Energy group Eni and Sonatrach signed a deal to accelerate the development of gas fields in Algeria and the development of green hydrogen, in a move aimed at increasing the African country's gas exports towards Italy.
Italy, which sources about 40 percent of its gas imports from Russia, has been scrambling to diversify its energy supply mix as the conflict in Ukraine escalates.
Algeria is Italy's second-biggest gas supplier and the Transmed pipeline - which runs from Algeria via Tunisia to the Italian island of Sicily - has been pumping Algerian gas to Italian shores since 1983.
The gas production volumes expected from the areas covered by Thursday's agreement is equal to some 3 billion cubic meters (bcm) per year and will contribute to increasing the export capacity of Algeria to Italy through the Transmed pipeline, Eni said.
The Memorandum of Understanding was signed in Rome by the top executives of the Italian and the Algerian groups in a ceremony witnessed by the President of Algeria Abdelmadjid Tebboune and Italian Prime Minister Mario Draghi.
Algeria's gas exports to Italy climbed last year, jumping 76 percent to 21 billion cubic meters – 28 percent of overall consumption and second behind the 29 bcm from top supplier Russia.
The agreement will allow Sonatrach and Eni to evaluate the gas potential and opportunities for accelerated development at specific fields already discovered by Sonatrach in Algeria.
The Memorandum also covers the technical and economic evaluation for a green hydrogen pilot project in Bir Rebaa North (BRN) in the Algerian desert, with the goal of supporting the decarbonisation of the BRN gas plant operated by the SONATRACH-Eni GSE joint venture.
Eni is the main international energy company operating in Algeria, where it has been present since 1981.