How is Georgia Meloni trying to make Italy a global center for gas?
?How is Georgia Meloni trying to make Italy a global center for gas
There is a war raging these days, and almost no one pays attention to it.
It involves two of the most important countries in Europe and two of the most important countries in North Africa and the Arab world! Let’s dive into it.
This is Giorgia Meloni, the prime minister of the third largest economy in Europe,Eighth largest economy on earth, with a GDP of $1.88 trillion, Italy.
She took office less than 4 months ago, and who is currently leading the first right-wing Italian government since World War II. She is in two of the most important places when it comes to perpetuating the Algerian struggle and its supporters against France.
This was Meloni's first visit to an African country.
She stayed for two days only, but those two days were quite enough to ignite the angerof the Élysée Palace and the French press.
?Why did the French get so angry
Because when Giorgia first landed at the airport, she visited the shrine of the martyr,the famous symbol that overlooks the capital Algiers and commemorates the Algerian revolution, the martyrs, and the people’s struggle against the French occupation.
She also visited the Enrico Mattei Garden, named after the founder and legendary leader of the Italian oil and gas giant Eni, also one of the biggest supporters of the Algerian struggle against French colonialism in the 50s and 60s.
The story of his death in the crash of his airplane is surrounded by exciting theoriessuggesting that it was an assassination and not an ordinary accident, such as that of Phillipe de Vosjoli, a former agent in the French Intelligence Agency, known at the time as SDECE,who said that agents from the SDECE were responsible for the fall and crash of Mattei's airplane,and he died because he was about to orchestrate an Italian takeover of the French oil interests in Algeria.
Of course, the message of the new Italian iron woman to the French was made very clear during her visits to places that annoy the French officially and effectively,through a declared Italian goal boldly titled "Italy as a major center for the delivery of gas supplies from Africa to Northern Europe in the future", which would mean taking Russia’s place, which was supplying almost half of Europe’s gas needs,and at the same time pulling the rug from under the French authority in North, Central and West Africa.
Evidence of that is that less than a week later, Giorgia was in another Arab capital, the Libyan Tripoli!
These smart, quick, and calculated Italian moves prompt us to ask some very important questions, such as:
What is Italy’s plan in order to remain a key player in the global natural gas markets?
How can Algeria mainly, but also other African countries, help it achieve this goal?
Will the Italian infrastructure allow transporting the quantities of gas that Europe needs?
What are the details of the Mattei plan announced by the Italian Prime Minister in the heart of Algeria?
This is a sample of the important and exciting questions that we will be discussing in today.
?What is Italy’s plan in order to remain a key player in the global natural gas markets
In order to understand how Italy ended up in Algeria, I must first quickly tell you about the energy situation in Italy before the Russian-Ukrainian war.
Exactly a year ago, before the Russian invasion of Ukraine, Russia was supplying the European Union countries with 40% of their natural gas needs, and Italy was the second largest importer of Russian gas after Germany.
It is in general one of the largest importers and users of natural gas in all of Europe.
it imports 90% of its supplies of natural gas, and approximately 40% of it, or about 29 billion cubic meters, was coming from Russia. In 2021 the Italian domestic consumption of gas reached 75 billion cubic meters.
Gas is fully responsible for generating half of the country’s electricityand it is the main energy source for Italian industries and for household heating.
But after Putin launched his still ongoing war, Italy and other European Union countriesfound themselves threatened with a cutoff of Russian gas supplies, and indeed Russian gas supplies began to gradually decrease as the war intensified and the European Union imposed all kinds of sanctions on Moscow.
Therefore, the logical step for the Europeans was to discuss alternatives to the Russian gas.
During the few months after the war, Italy had two main goals:
a short-term goal, which was to secure its supplies of natural gas after phasing out Russian gas,and a medium-term goal, which was to plan to re-export the surplus gas it imports from Africa to Europe, and thus be a gas center in the European continent.
