Let’s Tune In: Gas Supply Diversification

Let’s Tune In is a weekly column produced by our Newsroom team to highlight one story that you might have missed from last week. You can read more about our weekly content on the Newsroom page.

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In an attempt to disengage Russia from the European gas supplier role, Italy signed 15 agreements with Algeria last week. Agreements that made Algeria the biggest Italian gas supplier and they came together with several memorandums of understanding in areas ranging from energy to sustainable development, justice, and micro-enterprises. It was the Italian Prime Minister Mario Draghi himself who presented the agreement during his visit to Algeria.

With the Russian invasion of Ukraine, the African continent became an important and relevant opportunity to Europe because of its amount of gas. The major suppliers at the moment are: Algeria, Egypt, and Libya. The African continent, however, has a lot of countries with a huge amount of gas that could help the other African countries to respond to the European gas demand. An example is Senegal, where President Macky Sall asked Europe for support and more participation under better conditions, keys to a prolific new future for both.

From the Russian invasion until now, Algeria became the major European gas supplier because the country is geographically closer to Europe than the others and because the country has the right and advanced infrastructures necessary for the supplies of gas. Algeria also has an important and national oil and gas group called Sonatrach which recently discovered a major gas field in the Hassi R’mel field in the Algerian Sahara, that should contain between 1oo and 340 billion m3 of gas with condensate.

However, the change was not harmful because the gas suppliers now are several and Europe is less dependent on Russia. This change brought the price of gas to rise. It is a fact that Algeria’s gas together with Equatorial Guinea’s gas and Angola’s gas became the most expensive all over the world according to the Organization of the Petroleum Exporting Countries (OPEC) monthly report released on July 12.

It is interesting to remember that not every country in the European Union has a good relationship with Algeria and for this reason, this entity finds difficulty in having a relationship with everyone. Among these countries, France and Spain have been on the fence. The former because of its colonial past and the latter because of its dispute over the status of Western Sahara. The Italian relationship with Algeria instead has been improving since before the Russian invasion with several visits from Italian and Algerian members.

European nations are afraid that Russia could completely cut off the supply of gas to Europe and for this reason, all the countries are making several agreements on this field. It is always news these days that France signed an agreement on energy cooperation with the United Arab Emirates, and EU Commission President Ursula von der Leyen was in Azerbaijan to reach a deal with President Ilham Aliyev on increased gas supplies from the former Soviet Republic.

At the moment Russian gas gives power to the industry, generates electricity, and heats homes in winter. Europe is indeed less dependent now, but this is not the end of its Russian dependency. Italy can be proud of what it has done. It is less dependent on Russia, but due to the fact that the gas that it is buying is the most expensive in the world, it should keep in mind that there are several other African countries that are looking for investments. These other countries, however, still need time, infrastructure, and money together to have the confidence to grow in what at the moment is the most unstable continent on Earth.

Should the European Union seek a short or long-term solution? Should the European Union invest in other African countries even if they are more unstable?

Suggested readings:

Italy signs energy deals with Algeria in bid to sidestep Russia | Energy News | Al Jazeera

Europe looks to Africa for energy security [Business Africa] | Africanews

Algeria suspends trade ties with Spain over Western Sahara row | Politics News | Al Jazeera

Algeria to become Italy’s biggest gas supplier | Africanews

Draghi in Algeria: accordo con l’Italia sul gas – la Repubblica

Italy turns to Algeria for additional gas supply | Africanews

Algeria, Equatorial Guinea and Angola crudes the most expensive in the world (OPEC) | Africanews

Macron to Visit Algeria “soon” | Africanews