U.S. Reaches Out to Foreign Producers in Algeria on Gas Options

MILAN (Reuters) — The U.S. government has asked to meet Eni, TotalEnergies and other energy companies operating in Algeria to see if more gas can be sourced from the country, sources familiar with the matter said.

The move comes as Washington ramps up efforts to find alternative gas supplies for Europe in case any disruption arises from the standoff between Russia and Ukraine.

The European Union depends on Russia for more than a third of its gas, and any interruption of flows would worsen an energy crisis that has already sent consumer bills sky high.

"The U.S. has requested a meeting with Eni on Algeria," one of the sources said.

Eni, which has a series of long-term gas contracts with Algerian gas monopolist Sonatrach, is one of the country's biggest foreign producers.

A second source said Washington had reached out to France's TotalEnergies and other companies in the region, including Equinor and Occidental Petroleum Corp.

Eni, Occidental and Total have met to coordinate over Algeria gas and whether a boost in output is possible, an industry source said.

Eni was not immediately available for comment while TotalEnergies and Occidental declined to comment.

"We don't comment on the conversations we have with the government," Equinor CEO Anders Opedal told Reuters on Wednesday.

The U.S. State Department said it has been "working to identify additional volumes of non-Russian natural gas from the Near East and North Africa to Asia and the United States" but did not confirm any talks with individual companies.

It is in talks with "major natural gas producers around the globe to understand their capacity and willingness to temporarily surge natural gas output, and to allocate these volumes to European buyers," a spokesperson said.

U.S. officials are also working with major buyers and suppliers of LNG "to ensure flexibility in existing contracts and storage is managed and enables diversion to Europe," the person said.

Sources have told Reuters the United States has discussed a range of contingencies with companies in different regions including whether they had capacity to boost gas exports or delay field maintenance.

But with global gas supplies tight and LNG producers already churning out as much as they can, there is little availability to make up for the large volumes from Russia.

Algeria, which has pipelines to Spain and Italy and a large LNG terminal at Skikda, boosted oil and gas output last year by 5% to 185.2 million tons of oil equivalent. LNG output rose 14%.

Rising domestic consumption and political instability, including the closure of a pipeline to Spain over a dispute with Morocco, have capped exports. But the industry is recovering from the oil price crash in 2014 that hit investments.

"Algeria has important gas resources and it is likely they might be produced in the coming years," said a source at one energy company working in the country.

Algeria's gas exports to Italy climbed last year, jumping 76% to 21 billion cubic metres - 28% of overall consumption and not far from the 29 Bcm from top supplier Russia. Spain got 29% of its gas from Algeria.

On Monday EU Commission President Ursula von der Leyen said Brussels was talking to the U.S. and other suppliers about boosting gas deliveries to Europe.

Japan has also decided to divert some LNG cargoes to Europe in response to requests from the U.S. and EU.

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