?How can Algeria mainly, but also other African countries, help it achieve this goal
Thanks to precise moves made by Eni, the Italian energy giant, and former prime minister Mario Draghi, Italy has largely succeeded in achieving its short-term goal of securing the country's natural gas supplies and weaning it off Russian gas. Guess who supplied the Italians with their needs of natural gas?
Exactly, Algeria! Algeria was, at that moment, Italy's second largest gas supplier to after Russia, supplying 29% of Italy's total gas flows,meaning approximately 21.2 billion cubic meters, but the Italians wanted an additional 9 billion cubic meters of Algerian gas.
That is why Mario Draghi led a high-level delegation a month and a half after the Russian invasion to secure this agreement and convince the Algerians to sign it, and also to secure a foothold for Eni there, Of course, Claudio Descalzi, CEO of Eni and one of the most important Italian businessmen ever, was with him in the delegation.
The visit was so successful that at the end of May, the Algerian President Abdelmadjid Tebboune reciprocated the visit and traveled to Rome, and there he made a logical and understandable request to the Italians:
You want more gas, then you must help us raise our production capacities.
As a result, the two energy giants, the Italian company Eni and the Algerian state-owned Sonatrach, signed an agreement to boost gas exploration and accelerate the development of existing fields, to develop green hydrogen projects in Algeria, and to lay a submarine cable from Algeria to Italy to transmit electricity.
They also agreed to gradually increase gas flows to reach the 9 billion meters cube required by the Italians by 2023-2024.
After this mutual visit, the Italian Prime Minister made frequent visits to Algeria in particular and to other countries around the world in general to secure gas supplies away from Russia.
This effort had the greatest impact on Russia's supplies, which decreased by 40%, reaching only 10% of Italian gas imports, starting from late September 2022.
Italy succeeded in giving up most of the Russian gas, and compensated for it by increasing gas supplies mainly from Algeria and to a lesser extent from Egypt and Libya,after Mario Draghi's effective maneuvers with the help of his right-hand in the field of energy, Claudio Descalzi.
This is where Mario's role ends, kudos to him, and the role of the new iron woman, Giorgia Meloni, begins, who took office after her conservative right-wing party, "Brothers of Italy," won the elections in October and thus formed the new Italian government, while at the same time terrifying Europe with this victory.
?Why is Europe terrified of this victory
To let you understand, let me give you a little glimpse into Giorgia's background and where it comes from.
The Brothers of Italy party, led by Giorgia, is the main heir to the so-called "neo-fascism", and the party's members are very nice people who sanctify nationalism, hold great skepticism about the European Unionand the usefulness of its existence, and want to renegotiate the European Union treaties.
Meloni's motto in her election campaign was a populist slogan titled "Italy and the Italian people first", and most of her government is formed by members of her right-wing party, and from other right-wing and conservative parties such as the Lega Nord party, and the former Italian Prime Minister Silvio Berlusconi's party, Forza Italia.
In brief, Meloni sees and prioritizes the nationalism of her country only,and the first goal she started working on immediately after taking office is placing Italy in a major strategic position on the global natural gas map, while also planning to make it the next major European gas center.
The spearhead in achieving this goal is Algeria.
Algeria is the largest exporter of gas in Africa. It produces 100 billion cubic meters of natural gas each year, consuming half of it domestically and exporting the rest, and possesses one of the largest oil and gas reserves in Africa,which however is a largely untapped resource due to a combination of mismanagement and lack of investment.
Thus, Algeria's capabilities make it the main cornerstone of Giorgia Meloni's ambition, which is why her first visit to an African country was to Algeria.
This was encouraged by the fact that the Italian operator Eni, the world's largest in the field of energy, is considered the main foreign energy company operating on Algerian territory since 1981.
That's why Giorgia chose Algeria to announce her grand plan, through which Italy will become a huge global gas hub.
A plan she called "Mattei plan".
