Eni and Sonatrach sign deal to boost Algeria gas exports to Italy

Italian energy major Eni and Sonatrach have signed a deal to accelerate the development of gas fields in Algeria and the development of green hydrogen, the companies said.

The gas production volumes expected from the areas covered by the agreement are equal to nearly 3 billion cubic meters (bcm) per year and will contribute to increasing the export capacity of Algeria to Italy through the Transmed pipeline, Eni said in a statement.

The deal is part of the agreement reached by the two energy groups in April this year, when both Eni and Sonatrach announced they would gradually raise gas flows in the pipeline and reach 9 bcm of extra gas per year by 2023-24.

The Memorandum of Understanding was signed in Rome by the top executives of the Italian and the Algerian groups in a ceremony witnessed by Italian Prime Minister Mario Draghi and Algerian President Abdelmadjid Tebboune.

Algeria is Italy’s second-biggest gas supplier and the Transmed pipeline – which runs from Algeria via Tunisia to the Italian island of Sicily – has been pumping Algerian gas to Italian shores since 1983. Eni is the main international energy company operating in Algeria since 1981.

Italy sourced about 40% of its gas imports from Russia in 2021 and has been scrambling to diversify its energy supply mix amid the Ukraine conflict.

The MoU also covers the technical and economic evaluation for a green hydrogen pilot project in Bir Rebaa North (BRN) in the Algerian desert, Eni said in a statement. The project will help support the decarbonisation of the BRN gas plant operated by the Sonatrach-Eni GSE joint venture.

Ever since the Ukraine conflict began, Italy has been scrambling to reduce its dependency from Russian gas by tapping alternative sources such as the Congo Republic, Angola, Azerbaijan and Qatar.