UPDATE - Italy signs gas deal with Algeria to reduce dependence on Russia

UPDATES WITH SIGNING OF DEAL, QUOTES FROM DRAGHI, STATEMENT BY ENI

By Alvise Armellini

ROME (AA) - Italy’s Prime Minister Mario Draghi said Monday his country had secured a deal to increase gas imports from Algeria, in a bid to reduce its energy dependence on Russia.

Last year, Italy imported more than 95% of its gas needs, including 29 billion cubic meters (bcm), or 38%, from Russia, its largest supplier. Algeria was its second-largest supplier, with 21.1 bcm of gas, or 28% of the total.

During a visit to Algiers, Draghi announced that ENI, Italy’s largest energy company, and Sonatrach, the Algerian state oil and gas company, signed an agreement “to increase gas exports to Italy.”

Furthermore, the Algerian and Italian governments “signed a declaration of intent” on bilateral energy cooperation, and Italy is “ready to work with Algeria” on renewables and “green hydrogen,” Draghi added.

In a statement, ENI said: “This agreement will allow to exploit the [Transmed] pipeline's available transportation capacities to ensure greater supply flexibility, gradually providing increasing volumes of gas from 2022, up to 9 billion cubic meters per year in 2023-24.”

Draghi said: “Immediately after the invasion of Ukraine, I announced that Italy was going to move with the utmost speed to reduce its dependence on Russian gas. Today’s agreements are a significant answer to this strategic objective. More will follow.”

Foreign Minister Luigi Di Maio, who accompanied Draghi, said on the eve of the trip that he has been visiting a number of energy-producing countries as part of efforts to diversify energy supplies.

“In the last month and a half, I have been to Algeria, Qatar, Congo, Angola, Mozambique, Azerbaijan: all these countries said they are ready to increase supplies to Italy,” the minister said.

Ecological Transition Minister Roberto Cingolani and ENI Chief Executive Claudio Descalzi also travelled with Draghi to Algiers.

Last week, Cingolani said Italy could get by “for three, four months” if Russian gas supplies to Europe were cut immediately, thanks to national reserves, but “the problem [would be] preparing for winter.”

European Union countries like Italy are adopting ever-stricter sanctions against Russia in response to Moscow’s war on Ukraine, but this means facing up to the possibility of no longer being able to rely on Moscow for energy.

Last week, the European Commission proposed for the first time extending Russia sanctions to the energy sector, with a ban on coal imports. A ban on gas and oil imports is currently not on the table, but could be an option in the future.

On Wednesday, Draghi warned Italians they might have to make sacrifices and alter their energy consumption habits if the diplomatic crisis with Russia escalates. “Do you prefer peace or the air conditioning on?” he asked rhetorically.