Rabat – Algerian media outlet Algerie Part reported on Friday that Sonatrach, Algeria’s oil company, is struggling to meet the terms of its gas commitments with Italy.
According to the report, the company summoned its management staff to three urgent crisis resolution meetings in the past week alone.
The overarching goal of all these meetings was to discuss solutions that could allow Sonatrach to fulfill the requirements of Algeria’s gas agreement with Italy, stressed the report.
The agreement, which was being negotiated since April 11, and finalized on July 19 during the 4th Algerian-Italian Summit in Algiers, would see Algiers providing its European partner with 9 billion cubic meters of gas from November 2022 until the end of 2023, in addition to the previously agreed amounts.
While Algeria supplied Italy with nearly 14 billion cubic meters since the beginning of the year, a figure exceeding the initially agreed-on plans, noted Algerie Part’s report, the country ’s national gas company may not be able to find a way to supply the additional amounts within the agreed-on timespan.
Citing a Sonatrach internal audit, the Algerian outlet said the company can only mobilize around 4 billion cubic meters to the agreement.
It went on to quote “well-connected sources” as emphasizing that Algeria will need to mobilize all its available transport capacities of the Transmed gas pipeline and gradually increase production to meet demands of its gas deal with Italy.
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Sonatrach may be able to mobilize more gas to Italy if it decreases its liquified natural gas (LNG) production, but that could be a financially harmful move as LNG prices continue to soar in light of the Ukraine war, argued the sources.
The news comes with Europe bracing to turn to Algeria as one potential new supplier of fossil fuels as the continent gears up to increase sanctions on Russia for its ongoing war on Ukraine.
Facing a severe energy crisis in the coming months, coupled with political pressure to cut economic ties with Putin’s government, European countries are finding themselves in a difficult spot to secure energy deposits.
Algerie Part’s report holds grim implications for Europe in such a context, with the report’s main point being that Algeria may not be able to produce enough gas to meet growing demand.
