Italy Turns to Algeria, FSRUs to Help Displace Russian Natural Gas & More News Here

Following a provide deal in April, Italy plans to scale back reliance on Russian fossil fuels by investing in Algeria’s pure gasoline and inexperienced hydrogen and by increasing its import infrastructure with two floating storage and regasification models (FSRUs).

Italy is one among Europe’s largest pure gasoline shoppers. It has three LNG import terminals with a capability of 10.9 million metric tons/yr (mmty), however “more regasification capacity in Italy is needed, so it is not surprising that FSRUs are being leased,” researcher Marco Giuli of the Brussels School of Governance in Belgium instructed NGI.

Italy’s Snam SpA agreed to lease two FSRUs from Golar LNG Partners LP. One of these, the Golar Tundra, could be positioned in North-Central Italy shut to areas of excessive gasoline consumption. 

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The 5 mmty capability Tundra FSRU is slated to begin operations to “contribute about 6.5% of  [Italy’s] domestic needs,” stated Snam CEO Stefano Venier.

The second vessel, the LNG provider Golar Arctic, is to be transformed into an FSRU over two years. It could be positioned in Portovesme, Sardinia, to provide the island with gasoline.

In April, Italy’s Eni SpA additionally signed a cope with the Democratic Republic of Congo to enhance pure gasoline provide and export by 4.5 billion cubic meters (Bcm) yearly starting in 2023. Eni additionally signed an identical contract for between 1-1.5 Bcm/yr from Angola. Eni holds stakes in each the Angola and Congo LNG initiatives. Eni might additionally reportedly export 3 Bcm of LNG from Egypt’s Damietta plant this yr.

“Italy is so much geared towards gas diversification that its energy system is extremely dependent on gas, and only limited alternative fuel capacity is available,” Giuli stated. “So Italy has few alternatives to gas in the short term, even for basic power generation.”  

Replacing Russian Imports

Italy imported 29 Bcm from Russia final yr, or almost 40% of its complete gasoline imports. Algeria got here second with 22.6 Bcm, or 31% of complete imports, and the remaining 30% got here from Azerbaijan, Qatar, Libya, and Norway, in accordance to information from Italy’s Ministry of Ecological Transition.

To scale back dependency on Russian gasoline provides following the invasion of Ukraine as others throughout Europe are doing, Algeria’s Sonatrach and Eni agreed to a provide deal in April. Algeria would ship a further 9 Bcm of gasoline in 2023 and 2024 by way of the Transmed Pipeline.

But the Transmed system connecting Algeria and Italy isn’t working at full capability. Algeria has had manufacturing points. The nation has not invested in new infrastructure to enhance manufacturing prior to now three a long time, and it wants to divert gasoline to meet growing home demand for electrical energy. 

“The further 9 Bcm from Algeria by 2023 is unrealistic, particularly contemplating that Algerian provides to Italy elevated by 80% between 2020 and 2021, Giuli stated.

Giuli stated a big enhance by 2023 can solely happen if there’s a diversion of flows from Spain to Italy. Algeria’s relations with Spain have been strained as a result of Spain has sided with Morocco over a land battle within the Western Sahara.

“This has reverberated already on regional gas flows, but hasn’t yet reached the stage where Algeria intends to break its supply commitments to Spain,” Giuli added. 

In addition to the April provide settlement, Sonatrach and Eni agreed final month to signal a memorandum of understanding to collectively put money into pure gasoline and inexperienced hydrogen. Part of the settlement might embody financing from Italy, in accordance to Algerian information experiences.

Reducing Gas Consumption

Instead of wanting to exchange Russian gasoline by growing pipeline and LNG imports, Italy ought to give attention to making an attempt to scale back its gasoline consumption, stated Europe vitality analyst Ana Maria Jaller-Makarewicz, of the Institute for Energy Economics and Financial Analysis. 

Jaller-Makarewicz cited information from the Ministry of Ecological Transition that confirmed 45% of the gasoline consumed in Italy was from residential and business clients in 2020, whereas 35% was from energy technology and 19% was from industries. 

“With energy efficiency, gas demand management strategies and increasing renewable generation, Italy could see a great reduction on its gas consumption and this could help decrease its dependency on Russian gas and on gas a as a whole,” she instructed NGI. 

“Gas diversification can only be a very partial solution,” Giuli added. “ To replace all 29 Bcm of Russian gas imports, a full replacement can only involve significant efforts in demand side measures and renewable energy development.”

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