?What are the details of the Mattei plan announced by the Italian Prime Minister in the heart of Algeria
The plan's name, as it is clear, is named after the founder of Eni, Enrico Mattei,because it simply aims to repeat what Mattei did in the 50s and 60s, which was the core of Italy’s foreign policy at the time.
During this period, he supported Algeria's independence from France and confronted the major Anglo-American oil companies because of their exploitation of African resources.
He defended the continent's utilization of its natural resources and tried to help them maximize their economic growth, without of course forgetting his main priority, which was to strengthen the independence of his own country, Italy, in the field of energy by using some of Africa’s resources.
Speaking of, you should know that Eni company was at the time offering to the African countries mutual energy deals with actually fair and mutually beneficial policies, something that was never provided by any other international parties.
We now find, for example, that it offered Tunisia and Algeria an equal partnership to extract their oil in exchange for profit margins much lower than those offered by the major international oil companies to African countries.
This largely explains why this man was assassinated The Italian Prime Minister now wants to implement Mattei's strategy once again and turn Italy into an energy bridge connecting Africa to Europe by investing in African countrieswith fair bilateral energy deals for all parties.
She described this investment approach as "non-predatory and cooperative", especially with Algeria which has now replaced Russia as the largest supplier of natural gas to Italy.
But does Italy have the proper natural gas infrastructure that would enable it to transport billions of cubic meters of excess from its domestic consumption gas from the south to the north?
?Will the Italian infrastructure allow transporting the quantities of gas that Europe needs
Look, Italy currently has 3 pipelines transporting natural gas The first line is the Enrico Mattei gas pipeline, also known by its more popular name, the TransMed Pipeline.
It starts from the municipality of “Hassi R’Mel” in the Algerian state of Laghouat, passes through Tunisia, then goes under the strait of Sicily, reaches Sicily itself in southern Italy, and then onto the Italian mainland.
The second line is the Greenstream pipeline. This line belongs to the Libyan West Gas Project,and starts from the Wafaa field in the Libyan city of Mellitah, passing through the Libyan northwest, then under the Mediterranean Sea, reaching Sicily in southern Italy.
As for the third pipeline, it is called Trans Adriatic Pipeline and is known as TAP.This is part of the western European Gas Corridor project.
Please pay more attention here, because this pipeline consists of 3 lines that complement each other.
The first line, which is called South Caucasus Pipeline, aka SCP, starts from the Shah Deniz field in the south of the Caspian Sea, the largest natural gas field in Azerbaijan, and ends on the Georgian-Turkish border.
Then we find the second line, which is the Trans-Anatolia gas pipeline known as TANAP,a Turkish line that starts from the city of Akhalkalaki in Georgia and crosses all of Turkeyuntil it reaches the Greek village of Kipoi. Here is where the third line starts,the Trans Adriatic Pipeline (TAP), which goes from Greece to Albania and then under the Adriatic Sea until it reaches the San Foca region in eastern Italy.
These are the 3 pipelines that currently supply Italy with natural gas,but if Giorgia wants to lead Italy to become the first gas center for Europe, then these pipelines are not enough.
That is why the Italians are taking two paths: the first is expanding these lines, and the second is laying new lines.
For example, Italy has started working on doubling the capacity of the TAP pipeline,so that it can deliver 20 billion cubic meters of gas by 2027.
During Giorgia's visit to Algeria, she made an agreement with the officials there to resume work on the Algeria-Sardinia-Italy pipeline project known as Galsi. Construction of this line was supposed to start in 2012 in order be operative in 2014, but it stopped due to the discovery of a large amount of shipwreck from a French warship named Danton from World War I, which sank between the Italian island of Sardinia and northern Algeria.
Therefore, the project was shelved.
Nowadays, Rome and Algeria have begun rebuilding the line that will extend from the Algerian field of Hassi R’Mel to the north of the country, then to the island of Sardinia, reaching the Italian city of Piombino.
Additionally, Italy has 3 regasification plants to import liquefied gas and convert it into natural gas.
