replace Russian energy.

“Others will follow,” Draghi said.

Russia is Italy’s largest natural gas supplier, accounting for 40% of total imports, followed by Algeria, which supplies some 21 billion cubic meters of gas via the Trans-Mediterranean Gas Pipeline.

The new deal between Italian energy company Eni and Algeria’s Sonatrach would add up to 9 billion cubic meters of gas from Algeria by 2023-24, narrowly eclipsing the current 29 billion cubic meters from Russia by year. The increase in flows will begin in the fall, Eni said in a statement.

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Europe is trying to rapidly reduce its dependence on Russian natural gas imports, with leaders acknowledging that their payments help fund Moscow’s war. At the same time, there are fears that Russia could turn off the taps in retaliation for the sanctions, a threat that would have devastating effects on the European economy. Natural gas is used to generate electricity, heat and cool homes and the energy industry.

Russian President Vladimir Putin has previously sought to have gas payments made in rubles, in an apparent attempt to bolster the currency. A loophole allows countries to pay a designated Russian bank in dollars and euros as specified in contracts.

The tiny Baltic state of Lithuania, a former Soviet republic, recently cut itself off entirely from Russian gas imports, the first of 27 European Union countries to use Russian gas to break its energy dependence on Moscow.

Lithuania has been planning the move for years, and the task is more difficult for economic powerhouses like Germany and Italy, which get most of their natural gas from Russia.

The EU plans to reduce Russian gas imports by two-thirds by the end of the year and phase them out before 2030 through measures such as conservation, wind and solar development and alternative sources. The 27-nation bloc has reached an agreement with the United States to receive more shipments of liquefied natural gas, or LNG.

Germany, which gets around 40% of its gas from Russia, has announced its intention to quickly build two LNG terminals and has reached an agreement with Qatar for the supply of LNG. Poland is expanding an LNG terminal to receive deliveries from Qatar, the United States, Norway and others. It has reduced its dependence on Russian oil through contracts with Saudi Arabia, the United States and Norway.

Germany and Italy are also pushing for more renewables.

The agreement between Italy and Algeria is the first concrete result of the Italian Foreign Minister’s missions to energy-producing countries to secure alternative sources, including Azerbaijan, Qatar, Congo, Angola and Mozambique.

Draghi is traveling with Foreign Minister Luigi Di Maio, Energy Transition Minister Roberto Cingolani, and Italian energy company Eni CEO Claudio Descalzi.

Eni last month announced a major oil and gas discovery in Algeria and said it would work with its Algerian partner Sonatrach to accelerate its development for the third quarter of this year. Eni has been operating in Algeria for over 40 years.

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