Draghi Bets on Africa for Italy’s Exit From Russian Gas
Draghi Bets on Africa to Speed Up Italy’s Exit from Russian Gas
(Bloomberg) -- Italian Prime Minister Mario Draghi is chasing a raft of natural gas deals in Africa as he seeks to cut energy ties with Russia.
Potential deals in the Republic of Congo and Angola could bring Italy an additional 5 billion cubic meters and 1.5 billion cubic meters a year, respectively, people familiar with the matter said, asking not to be identified discussing private information. Together with the extra volume it secured from Algeria, that would replace more than half the amount it gets from Russia as early as next year.
Talks are ongoing and details of any accords may change, the people said.
Italy currently gets about 40% of its gas from Russia, and Draghi -- together with local energy giant Eni SpA -- has sought alternative sources since President Vladimir Putin launched an invasion of Ukraine in February. With Eni already present in more than a dozen countries in Africa, the continent is an attractive option.
Yet the former central banker’s energy diplomacy is causing some anxiety among European Union allies. The Algeria deal stoked concerns in Spain that its own access to the country’s gas could be affected, prompting talks between Rome and Madrid. It’s also unclear how Italy’s plans square with a push to centralize gas-purchase negotiations at the EU level.
“It’s really important that the EU sticks together at the moment, that’s essential,” said Oliver Sartor, senior industry adviser at think tank Agora Energiewende. “There are some countries that are more exposed than others, so it’s normal that they would look to protect themselves. But there’s a higher priority here.”
Draghi’s discussions in Congo and Angola next week will focus -- among other things -- on boosting deliveries of liquefied natural gas, the people said. That trip could be followed by travel to Mozambique, though plans haven’t yet been confirmed, they said.
Gas discoveries off Mozambique have attracted international operators, including Eni, to its waters. While work in the country is risky -- with attacks by an insurgency group threatening onshore developments -- Eni’s Coral Sul offshore LNG plant is expected to start production in the second half of 2022.
The company’s deal with Algeria’s Sonatrach Group, signed Monday during Draghi’s first official visit to Algiers, sees Italy buying an extra 9 billion cubic meters of gas annually by 2023-2024. On Wednesday, the firm struck an agreement with Egypt to increase flows of LNG to Italy. It has also said it’s ready to invest billions of euros across the Mediterranean Sea in Libya, where it has been present for decades.
Draghi isn’t the only EU leader to court gas-rich countries in a bid to ease dependence on Moscow. Germany, which relies on Russia for 40% of its gas imports, is creating its own LNG infrastructure and reached a supply deal with Qatar in March. Others from France to Croatia plan to build or expand import terminals, while the U.S. has also agreed to boost shipments to the bloc.
“Everyone is moving very fast,” said Simone Tagliapietra, a senior fellow at the Bruegel think tank in Brussels. “It makes sense for Draghi to act now, and he is doing it very well.”
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