Italy: Energy giant Eni signs deal to boost Algerian gas supply

Rome: Italian energy giant Eni and Algeria’s state-owned Sonatrach have reached agreement to boost both gas exploration and the development of green hydrogen in the North African nation, as Rome seeks new ways to reduce its reliance on Russian hydrocarbons.

The agreement was reached during a state visit by Algerian President Abdelmadjid Tebboune to Rome on Thursday, which followed some weeks after Italian Prime Minister Mario Draghi made his own trip to Algiers.

“Every time production increases, we will be able to supply it to Italy, which can then send it to the rest of Europe,” Tebboune said after meeting with Italian President Sergio Mattarella.

“As far as electricity is concerned, we have agreed with our Italian friends to set up a submarine cable from Algeria to Italy,” he said.

Italy, which sourced around 40 percent of its gas imports from Russia last year, has been scrambling to diversify its energy supply mix as Russia’s conflict in Ukraine escalates. Diversifying away from Russia is the main reason behind attempts to accelerate the development of gas fields in Algeria.

Algeria, Italy’s second-biggest gas supplier last year after Russia, has been pumping Algerian gas to Italian shores since 1983 through the Trans-Mediterranean Pipeline, which runs to Sicily.

Gas production volumes expected from the areas covered by the new agreement are equal to some 3 billion cubic metres (bcm) per year and will contribute to increasing the export capacity of Algeria to Italy through the TransMed pipeline, Italy’s energy giant Eni said.

Thursday’s signing is part of an agreement reached by the two energy groups in April, when they announced they would gradually increase gas flows in the pipeline starting this year and eventually reach 9 bcm of extra gas per year by 2023-24.

The memorandum of understanding (MOU) was signed in Rome by the top executives of the Italian and the Algerian groups in a ceremony witnessed by Tebboune and Draghi.

The MOU also covers the technical and economic evaluation for a green hydrogen pilot project in Bir Rebaa North (BRN) in the Algerian desert, with the goal of supporting the decarbonisation of the BRN gas plant operated by the Sonatrach-Eni GSE joint venture.

Eni is the main international energy company operating in Algeria, where it has been present since 1981.

In the race to cut Rome’s dependency on Russian gas, Italian ministers have tapped numerous countries, such as the Republic of Congo, Angola, Azerbaijan and Qatar.