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Italy’s premier to sign gas deal with Algeria

MILAN (AP) – Italian Premier Mario Draghi (AP; pic below) is travelling to Algeria to sign a deal for additional natural gas, the latest push by a European Union (EU) country to acquire alternative energy sources to reduce dependence on Russia following its invasion of Ukraine.

Russia is Italy’s biggest supplier, representing 40 per cent of total imports, followed by Algeria, which provides some 21 billion cubic metres of gas via the Trans-Mediterranean pipeline. The new deal would add an extra nine billion cubic metres of gas from Algeria, just eclipsing Russia’s 29 billion cubic metres a year.

Europe is trying to cut its reliance on Russian natural gas imports quickly, with leaders recognising that their payments help fund Moscow’s war. At the same time, there is concern Russia might turn off the taps in reprisal for sanctions, a threat that would have devastating effects on the European economy. Natural gas is used to generate electricity, heat and cool homes, and power industry.

Russian President Vladimir Putin has already sought to have gas payments be made in rubles, in an apparent bid shore up the currency.

A loophole allows countries to pay a designated Russian bank in dollars and euros as set out in contracts.

The tiny Baltic state of Lithuania, a former Soviet republic, recently cut itself off entirely from Russian gas imports, the first of the EU’s 27 nations using Russian gas to break its energy dependence on Moscow. Lithuania has been planning that move for years, and the task is more difficult for economic powers like Germany and Italy, which have gotten 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 eliminate them before 2030 through steps like conservation, wind and solar development, and alternative sources. The 27-nation bloc has reached a deal with the United States (US) to receive more boatloads of liquefied natural gas, or LNG.

Germany, which gets about 40 per cent of its gas from Russia, has announced plans to quickly build two LNG terminals and reached an agreement with Qatar for LNG supplies.

Poland is expanding an LNG terminal to receive deliveries from Qatar, the US, Norway and others.

It has been reducing dependence on Russian oil through contracts with Saudi Arabia, the US and Norway.

Germany and Italy also are pushing for more renewable energy.

The deal between Italy and Algeria is the first concrete result of missions by Italy’s foreign minister to energy-producing nations to secure alternate sources, also including Azerbaijan, Qatar, Congo, Angola and Mozambique.

Draghi is travelling with Foreign Minister Luigi Di Maio, the energy transition minister, Roberto Cingolani, and the CEO of Italian energy company Eni, Claudio Descalzi.

Eni announced a significant oil and gas discovery in Algeria last month and said it would work with Algerian partner Sonatrach to fast-track its development for the third quarter of this year. Eni has operated in Algeria for more than 40 years.