One in the Veneto region, a second in the Liguria region, and a third plant in the Tuscany region.
The country’s 3 plants have a combined capacity to re-convert liquefied gas into natural gas of 15.25 billion cubic meters.
Moreover, a few months ago the operator of the Italian gas network, the state-run Snam company, bought a ship, which serves as a floating gas storage and regasification unit (FSRU) and is called Golar Tundra, for $350 million.
A month later, Snam bought another FSRU ship called BW Singapore for $400 million.
Both ships have a capacity of 5 billion cubic meters of gas each.
FSRU vessels generally refer to a type of enormous ship that stores gas and has the ability to convert it from liquefied gas to natural gas, which renders them highly important units. That is why Stefano Venier, CEO of the Snam company, said that the two ships will provide 13% of the Italian domestic consumption needs for gas.
By the way, domestic consumption is expected to decrease by 7% by next month,because at the beginning of last August the European countries approved a voluntary reduction in gas demand by 15%, with the possibility of exceptions according to each country's circumstances.
Italy said that it will aim to reduce demand by only 7% and obtained an exemption from the European Council based on its ability to store gas.
By next month, Italian domestic consumption is expected to drop to 65.7 billion cubic meters per year.
Since Italy's main goal for taking all these steps is to become the first gas corridor for Europe, it must take care of the infrastructure that will transport the excess quantities of imported gas coming from the entry points that we mentioned a while ago to its strong industrial center located in the north of the country,as well as to the export channels that used to transport gas from Russia, passing it through some European countries before it reached Italy.
That's not the case now, as we Italians will create a reverse flow of gas from our country to other European countries through the Trans Austria Gas pipeline (TAG), which passes through Austria, and through the Transitgas pipeline that goes through Switzerland as we see, which will in turn transport Italian gas to high-demand markets in Central and Western Europe.
For that reason?, Italy started investing $2.7 billion in an additional land pipeline that will run through the heart of Italy, called the Adriatic Line. What is the purpose of this land line
It will increase the transportation capacity between the south and the north by about 10 billion cubic meters.
However, it seems that Giorgia Meloni's ambition has no limits and will not be satisfied with all of this, as she is trying to take advantage of the critical situation the European Union is going through in the field of energy,in order to gain its financial and political support to achieve the Italian ambition in the region... How? Through the REPowerEU plan.. This is a very huge plan developed by the European Commission in May 2022 to make the European Union independent of Russian fossil fuels by 2027, and of course with huge sums allocated to accelerating the European Union’s diversification of natural gas supply sources...The plan will be supported by $263.5 billion in loans and grants.
Of course, the European Union is now excited about any projects that will make it dispense with anything coming from Russia.
That is why, on February 6, Giorgia and some of her government's ministers met with the heads ofmajor Italian energy companies, such as the CEOs of energy giant Eni, of Enel, the Italian distributor of electricity and gas, of the Italian gas network operator Snam, and of the Italian transmission system operator Terna.
After the meeting, she explicitly stated that she would use the EU funds of the REPowerEU plan to completely wean Italy from Russian gas and turn the country into an energy hub for the EU.
Therefore, considering the amount of domestic consumption after the expected decrease,the solid infrastructure that Italy owns and has begun to expand and develop, the additional quantities that Eni contracted with the Algerian company Sonatrach, the increase in imports of natural gas from Azerbaijan and liquefied gas from Egypt, Angola, the Republic of the Congo, Nigeria and Mozambique, not to mention Eni's new investments in Libya and other countries, which will likely bear fruit within the next 3 years,Italy will become a major exporter of natural gas to northern European countries.
Thus, its strategy has succeeded, and it achieved its ambitions to become the main gas corridor for Europe, which will help it in the future to increase its weight within the European Union, and will enhance its influence in the Mediterranean region, because the country will play a major role in the energy securityof the European Union on one hand and will serve as the largest natural gas customer for the Mediterranean countries and Africa on the other hand.