Algeria considers Italy a major energy partner after the crisis with Spain | Economy

An employee works in the Zarzaitine gas field (Algeria).LOUAFI LARBI

A single word is sometimes enough to change the geopolitics of a region. The comparative adverb “more” in the letter that the Spanish President addressed to King Mohamed VI on March 14 was enough to trigger tectonic movements in the geopolitics of the Mediterranean and, above all, in the energy sector. Since Pedro Sánchez wrote to the Moroccan monarch that his autonomy proposal for Western Sahara, presented in 2007, is “the most serious, realistic and credible basis” for finding a solution to the conflict, Algeria has withdrawn its ambassador in Madrid, Said Moussi, and is building more and more bridges with Italy. And the Italian government, whose President Mario Draghi is going to Algiers on Monday, seems to want to take advantage of the opportunity.

Putin’s war in Ukraine has caused many countries to look to Algeria as a possible substitute for Russian gas. The president of the Algerian energy company Sonatrach, Touffik Hakkar, had already warned on April 1 that Algeria was not in a position today to offer additional quantities to supply Russian gas. But this has opened the door to major projects: “At the rate of our explorations, our capacities will double in four years, which suggests promising prospects with our European customers,” he said.

Spain had very good conditions to position itself as a possible distribution center for Algerian gas to Europe, until Algeria decided to withdraw its ambassador from Madrid. From now on, the privileged place seems to be occupied only by Italy. A source from the European private energy sector, speaking on condition of anonymity, told EL PAÍS that for Europe, the ideal country to supply some of Russia’s gas is Algeria. “Nobody else is closer. And in the energy sector, if you have a country close to you, it means you have better prices. Germany and the countries of Eastern Europe East have become dependent on Russian gas not because they are stupid, but because the cost is much cheaper compared to ships arriving from other continents”.

The same source recognizes that today, the collaboration between Italy and Algeria, to the detriment of Spain, does not translate into any precise figures or contracts. But he adds that Rome has three assets in its favor to become a possible center for the distribution of Algerian gas to Europe. The first, according to the aforementioned expert, is that there is a large Italian semi-public private company, Eni, ready to invest in exploration. Eni is the main international company in Algeria in volume of activity. Italy is also Algeria’s third largest supplier, just behind China and France. And it is its first client, ahead of France and Spain.

The second factor in favor of Italy is that there is great “political will” in Rome to increase gas imports from Algeria. “In this world of energy, the fact that there is political will accompanied by large private companies is essential. And that’s what Italy has.”

Heavy reliance on Russian gas

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And the third factor in favor of Italy, according to the aforementioned source, is that the country is very dependent on Russian gas. “Italy is hungrier than Spain, because it is more dependent on Russia,” he concludes. 40% of its gas imports come from Russia, followed by a long way by 27% from Algeria (21,000 million cubic meters). The executive’s goal is to liquidate dependence on Russian gas by 2025.

Italian Prime Minister Mario Draghi intends with his trip on Monday to pave the way for a future without dependence on Russian gas in three years. At Chigi Palace, the seat of government, they point out that the advantage of Algeria is that there is already an infrastructure of two gas pipelines created. “And new connections could be made in the future,” says the same source.

The president of the Italian group Eni, Claudio Descalzi, traveled on April 3 to meet the boss of the Algerian Sonatrach in Algiers. The objective was to strengthen the partnership between the two companies. The meeting between the two directors took place hours after Hakkar revealed that his country, Spain’s main gas supplier, would maintain the price for all its customers, although he did not rule out reviewing those of his “Spanish client”.

Draghi’s visit to Algiers on Monday is preceded by a telephone conversation with his Algerian counterpart, Abdelmayid Tebún, on April 1. They discussed the “strategic and energy” relations between the two countries. Bilateral summits have also been scheduled for the coming months. And at the end of May, Tebún should go to Rome.

The aforementioned source from the energy sector points out that, although Algeria cannot give up the money that comes from Spain for gas, Madrid “killed the goose that laid the golden eggs”. Last year, Spain paid 2.6 billion euros for imported Algerian gas. The Third Vice-President of the Government and Minister for Ecological Transition, Teresa Ribera, said last week that Algeria had already planned since October to increase the price of gas to Spain through its company Sonatrach.

The same source insists that the repercussions go beyond the one-time price hike right now. “In this panorama of war, Algeria is the key. And you don’t spit in a partner’s face. Germany is looking everywhere for energy sources. And we, who have him so close to us, have just closed a door. It may be that in one, two or three years, when the Algerian ambassador returns to Spain, it will no longer be possible to make up for lost time. Italy will have seized its moment.

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