Italy lines up gas deal with Algeria in effort to cut dependence on Russia

Italian prime minister Mario Draghi will visit Algeria on Monday to sign a new gas supply deal, as Rome strives to reduce its dependence on Russian fuel following the invasion of Ukraine.

It is the latest in a series of moves made by European countries to secure alternative fuel sources as they seek to cut Russia off from the global economy in punishment for the war.

Italy buys about 30bn cubic meters of gas a year from Russia, 40 per cent of its total consumption. Algeria is Italy’s second-largest supplier, providing 21bn cubic metres a year — about 31 per cent of annual consumption.

An Italian government official said the Trans-Mediterranean pipeline — which carries gas from Algeria to Italy via Tunisia — is only operating at two-thirds of its capacity of 33bn cubic meters per year, giving Italy the scope to rapidly step up its purchases from Algeria.

“This can have an immediate impact — you don’t need to build more pipelines or other new infrastructure,” the official said.

A third of the Russian gas supplied to Italy each year could be replaced by quickly increasing imports from Algeria, the Italian official said.

Since the invasion of Ukraine, Draghi has stressed the need for Italy to urgently diversify its energy supplies, especially given the risk that Russia could retaliate against EU sanctions by shutting off the flow of gas to Europe.

“Diversification of our energy supplies is something to aim for regardless of what happens with Russian gas supplies in the immediate future,” Draghi told lawmakers last month. “We cannot be so dependent on the decisions of just one country, as this jeopardises our freedom, not just our prosperity.”

Last week, Lithuania became the first EU country to cut off Russian gas supplies completely, with the two other Baltic states also temporarily stopping its flow.

Germany has said it aims to be “virtually independent” from Russian oil by the end of this year and from gas by mid-2024. Berlin recently signed a long-term agreement with Qatar for the supply of liquefied natural gas (LNG), which Robert Habeck, economy minister, said would reduce its reliance on Russian supplies.

EU leaders last month decided to bulk buy natural gas jointly from other sources.

The Italian delegation led by Draghi on Monday will include foreign minister Luigi Di Maio and Roberto Cingolani, the minister for ecological transition, as well as the head of Eni, the Italian energy company, which has strong ties with Algerian energy company Sonatrach.

The Italian official said the deal would not only pave the way for increased purchases of Algerian gas but would also include an agreement on greater Italian investment in renewable energy in the north African country, which could help it cut down its own gas consumption, freeing up more for export.

Di Maio has visited several energy-producing nations in recent weeks and Cingolani has been working on how to speed up the development of renewable energy sources.