Italy Reduces Russia Gas Share... Signs New Supply Contract with Algeria

Mario Draghi, Prime Minister of Italy [Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] Italian Prime Minister Mario Draghi is scheduled to visit Algeria on the 11th (local time) to sign a new gas supply contract, according to major foreign media reports on the 10th.

This is part of measures to reduce the share of Russian gas. Italy purchases about 30 billion cubic meters (bcm), which is approximately 40% of its annual gas consumption, from Russia. Algeria is the second largest gas supplier after Russia, exporting 21 bcm, or 31% of Italy's annual consumption, to Italy.

An Italian government official stated that the trans-Mediterranean gas pipeline connecting Italy and Algeria via Tunisia can transport up to 33 bcm of gas annually, but the current actual transport volume is only about two-thirds of that. Therefore, Italy can quickly increase its gas imports from Algeria, and there is no need to build more pipelines, the official added.

With Prime Minister Draghi's visit, the two countries are also expected to agree on expanding Italy's investment in Algeria's renewable energy sector. By increasing investment in renewable energy, Algeria plans to reduce its gas consumption and export more gas.

Prime Minister Draghi has argued that energy supply sources must be urgently diversified following Russia's invasion of Ukraine.

European countries are trying to reduce purchases of Russian crude oil and gas as part of sanctions against Russia following its invasion of Ukraine.

Lithuania last week became the first EU country to declare a halt to Russian gas imports. Lithuania has not imported Russian gas since the 1st of this month. Germany has signed a long-term liquefied natural gas (LNG) supply contract with Qatar.