Edison’s Abandonment of Algerian Gas Will Not Affect Relations With Italy

Algerian-Italian energy relations will not be affected by the decision of Edison, owned by the French state-owned electricity company EDF, to purchase American liquefied natural gas (LNG), Italian energy expert and researcher in energy geopolitics and markets, Francesco Sassi, said.

Sassi added that Algeria remains a strategic partner for Italy in the energy sector. However, the reasons behind the decision may not be entirely unrelated to the unprecedented tensions between Algeria and Paris, which opens the door to the possibility that Edison is being exploited as a tool in the political-economic conflict between the two countries.

As is well known, during the Gastech exhibition and conference in Milan, the Italian company Edison, through its CEO Nicolas Monti, announced a new contract with Shell to purchase 700,000 tons of American liquefied natural gas annually, starting in 2028. This contract will reduce or eliminate its imports from Algeria, estimated at one billion cubic meters annually, in addition to those from Libya.

In response to a question asked by Echorouk about his interpretation of the Italian Edison move, the expert, a postdoctoral researcher and assistant professor in the Department of Political Science at the University of Oslo (UiO) in Norway, where he works on geopolitical issues, energy, international relations, and the use of energy as a tool of state, emphasized that the decision, like other moves by European companies operating in the gas and liquefied natural gas (LNG) sector, is driven by both economic and geopolitical considerations.

He explained that there is a growing need to diversify supply sources, given the American supply, which is expected to double over the coming decades. He added that energy has become at the heart of major conflicts, as it is both a geopolitical tool and a geopolitical goal. This requires the global energy industry to quickly adapt to these shifts; otherwise, it will become a mere tool in the hands of politics.

Regarding the economic rationale of this option, given Algeria’s geographical proximity and its much lower prices than American gas, which is thousands of kilometers away and more expensive, the expert explained that the American liquefied natural gas industry is based on an industrial and pricing model that is completely different from the economic and political partnership model offered by Algeria, which is built on continuity and stability.

Expert Francesco Sassi, who also contributes to the Energy Security Unit of the Italian Parliamentary Observatory on International Policy, affiliated with the Italian Parliament and Ministry of Foreign Affairs and International Cooperation, noted that the abundance of shale gas in the United States makes the American offer attractive due to seemingly competitive prices. However, he warned that these prices are highly volatile due to the constantly changing nature of the global market.

In response to a question about whether Paris was trying to use Edison as an economic arm to isolate Algeria from the European market in light of the unprecedented political crisis between the two countries, the expert asserted that a company of Edison’s size cannot be held hostage by purely political calculations, even though the geopolitical dimension remains strongly present.

In this regard, he explained that the existing tension between Algeria and France may have been one of the factors driving the diversification of supply sources, which has already occurred in recent years. However, the essence of the deal remains primarily economic, given the long-term, 15-year contract the company signed with Shell to supply liquefied natural gas from the United States.

Regarding the potential repercussions of this move on Algerian-Italian relations, the expert ruled out any direct impact or consequences, noting that the two countries have established agreements that strengthen the gas axis as a pillar of energy cooperation.

However, he warned that global tensions and major economic transformations could lead to unexpected repercussions in the medium and long term, requiring decision-makers to show vigilance.

Sassi concluded that he does not see any threat to the Algerian-Italian partnership in the near term due to Edison’s agreement with Shell, noting that energy supplies from Algeria remain essential to ensuring energy security for both Italy and Europe.

It’s worth noting that expert Francesco Sassi previously worked as a researcher on energy markets and geopolitics at the RIE Institute for Industrial and Energy Research. He was also a researcher at the University of Pisa, where he obtained a PhD in political science, specialising in geopolitics, through a research project on the China-Russia gas interconnection.