Europe looks hopeful at African gas

Eni and Algerian state-owned company Sonatrach have reached an agreement to increase gas exploration in Algeria and develop green hydrogen technology. This happened on the occasion of the state visit of the President of Algeria, Abdelmadjid Tebboune to Rome, a few weeks after Italian Prime Minister Mario Draghi made his own trip to Algeria. “As production increases, we can supply gas to Italy, which can then ship it to the rest of Europe,” Tebboune said after meeting Italian President Sergio Mattarella.

Italy, which gained about 40% of its job share last year. of imported gas from Russia, they are trying to diversify supplies in relation to the situation in Ukraine. They are interested in accelerating the development of gas fields in Algeria, from which the raw material is pumped to Sicily via the trans-Mediterranean pipeline.

Algeria is currently Italy’s second largest gas supplier. The deposits covered by the latter agreement have a production capacity of approximately 3 billion cubic meters. annual. The most recent agreement is part of a wider collaboration; both sides announced in April that they would increase gas flows to 9 billion cubic meters in 2023-2024. of raw material extra per year. By comparison, in 2021 Algerian gas exports to Italy amounted to approximately 21 billion cubic meters.

Meanwhile, even before the Russian invasion of Ukraine, Italian Prime Minister Mario Draghi planned to travel to Moscow to talk with Vladimir Putin about the possibilities of increasing gas supplies. The war fundamentally changed Italy’s energy strategy. Last week, Draghi said his country could be independent from Russian gas from the second half of 2024.

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North Africa is one of the most promising regions for Europe to become independent from Russian energy resources. The region is relatively close and has been cooperating commercially with the Old Continent for a long time. It also has a turnkey infrastructure.

But there are also challenges. Most experts indicate that it will be difficult to increase stocks of the raw material significantly in the short term as there is no spare production capacity left. In addition, gas consumption in Africa itself is growing. Meanwhile, there are no new investment projects, incl. due to political instability.

Analysts point out that Eni is a major foreign gas producer in North Africa, which includes Egypt, Libya, Tunisia and Algeria. From this perspective, healthcare is well placed to try to get more production from these countries. The problem is that it will take a long time. Projects typically take years to develop, and at the moment there are not many on the horizon that would contribute to a significant increase in exports.

Algeria produces approximately 130 billion cubic meters of gas annually and is the tenth largest gas producer in the world and among the top five exporters of liquefied natural gas (LNG) to Europe. In 2021, gas sales to Europe amounted to more than 55 billion cubic meters. This country was responsible for about 13 percent. gas imports to the European Union.

The problem with Algeria’s natural gas exports to Europe is tensions with neighboring Morocco over Western Sahara that Morocco occupies. There has been a dispute over this area for a long time. Algeria supports the region’s independence efforts.

Tensions around Western Sahara led to the closure of the Maghreb-Europe gas pipeline in 2021, which has supplied gas to Spain via Morocco for the past quarter century. The capacity is 12 billion cubic meters. Algeria has been supplying Spain with approximately 10 billion m3 of natural gas since early 2022 solely through the offshore MedGaz pipeline bypassing Morocco.

Monika Borkowska

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