Italy Signs $8 Billion Gas Deal With Libya As It Seeks To Cut Russian Dependence.

Italian Prime Minister Giorgia Meloni speaks during a news conference in Tripoli on January 28.

Italy’s state-run energy company ENI has signed an $8 billion deal with Libya’s National Oil Corporation to develop two Libyan offshore gas fields as European nations seek to cut their dependence on Russian energy.

ENI will help develop two offshore fields, with production expected set to start in 2026, the company said on January 28. ENI estimated the fields could produce about 7.5 billion cubic meters of gas a year or more than two-thirds of the amount Italy imported from Russia last year.

European nations have been rushing to purchase natural gas from non-Russian sources, including North Africa, following Moscow’s invasion of Ukraine in February 2022.

Russia, the largest supplier of natural gas to Europe prior to the invasion, sharply cut exports to the continent last year in what EU officials said was an attempt to blackmail Brussels into cutting support for Ukraine. Italy had been the second-largest consumer of Russian gas in Europe after Germany.

The Russian energy cut caused natural gas prices in Europe to skyrocket to record levels, forcing companies and consumers to slash consumption. Prices have since returned to prewar levels amid a warm winter.

The ENI announcement came as Italian Prime Minister Giorgia Meloni toured energy-rich North Africa.

Days earlier, Meloni visited Algeria, Italy’s main supplier of natural gas, to sign memorandums on energy. Italy in May signed a deal with Algeria to increase imports starting in the autumn of 2022. That agreement called for up to an additional 9 bcm in 2023-24.

During her visit to Libya, Meloni said Italy wasn’t seeking a “predatory” role but wants to help African nations “grow and become richer.”

Libya’s exports to Italy have fallen by 5.5 bcm, or two-thirds, since 2011, when a NATO-backed uprising overthrew longtime dictator Muammar Qaddafi, ushering in a period of instability and underinvestment.

In addition to North Africa, European nations have sought more natural gas imports from the United States and Qatar.

Russian gas exports to Europe via pipelines plummeted to a post-Soviet low in 2022 and are expected to fall further this year.

The EU is aiming to end Russian imports of natural gas via pipeline later this decade, a business that had generated Moscow tens of billions of dollars annually.

With reporting by AP and Reuters