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UKRAINE

Russian invasion: Italy considers Algeria as alternative gas supply

Italy's government approved measures Monday to alleviate a possible gas shortage sparked by Russia's invasion of Ukraine, as the foreign minister held talks in Algeria about boosting supply from there.

The Krechba gas treatment plant, about 1,200 km (746 miles) south of Algiers.
The Krechba gas treatment plant, about 1,200 km (746 miles) south of Algiers. Photo by AFP

Prime Minister Mario Draghi’s cabinet agreed that “if necessary”, Italy could reduce “the gas consumption of power plants currently active through maximising production from other sources”, according to a government statement.

“We are preparing for a war economy, hoping not to get there,” undersecretary of state for foreign affairs Manlio Di Stefano told Rai Radio 1.

“Preparing for a war economy means that if gas supplies from Russia are interrupted, Italy will have to be ready to restart coal-fired power plants too.”

Russia last week invaded its pro-Western neighbour, prompting international outrage and causing the United States and its allies to impose sanctions on Moscow.

The conflict has also sparked alarm among countries like Italy which depend on Russia for its energy needs.

Italy imports around 95 percent of the gas it uses, and around 45 percent of that comes from Russia.

Foreign Minister Luigi Di Maio visited Algeria Monday, tweeting that he was there to “discuss strengthening bilateral cooperation, in particular to address European energy security needs, in the light of the conflict in Ukraine”.

READ ALSO: How will the Russian invasion affect Italy’s gas supplies and prices?

“Our goal is to protect Italian companies and families from the effects of this terrible war,” he told reporters later, without giving any detail on how much extra gas the North African country might provide.

He met with Algerian President Abdelmadjid Tebboune, the foreign and energy ministers and Toufik Hakkar, the head of Algerian state energy giant Sonatrach.

Sonatrach said on Sunday it was ready to increase gas supplies to Europe, notably via the Transmed pipeline linking Algeria to Italy.

Hakkar was quoted as saying in the daily Liberte that Europe is the “natural market of choice” for Algerian gas, which accounts for about 11 percent of Europe’s gas imports.

Di Maio was accompanied by a delegation that included Claudio Descalzi, head of Italian energy giant Eni, which is a partner of Sonatrach in Algeria.

Di Maio confirmed Italy was “committed to increasing energy supplies, notably in gas, from various international partners” — including Algeria, which he said had “always been a reliable supplier”.

Last week Draghi said that supplies could also be increased from Azerbaijan, Tunisia and Libya.

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ENERGY

How long will it take Italy to wean itself off Russian gas?

Italy's government has repeatedly said it plans to end its dependence on Russia for gas supplies following the invasion of Ukraine. But as the timeline keeps changing, when and how could this happen?

How long will it take Italy to wean itself off Russian gas?

Italy is heavily dependent on Russian gas, but has been seeking new sources since Moscow’s invasion of Ukraine as part of an effort to end this reliance in the coming years.

But it remains unclear whether Italy can really end its dependence on Russia for its gas supply – or when this might be feasible.

READ ALSO: What does Italy’s Algerian gas deal mean for energy supplies?

The government has been seeking new sources since Moscow’s invasion of Ukraine, including with a recent deal to boost supplies from Algeria.

Prime Minister Mario Draghi said last week the country could be independent of Russian gas by the second half of 2024 – the latest in a series of changing estimates.

“Government estimates indicate that we can make ourselves independent from Russian gas in the second half of 2024,” Draghi told the Senate, while adding that the “first effects” of this plan would be felt by the end of this year.

He said his government was also seeking to boost its production of renewable energy, including by “destroying bureaucratic barriers” to investment, saying it was the “only way” to free Italy from having to import fossil fuels.

Explained: Why and how Italy will pay for Russian gas in rubles

In April, Italy‘s Ecological Transition Minister Roberto Cingolani estimated the country would no longer need Russian gas within 18 months, following an earlier prediction that it could take until 2025.

Italy is one of Europe’s biggest users and importers of natural gas, importing 90 percent of its gas supply with 45 percent of that coming from Russia – up from 27 percent ten years ago.

Italy now imports 29 billion cubic metres of Russian gas a year, which Cingolani said in March “must be replaced” – but he didn’t specify with what.

Analysts have said there are “a lot of questions” about how helpful Italy’s gas deal with Algeria will be.

Despite its vast natural gas reserves, Algeria is already exporting at close to full capacity.

Draghi repeated his strong support for EU sanctions on Moscow last week, including a proposed ban on imports of Russian oil, although this is currently being blocked by Hungary.

“We must continue to keep up the pressure on Russia through sanctions, because we must bring Moscow to the negotiating table,” he said.

But for now, Italian energy giant Eni says it plans to pay for Russian gas supplies in rubles, meeting a demand from Vladimir Putin.

It was not immediately clear whether the plan would fall foul of European Union sanctions, although Eni said it was “not incompatible”.

The company said its decision to open the accounts was “taken in compliance with the current international sanctions framework” and that Italian authorities had been informed.

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