Italy is in talks with Algeria to secure additional natural gas supplies as disruptions linked to the Iran conflict continue to strain global energy markets.
The development comes as supply from key exporters has been affected, leading European countries to seek alternative sources to meet demand.
According to people familiar with the matter, Italy’s energy company Eni SpA is renegotiating existing gas contracts with Algeria’s state-owned Sonatrach.
The talks are aimed at increasing volumes, although Algeria is reportedly pushing for any additional supply to be sold at spot market prices, which are currently higher.
Italian Prime Minister, Giorgia Meloni is expected to visit Algiers in the coming days. The Italian government confirmed the trip, noting that energy will be part of a broader set of discussions, but declined to comment on the negotiations.
Supply pressure builds after Qatar disruption
The talks follow recent disruptions to global gas supply linked to the Iran conflict. Qatar, one of the world’s largest exporters of liquefied natural gas, has seen part of its production capacity affected after missile strikes targeted key facilities.
European buyers, including Italy which imports Qatari LNG, are affected by the disruptions. Reports indicate that repairs to the damaged infrastructure could take years.
QatarEnergy has indicated it may declare force majeure on certain contracts, which would permit temporary suspension of deliveries. Meanwhile, the broader instability in the Gulf has affected shipping routes.
Algeria as an alternative gas supplier for Europe
With uncertainty in Qatari supply, Italy and others are negotiating increased imports from Algeria, a major gas producer with existing pipeline links to Europe. Italy and Spain are among countries currently seeking to increase imports from the North African nation.
Algeria has played a similar role in the past. Following the Russian invasion of Ukraine, Italy moved to reduce its dependence on Russian gas and expanded its energy ties with Algeria.
Those earlier agreements are now approaching expiration, making the current negotiations more urgent. Algeria has proposed additional volumes at spot market prices.
Sources familiar with the discussions said this pricing approach could complicate negotiations, especially as European buyers face rising import costs.
The bottom line
Algeria is one of Europe’s largest gas suppliers, with established pipeline connections to Italy and Spain. Its state energy firm, Sonatrach, manages production and export agreements with several European buyers.
Eni SpA has maintained a long-standing partnership with Sonatrach, including joint exploration and production projects.
Italy remains one of Europe’s largest gas consumers, relying on imports to meet the majority of its energy needs, sourcing gas from a mix of pipeline suppliers and LNG exporters.
Following the 2022 Ukraine invasion, Europe diversified away from Russian gas, increasing reliance on LNG and North African pipeline supplies. LNG has since become a critical component of Europe’s energy mix.
Ongoing negotiations with Algeria are expected to play a key role in determining how Italy manages supply risks in the coming months, as global energy markets remain sensitive to geopolitical developments.
It remains unclear whether Italy will agree to Algeria’s proposed terms, as discussions are ongoing and details have not been made public.
