Algeria consolidates its position as Italy's leading gas supplier

Italy is continuing its policy of diversifying its gas supplies

Algeria consolidates its position as Italy's leading gas supplier

Italy is continuing its policy of diversifying its gas supplies. Italian Prime Minister Mario Draghi, still under pressure to remain at the head of the government, was Monday and Tuesday on an official visit to Algiers, where he was received by Algerian President Abdelmadjid Tebboune, with whom he co-chaired the fourth Algerian- Italian during which many agreements were sealed, in particular to increase the supply of Algerian gas to Rome.

Tebboune and Draghi have signed 15 memorandums of understanding and agreements relating to justice, microenterprises and start-ups, industrial and energy cooperation and sustainable development.

Algeria, which has privileged relations with Italy, "has become its first gas supplier in recent months" after being long outstripped by Russia, from where 45% of the peninsula's gas imports come from, said the President of the Italian Council in front of the media, alongside President Tebboune. "The signed agreement on energy cooperation demonstrates our determination to do even more in this area," Mario Draghi said at an economic forum after his meeting with Abdelmadjid Tebboune.

In the coming days, some additional 4 billion cubic meters will be exported to Italy, according to an Algerian government source. An agreement for an increase in volumes delivered to Italy had been announced by Mario Draghi during a first visit to Algiers in April, but no figures had been communicated. Since the beginning of 2022, Algeria has supplied Italy with 13.9 billion cubic meters, exceeding the volumes initially planned by 113%.

On the second day of their meeting, the two leaders also announced the signing of an important agreement, worth 4 billion dollars, between the Algerian groups Sonatrach, Italian ENI, American Occidental and French Total which will make it possible to supply Italy of significant additional quantities of gas.

This contract, for a period of twenty-five years, covers the exploitation of gas and oil deposits in the Berkine basin, in southeastern Algeria. The agreement aims to recover "more than one billion barrels of oil equivalent of hydrocarbons, which will increase the average ultimate recovery rate to 55%", Sonatrach said in a statement. The goal is to "develop additional liquid hydrocarbon resources while reducing the carbon intensity of the fields through a targeted emissions reduction program," Total noted in a separate statement.

The deal was signed under the terms of a new hydrocarbons law in Algeria, enacted in November 2019, introducing the possibility of production sharing with foreign groups. This controversial legislation had aroused virulent opposition in the country. Its detractors had demonstrated in the street, believing that it is selling off national wealth to multinationals.

Occidental Petroleum is a party to this contract after having absorbed the American oil company Anadarko. The Total group had signed an agreement with Occidental to buy Anadarko's assets in Algeria, Ghana, Mozambique and South Africa. But the Algerian authorities opposed the acquisition by Total of the assets in the country, asserting their right of pre-emption.

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